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Seeing Machines expects to meet full-year expectations

The Guardian sales pipeline continues to grow with A$250mln in qualified opportunities now being pursued
Driver monitoring system
A number of manufacturers are using or taking a look at Seeing Machines' FOVIO driver monitoring system

Seeing Machines Limited (LON:SEE) saw revenue surge in the first half of a financial year that is expected to be weighted heavily to the second half.

Revenue in the six months to the end of 2017 rose 267% to a record level of A$14.65mln from A$4.00mln the year before.

Revenue from the Automotive segment of the Seeing Machines business really took off, soaring to A$6.88mln from A$992,934 the year before, boosted by milestone payments from the German car giant that signed a contract in October last year to use Seeing Machines’ FOVIO driver monitoring system.

READ: Seeing Machines driven higher by new contract with German car giant

Revenue from the Fleet division jumped 258% to A$5.87mln from A$1.64mln the previous year.

The company’s Guardian platform, which uses advanced computer vision technology to detect and minimise driver fatigue and distraction events in commercial fleet applications, took in A$21mln of orders in the first half of the financial year, taking the value of contracts signed by the Fleet division but not yet delivered or recognised as revenue up to A$36.4mln, up from A$21.5mln at the end of June 2017.

The company said around one-third of this A$36.4mln is expected to be recognised as revenue in the first half of 2018, and then progressively over the life of the contracts, which typically range from three to five years.

Revenue from the Off-Road segment totalled A$1.32mln (2017: A$789,939), representing an increase of 68% on the same period last year. This revenue mainly comprises royalties from Caterpillar on sales of DSS (Driver Safety System) mining products and services.

The company made a net loss before tax of A$16,68mln for the period, compared with a net loss of A$14.14mln for the period to 31 December 2016.

The second half has started well, including continued progress on a new potential automotive original equipment manufacturer (OEM), as announced on 9 March 2018.

READ: Seeing Machines confirms negotiations with third new automotive OEM to deliver its driver monitoring systems

The board remains confident in the prospects for the second half and expects the company's results for the full year to June 2018 to be in line with expectations.

"We have had a busy first half with very pleasing revenue results achieved across the business,” said Ken Kroeger, the executive chairman and interim chief executive officer of Seeing Machines.

“Some of our highlights - such as the debut of the FOVIO driver monitoring platform in GM's Cadillac CT6 Super Cruise which is being touted as a ‘semi-autonomous industry game-changer’, the programme design win with a premium German OEM as well as our collaboration with Emirates and continued strength in the Fleet business - reaffirms our commitment to the company's multi-transport sector strategy,” Kroeger added.

“We continue to focus on delivering significant value to shareholders but have not lost sight of our commitment to safety as fundamental to Seeing Machines' foundations," he concluded.

House broker finnCap said there is an open road ahead for Seeing Machines.

“The year is expected to be strongly H2-weighted but the interim results are nevertheless impressive,” finnCap said.

WATCH: Future 'looking bright' for Seeing Machines after record half year

“It has also taken on some leasing commitments to finance inventory and securitise a debtor but post period-end we have seen a major £35mln fundraising as the business continues to gear up for a very exciting future. The unexpected departure of the CEO shortly after was a setback; however, that has been overtaken by the news that negotiations were underway to deliver the leading edge DMS solution to a 3rd major automotive OEM,” the broker noted.

“The first production cars utilising its technology are now on the road and the OEM opportunity has been quickened by news of NCAP [car safety] ratings requiring DMS by 2020; putting pressure on OEMs to select solutions over the next year or so,” finnCap noted.

--- adds broker comment ---

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