TIDMSEE
RNS Number : 3359N
Seeing Machines Limited
08 August 2017
Seeing Machines Limited
("Seeing Machines", the "Company" or the "Group")
Seeing Machines Year End Trading Update and Outlook
8 August 2017
Seeing Machines (AIM: SEE), an industry leader in computer
vision technologies which enable machines to see, understand and
assist people, is pleased to confirm that the Group expects to
report trading results for the full year to 30 June 2017 ahead of
market expectations, aided by other income accruals above
expectations. Total sales revenue for the year was in excess of
A$13 million.
Company revenue achieved was more than double that of FY16 on a
like-for-like basis(1) . Revenue momentum accelerated through the
year with second half sales being more than 250% that of first half
sales. The key growth driver was the Fleet business with sales more
than 250% that of the previous year. Automotive sales also grew
strongly year on year by more than 50%. The Company also achieved
positive gross margin for the year due to stronger second half
contribution from Fleet monitoring MRR(2) from its growing
connected customer base.
The significant growth of the Fleet business was driven by both
direct sales and from new Distribution partners - this growth
momentum will be further supported by contribution from new
Telematics partner channels in FY18. In addition to hardware
revenue, monthly recurring revenue ("MRR") is generated for
monitoring and analytics services pursuant to a SaaS
("Safety-as-a-Service") model with multi-year contracts. A key
metric for Fleet growth is Total Contract Value ("TCV"), which
increased from A$7.9M at 30.06.16 to A$36.5M at 30.06.17 (360%
growth). At year end, more than A$22M of this value has not yet
been recognised as revenue, with approximately half of this
contract value converting to revenue in FY18 and the remainder over
the following two years. Market studies project the annual
addressable market opportunity for Fleet to exceed A$1.5 billion
within five years, with Seeing Machines recognised as the pioneer
in this market. Seeing Machines has secured Fleet financing with
several finance companies and anticipates that up to 10% of Fleet
revenue can be factored.
The robust growth in Automotive revenue came from both
development payments from awarded programs and funded engagements
with leading OEMs and Tier 1 firms who are working with Seeing
Machines to evaluate integration of the Company's Driver Monitoring
System (DMS) technology into new model programs. The Company
released its DMS solution for the world's 1(st) "hands-free"
semi-autonomous car, launching later this year from a leading US
OEM. In addition, the Company is deeply engaged with other leading
global OEMs as well as an expanding ecosystem of Tier 1 partners.
To date the Company has secured sourcing contracts for eight
production vehicle models with a strong and growing pipeline of OEM
Program opportunities in the next 12 to 18 months for mass
production starts in the CY2019/2020 timeframe. As the market
develops, smaller program wins are expected to provide lifetime
revenue of up to A$10 million, medium program wins providing
between A$10 to $25 million in lifetime value and large program
wins delivering more than A$25 million in lifetime value, with
these revenue guidelines growing in accordance with the overall
market growth.
Market projections are for the Automotive DMS (OEM and
Aftermarket) addressable market opportunity for the Company to
exceed A$1 billion per year within seven years. Seeing Machines'
leading FOVIO DMS platform and processor is generating a high level
of customer interest and engagement worldwide, driven by
accelerating adoption of ADAS and Autonomous Driving technologies
and new HMI (human machine interface) technologies with further
applications such as All-occupant Cabin Sensing in development at
this time.
The Company continues to develop significant business
opportunities with global market leaders in the Aviation and Rail
segments with the first meaningful revenue contribution expected
this fiscal year after extensive positive trials, which is evidence
of the Company's ability to leverage its platform across multiple
end markets.
During FY17 the Company received an Australian R&D tax
incentive and a research grant for an Advanced Safe Truck Concept
("ASTC") program in collaboration with leading fleet operators and
OEMs - with both the FY16 and FY17 R&D tax incentives being
accounted for in the same period due to revised expectations of
receipt timing. Further research grants for the ASTC program and
new CAN-Drive semi-autonomous driving program are expected in FY18.
Cash and cash equivalents at 30 June 2017 totalled A$22M which was
ahead of expectations.
Seeing Machines CEO, Mike McAuliffe commented: "These results
show the strong traction in our core transport business segments
and are a testament to the hard work of the entire team. We are
confident that our leading technology platform being adopted by our
rapidly growing customer base will continue to fuel our growth. It
has been a break-through growth year for the Fleet business which
achieved widespread market recognition of the effectiveness of our
pioneering Guardian solution. We are excited by our product
progress and market reception to our leading FOVIO DMS platform in
the rapidly developing Automotive market and the developing
engagements with market leaders in Aviation and Rail. We are
building the Go-To company for full-stack DMS solutions,
Eye-tracking solutions and more broadly vision AI (artificial
intelligence) human sensing and assistance solutions - which we
believe will deliver exceptional growth and long-term value
creation for our shareholders."
The Company expects to release final FY17 results and audited
accounts in late September 2017.
Operational Highlights
-- Fleet has grown rapidly in FY17 with now over 130 Fleet
customers globally. This growth rate is expected to continue with
new presence in the UK/European market (Freshlinc announced as
first UK customer), a strong pipeline of US customer trials coming
through with high conversion rates to date and a strong APAC
distribution network established with strong local partners, such
as Kiattana in Thailand.
-- As part of Fleet's strategic Telematics partner strategy, the
Company signed its initial distribution agreement with MiX
Telematics ("Mix"), a global leader in fleet solutions, to design
and provide an integrated Guardian solution which will be promoted
by Mix across its large worldwide customer base.
-- The Company set an integrated Seeing Machines strategy which
retained the Automotive business within the Group to leverage a
common platform strategy and synergies between segments, and
ultimately create a more scalable and long term valuable company
for its shareholders.
-- Automotive completed the release of its 1(st) Automotive DMS
for the world's 1(st) "hands-free" semi-autonomous car from a
leading US OEM, with work on their follow-on models currently
underway.
-- Automotive sampled its FOVIO processor - the world's first
DMS processor SOC(3) . The FOVIO platform and processor are key to
the Company's strategy to establish market leadership in high
performance "full-stack" human factor solutions, enabling machines
to see, understand and assist people, while also enabling the
Company to deliver validated DMS solutions at scale across multiple
segments, channels and customers worldwide, all in a cost-effective
manner.
-- The Company has made tremendous progress during the year in
building an expanding ecosystem of leading Automotive Tier 1
partners to best pursue global OEM business opportunities, in
addition to having converted the original Takata Corporation
partnership agreement to a non-exclusive one.
-- Mike McAuliffe was appointed CEO to lead next phase of growth
by capitalising on the major market opportunities for our
technology and scaling the business globally. Further key
management hires were made globally, such as Nick DiFiore to run
the Automotive business, adding experience and expertise to the
team to help execution of its strategic plan.
Outlook
Further to the appointment of Mike McAuliffe as CEO, the Company
has done considerable work on its strategy and business plan and is
pleased to share the following preliminary outlook(4) .
-- Base Case Revenue expected to grow in-line with market
expectations for FY18, driven by strong momentum in Fleet, a
growing Automotive and Off-Road contribution and first meaningful
revenues from Aviation and Rail segments. Whilst there are
uncertainties around the timing ramp of any new markets, the
Company targets growing annual revenue to the sub A$100 million
region by the end of FY19.
-- The Company expects to deliver gross profit margins in the
low to mid thirty percent range for FY18, with additional gross
margin expansion of 500 to 1000 basis points (+5% to +10%) per year
for the next several years as the Company's business scales - to a
long term gross margin model of 60% to 70%+ which is consistent
with SaaS business models and high-performance IP processor
business models.
-- Given the Company's strategy to seize its first mover
advantage and scale major Fleet and Automotive businesses to market
leading positions - through continued investment in its Advanced
Platform Technology, Product Roadmap, Machine Learning
Infrastructure and a global support infrastructure for its
expanding customer base, the Company expects to potentially invest
up to A$50 million over the next two years to accelerate platform
and product development and build an infrastructure capacity to
support the sharp ramp in global customer programs. The Company
projects to achieve EBITDA breakeven by the end of FY19 with an
attractive EBITDA & Free Cash Flow margin profile accelerating
from that point on as the ensuing gross profit expansion
increasingly flows to the bottom line.
-- As the Company continues to advance its strategic business
plan and attracts market recognition for its leading technology
position, it is engaged in exploratory discussions with a number of
potential strategic partners - both industrial and financial - with
regards to various potential partnerships, R&D collaboration,
supply agreements and possible strategic investment in the
business.
Seeing Machines Executive Chairman, Ken Kroeger commented: "I am
really encouraged by the work that's been done by the team to
achieve these results. If I think back to 2014 when we were largely
focused on Off-Road (Mining) opportunities, we have successfully
leveraged that experience into a broad Transport strategy -
pioneering and achieving early leadership in DMS solutions across
the Fleet, Automotive, Rail and Aviation segments. I look forward
to working with Mike and the team to achieve our aggressive
medium-term growth targets in Transport and beyond that in further
emerging market opportunities for our technology."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Enquiries:
Seeing Machines Limited www.seeingmachines.com / +61
2 6103 4700
Mike McAuliffe, CEO Mike.McAuliffe@seeingmachines.com
Media enquiries Sophie.Nicoll@seeingmachines.com
finnCap Ltd
Ed Frisby / Emily Watts, Corporate
Finance +44 20 7220 0500
Tim Redfern / Richard Chambers,
Corporate Broking
Canaccord Genuity Limited
Simon Bridges +44 20 7423 8000
Richard Andrews
Alexander Napier
About Seeing Machines
Seeing Machines, (AIM: SEE) is an industry leader in computer
vision technologies which enable machines to see, understand and
assist people. Seeing Machines deploys its FOVIO machine learning
platform to deliver precision sensing and interpretation of heads,
faces and eyes for these purposes. A key application today is
Driver Monitoring Systems to assess drowsiness, distraction and
cognitive state which is a key enabling technology for Automotive
ADAS and Autonomous Driving as well as for Guardian, our Commercial
Fleet solution. The Guardian retrofit telematics solution combines
an in-cabin safety intervention system with cloud monitoring and
analytics services provisioned on a SaaS basis which prevents
accidents - saving costs and lives. Other markets include Aviation,
Rail and Off-Road as well as the broader precision eye tracking
market. The company offers a range of proprietary solutions from
embedded software to processors and system products. Seeing
Machines is headquartered in Canberra, Australia and has offices in
Melbourne, Tucson, Silicon Valley, Detroit and the UK.
1 Excluding one-off license fee to CAT and adjusting FY16 DSS
sales as if a royalty was earned on the gross sale instead
(2) Monthly Recurring Revenue
(3) System on Chip
(4) Forward-looking statements involve substantial risks and
uncertainties and actual results may differ materially from those
expressed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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