TIDMSEE
RNS Number : 2347N
Seeing Machines Limited
16 January 2019
Seeing Machines Limited
16 January 2019
Half year trading update
Seeing Machines Limited (AIM: SEE, "Seeing Machines" or the
"Group"), the advanced computer vision technology company that
designs AI-powered operator monitoring systems to improve transport
safety, publishes a trading update for the six months to 31
December 2018 ("H1 2019").
The Group is expecting to report revenue for H1 2019 of A$13.5m
(H1 2018: A$14.6m), which is in line with the Board's revised
projections following the review of the Fleet business completed in
September 2018.
The Board's expectation for FY2019 revenue to be approximately
in line with FY2018 remains unchanged.
Ken Kroeger, CEO at Seeing Machines, said:
"The momentum towards mandatory implementation of advanced
safety systems in all new models of vehicles around the world has
continued to build over the last three months of 2018 and we have
seen an increasing interest in our driver monitoring system (DMS)
capabilities across all our transport sectors.
"The transformation of our Fleet business is making good
progress as we hone our direct sales focus on profitable geographic
markets and industry categories. We are leveraging our channel
partners to grow the Guardian footprint, focusing on accelerating
installation rates to commence service delivery (24/7 monitoring),
which remains independently profitable.
"We had a series of productive automotive OEM and Tier 1
meetings at CES in Las Vegas last week. More generally, our
positive outlook on the DMS market globally was supported by the
significant emphasis and prioritisation at CES of semi-autonomous
Level 2 and Level 3 driving technology, whilst the introduction of
fully driverless vehicles at Level 4 and Level 5 is now anticipated
to be much further away than the industry had predicted. We
continue to focus on further strengthening our engineering
capability and optimising quality management to meet the expected
growth in demand for DMS."
Divisional review
Automotive
The compelling opportunity in Automotive continues to build as
Europe and North America both move towards mandatory driver
monitoring for cars, vans, trucks and buses. As a result, global
demand for camera-based driver monitoring technology is set for
continued growth, and industry commentators* anticipate that more
than 60% of all light vehicles produced globally will include
driver monitoring DMS by 2025. The Board expects to achieve a
significant share of this market given the limited competition in
DMS technology, the quality of Seeing Machines' technology, our
established market position and the formal agreements in place with
leading Tier 1 suppliers.
The Group has invested significantly in building further
capacity over the past 12 months and has hired more than 40
engineers. These additional resources have de-risked delivery on
existing automotive OEM programs, which represent projected revenue
of A$138 million based on OEM forecasted volumes (between 2019 and
2026 with the majority of that revenue to be recognised between
2021 and 2024), and will accommodate the ongoing growth in demand,
based on expected near-term program awards.
The Group's five existing automotive programs are on track and
at varying stages of development. Seeing Machines' second major OEM
program (Germany) has successfully progressed past the production
sample phase and is currently on track for a production launch
within the next 14 months. The third OEM program (Germany) is
moving through the second sample stage software development and
promises a volume launch in mid-2021. The fourth (North America)
and fifth OEM (China) programs are both successfully progressing
towards second sample stage of FOVIO chip solution, with first
production orders expected within the next 12 months.
In addition, Seeing Machines continues to respond to RFQs
(request for quote) across North America, Europe and Asia, with a
number of the Group's submissions being presented via multiple Tier
1 partners. Seeing Machines is currently engaged in six submitted
proposals (representing total additional revenue potential of
approximately A$140 million) with OEM sourcing decisions on the
majority of these programs anticipated before the end of FY2019.
The Group expects to be active in an additional three to four
market RFQs to be issued within the current fiscal half. One of
these opportunities is with an existing awarded Tier 1 and OEM to
expand Seeing Machines' DMS offering to nine additional vehicle
models with start of production in 2021.
Seeing Machines has recently finalised an additional
collaboration agreement with one of the largest global Tier 1
automotive parts suppliers, paving the way for more in-depth
technology sharing and collaboration toward additional OEM design
wins, and demonstrating continued, successful growth of Tier 1
collaborations across the industry.
Guardian BdMS (Backup-driver Monitoring System), the Group's
specially designed retro-fitted solution for test fleet
semi-autonomous and autonomous vehicles, is currently in active
pilots with some of the world's leading autonomous technology
developers in the US, and it is expected that these opportunities
will crystallise in 2019.
Aviation
In recent months, the Aviation division has entered commercial
deals, both of which are world first, with customers including the
Royal Australian Air Force, L3 Training Solutions for a major
Australian airline to deliver the Group's eye tracking technology
to improve training across the industry.
The Board expects these engagements to continue in number and to
grow in size as the aviation industry embraces technology to
enhance pilot training to better measure, tailor and advance
programs that will enable it to cope with expected increases in
aviation fleets and subsequent global travel.
Fleet
Following an in-depth review, the Group has established a new
leadership team and set in place actions that it believes will
stabilise the business in the current financial year and lay a
strong foundation for growth and profitability in the medium
term.
The short-term focus has been on cost reduction, primarily
through the closure of the North American business development and
operations teams. This will also help facilitate a greater focus on
higher-value potential markets such as UK and Europe, Australasia
and Latin America.
The sales effort has been better aligned to ensure improved
service and deeper penetration into both the direct and distributor
channels. As at 31 December 2018, the Fleet business now has nine
well established distribution partnerships across Australia, Asia,
Africa, Middle East and Latin America.
Seeing Machines will continue to deal directly with large,
global transport and logistics accounts where it has a proven track
record delivering its cutting-edge Guardian technology and
market-leading service for the safety of drivers and passengers.
Some of the more recent examples in this field include customers
such as First Group (leading transport operator in UK and North
America), major energy operator Total, and Tengizchevroil (TCO), a
Chevron company.
Installation rates of the Group's Gen 2 product were impacted in
the first half by delays in product availability owing to recent
manufacturing issues which temporarily affected the performance of
the FOVIO platform technology, now integrated into Guardian. Seeing
Machines has worked closely with its manufacturing partners to
resolve these issues and expects to be able to satisfy all existing
orders and meet continued strong demand in the remainder of the
financial year. Discussions with the Group's manufacturing partners
are ongoing and are aimed at streamlining ongoing distribution,
service and support and improving and optimising the manufacturing
arrangements of Guardian hardware. Customer feedback and user
experience will be integral in informing changes implemented to
reduce production cost and enhance hardware performance.
The Group will retain the growing subscription SaaS (Software as
a Service) delivery model, via its 24/7 Guardian Centre in Tucson,
Arizona. This services business is profitable on a stand-alone
basis and provides a regular and repeatable annuity style income
stream going forward. Improvement of installation rates within
customer fleets is a key focus in order to speed up delivery of
services via 24/7 monitoring and fast-track profitability of
individual deals.
Mining and Rail
Seeing Machines continues to grow its long-standing strategic
partnership with Caterpillar and Progress Rail. The Group is
currently discussing the consolidation of existing contractual
arrangements to simplify product offerings and allow Seeing
Machines to provide focused sales and marketing technical support
to this established partner.
It is the Board's intention that, in the longer term, any
consolidated agreement will provide next generation ruggedized
hardware for Rail and Mining operators and Caterpillar-specific
semi-rugged truck technology and will also allow Seeing Machines to
further expand its Guardian installed base across additional fields
of use beyond global rail and mining markets.
Board and operational management
During the last six months, a number of key appointments were
made to strengthen Seeing Machines' Board and management
capabilities and to address the challenges of today's environment
and position the Group to allow it to realise the potential of its
unique market position moving forward.
Board changes include the appointment of Jack Boyer OBE as
Chairman, Kate Hill as Non-executive Director and Luke Oxenham as
Finance Director. Within the senior management team, Ryan Murphy
joined as Chief Operating Officer and Paul McGlone was appointed
General Manager of Fleet.
The Group expects to publish its half year results in March
2019.
(*Source: Semicast Research)
Enquiries:
Seeing Machines Limited www.seeingmachines.com +61 2 6103 4700
Ken Kroeger - CEO
Sophie Nicoll - VP, Marketing & Communications
Cenkos Securities plc (Nominated Adviser
and Joint Broker)
Neil McDonald/Beth McKiernan/Pete Lynch +44 131 220 6939
Canaccord Genuity Limited (Joint Broker) +44 20 7523 8000
Simon Bridges/Richard Andrews
Instinctif Partners +44 20 7427 1412
Adrian Duffield/Kay Larsen/Chantal Woolcock
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
About Seeing Machines - www.seeingmachines.com
Seeing Machines (LSE: SEE), a global company headquartered in
Australia, is an industry leader in computer vision technologies
which enable machines to see, understand and assist people. The
Company's machine learning vision platform has the know-how to
deliver real-time identification and understanding of drivers
through Artificial Intelligence (AI) analysis of heads, faces and
eyes. This insight enables Driver Monitoring Systems (DMS), which
monitor driver/operator identification and attention and can detect
drowsiness and distraction across multiple transport sectors.
Seeing Machines develops DMS for the Automotive, Commercial
Fleet, Aviation, Rail and Off-Road markets. The Company has offices
in Australia, USA, Europe and Asia, and delivers multi-platform
solutions to industry leaders in each vertical.
DMS is becoming a core safety technology integrated into ADAS
offerings for the automotive industry, particularly with the
development of semi-autonomous and self-driving cars. DMS is also
increasingly seen to be an integral safety feature across the
Commercial Transport & Logistics industry globally.
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END
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