Seeing Machines Ltd (AIM:SEE, OTC:SEEMF) has reported a surge in demand for its technology with over 2.6 million vehicles across eight automotive programmes now equipped with its driver monitoring systems (DMS).
This figure represents a 100% increase from the same period last year - and was achieved against a tough backdrop for the automotive industry.
The company’s DMS, which uses artificial intelligence to detect drowsiness and distraction, has been designed to help reduce road accidents by continuously monitoring driver behaviour.
Production volumes of vehicles fitted with the company’s DMS technology hit 405,669 units in the first quarter of the 2025 fiscal year, Seeing Machines said in an investor update.
Maintained momentum
CEO Paul McGlone said: “Seeing Machines has maintained the expected growth rate of 100% in cars on the road from 12 months ago, now with eight programs at the start of production.
"We continue to see our Automotive programmes progress successfully to production despite the ongoing and widely documented challenges across the global automotive sector.
"I am confident growth will continue as regulations and automated driving features continue to drive demand for driver and occupant monitoring system technology."
In the Aftermarket segment, Seeing Machines has recalibrated its metrics to better reflect its financial performance following a licensing agreement signed in June with heavy equipment manufacturer Caterpillar.
The deal brought in an upfront license fee of $16.5 million, with $5 million recorded as revenue in fiscal year 2024, and the remaining balance to be spread over the contract’s five-year term.
Stable income
This setup will provide stable, non-recurring income for Seeing Machines, helping to smooth out revenue fluctuations as it continues to expand its customer base.
The company has also introduced updated performance indicators for its Aftermarket Guardian product, shifting its focus to hardware unit sales and annual recurring revenue (ARR), which is considered a more accurate measure of ongoing growth.
Excluding the contribution from the Caterpillar deal, ARR has grown by 13.4% year-over-year.
Additionally, the company’s Guardian hardware sales are expected to increase in the second half of the fiscal year, as production of the third-generation Guardian product ramps up.
According to Seeing Machines, these new metrics will give investors clearer insight into the company's revenue potential across its expanding product lines.
"Guardian growth remains steady, and we expect this to accelerate as Guardian Generation 3 becomes available to Aftermarket customers in more jurisdictions, globally," said CEO McGlone.
Mind the valuation gap
Following the update, Stifel, the American investment bank, reiterated its ‘buy’ recommendation for shares in the company, with a target share price of 11.4p, a significant premium over the current trading price of 3.4p.
According to Stifel’s analysis, Seeing Machines shares are now valued at just 3.1 times its enterprise value (EV) relative to its annual sales.
This should appeal to investors new to the story as the company is a leader in a large industry and is expected to grow steadily.”
Stifel’s optimism is underpinned by a strong growth forecast, with revenue expected to rise at a compound average growth rate (CAGR) of 23% annually over the next three years.
Meanwhile, gross profit is projected to grow by an impressive 42% through the fiscal year ending in 2027. If these projections are realised, Seeing Machines could emerge as a major player in the automotive safety technology market.
The investment bank’s analysis points to an annualised production rate for Seeing Machines’ DMS-equipped vehicles that could see it selling a further 1.9 million units in 2025, further bolstering the company’s growth trajectory.
Peel Hunt, which rates the stock a 'buy' up to 7p, said the numbers were in line with its forecasts, but noted that performance would likely be second-half weighted.