A greater focus on safety by regulatory bodies across all transport sectors globally, is very good news for this company.
That focus is really helping this group to proceed safely.
The Seeing Machines (LON: SEE) group is an advanced computer vision technology company that designs AI-powered operator monitoring systems to improve transport safety.
Regulatory tailwinds and industry momentum supports continued growth
In the first half year to the end of December 2022 the group saw revenues up 54% from $15.8m to $24.4m, with an end period cash balance of $52.2m ($40.5m end June).
The net loss was reduced by 47% to $5.4m ($10.1m), while the annual recurring revenue was increased nearly 17% to $11.9m ($10.2m).
The safety focus tailwinds are boosting the expansion of the company’s addressable market, adding to the attractive structural growth drivers in the Automotive, Aftermarket and Aviation sectors.
The Business
This group has come a long way over the last 23 years, from the 1997 research work into vision-based human-machine interfaces undertaken by Volvo Technology of Sweden and researchers at the Australian National University.
That work was to develop technologies that enable computers to detect, track and interpret human faces and facial features, with the initial aim to improve driver safety.
Three years later the company was set up.
Today the group, headquartered in Australia, is a global industry leader in vision-based monitoring technology that enable machines to see, understand and assist people. Seeing Machines is revolutionising global transport safety.
Its technology portfolio of AI algorithms, embedded processing and optics, power products that need to deliver reliable real-time understanding of vehicle operators.
The technology spans the critical measurement of where a driver is looking, through to classification of their cognitive state as it applies to accident risk.
Reliable “driver state” measurement is the end-goal of Driver Monitoring Systems (DMS) technology.
Seeing Machines develops DMS technology to drive safety for Automotive, Commercial Fleet, Off-road and Aviation.
The company has offices in Australia, USA, Europe and Asia, and supplies technology solutions and services to industry leaders in each market vertical.
The group is continuing to grow as an automotive technology leader in driver and occupant monitoring system technology, having now won a total of 15 automotive programs spanning 10 individual OEMs, covering more than 160 distinct vehicle models.
The cumulative initial lifetime value of all OEM programs that Seeing Machines has won to date now stands at $321m.
The company reported a total of 701,049 cars on road as at 31 December 2022, representing an increase of 188% over the 12 months period (243,722) spanning six individual programs with four global OEMs.
Guardian, Seeing Machines’ Aftermarket driver distraction and fatigue technology, is now installed into and monitoring 46,018 individual vehicles, compared to 36,933 in December 2021 representing a 25% increase over the 12-month period.
CEO Paul McGlone stated that:
“We are pleased with the continued progress made during the first half of the year. Transport safety has moved meaningfully up the regulatory agenda around the world and our market leadership, scalability and balance sheet strength means we are ideally positioned to deliver on our business objectives.
Whether inside the car, cabin or cockpit, our mission-critical technology is achieving strong take-up by a range of customers.
Whilst we have contended with some industry wide supply chain challenges relating to automotive manufacturing, we expect the impact of these to ease on our Aftermarket business in the second half of the year and are confident of meeting FY2023 expectations.”
Analyst Opinion – a Target Price of 24.3p
Consensus expectations for FY2023 are for revenue of $53.9m and EBITDA of $(12.7m).
John-Marc Bunce at Cenkos Securities has a Buy recommendation out on the group’s shares, with a 23.8p Target Price.
His estimates for the current year to end June 2023 are for $53.5m ($35.6m) sales with a reduced adjusted pre-tax loss of $15.2m ($16.9m) and ending the year with a $6.4m net cash position.
The heavier spend in the coming year, he reckons, could see a $16.7m net debt, but with $62.6m revenues and a significantly reduced loss of $6.6m.
For the 2025-year Bunce estimates a major advance, with sales of $85.2m and a very healthy $15.0m profit, worth 0.3c per share in earnings.
Conclusion – a medium-term view on potential profitability
This £302m capitalised group has continued to grow as an automotive technology leader in driver and occupant monitoring system technology.
Investors prepared to take a medium-term view could enjoy future participation in strong profitability.
The shares, which touched 13p in 2018, are currently trading at around the 7.25p level.