Interim report January – December 2019

Decisive nominations in the mid-sized car segment.   

October – December 2019

• Net sales totalled SEK 13,505 (14,961) thousand which corresponds to a decrease of 10 %.
• Operating profit/loss totalled SEK -35,204 (-15,628) thousand, operational costs are developing according to plan and reflects the investments in the new business area AIS (Applied Artificial Intelligence Systems) as well as to manage the large amount of ongoing procurements and project deliveries within business area Automotive solutions.
• Profit/loss after financial items was SEK -35,497 (-15,681) thousand
• Profit/loss after tax per share is negative.
• Cash and cash equivalents totalled SEK 145,384 thousand at the end of December
• In November, three design wins were received, one from a new Japanese OEM and the other two from a previously communicated European OEM. The estimated revenue of the order is SEK 100 million.
• After the end of the period, the company announced that a design win had been obtained for another Chinese OEM. The estimated order value is approximately SEK 50 million
• On 8 November, the EU Council of Ministers passed a law that starting 2022 gradually makes driver monitoring systems mandatory for all vehicles within the EU.

January – December 2019

• Net sales totalled SEK 49,817 (50,778) thousand which corresponds to a decrease of 2 %.
• Operating profit/loss totalled SEK -105,723 (-55,998) thousand.
• Profit/loss after financial items was SEK -106,269 (-56,438) thousand
• Profit/loss after tax per share is negative.

Estimated value of obtained design wins

As of the report for the second quarter of 2018, the company provides information on the estimated market value of obtained design wins at the time of publication of the report. The figures in brackets show the levels at the time of the publication of the preceding report, which in this case was October 25, 2019.

The total estimated value of the company’s 57 (53) design wins announced to date currently amounts to at least 1,500 MSEK (1,350) over a product life cycle.

If the company’s system had been used in all car models on existing platforms by the ten (eight) car manufacturers with whom design wins have been communicated, the estimated value would amount to at least 2,800 MSEK (2,650) over a product life cycle.

Comments from the CEO

The decision is approaching for DMS in the middle class segment

The decisive moment of the procurement of DMS (Driver Monitoring Systems) is moving closer. Soon all the major players in the automotive industry have nominated their partners. That, more than anything, has characterized Q4 2019. The car industry is ready, decisions are imminent, and the repercussions of the nominations will echo for a long time.

It all started in the summer of 2018. Then and there the market shifted. The RFQs (Request For Quotation) from the industry were less about premium cars and more about mid-class cars, globally the largest segment in the automotive industry. This trend was faster than expected. We had to adapt without delay to the new conditions. Since then, work at Automotive Solutions has been focused on finding the best and most streamlined technical and commercial solutions for high volume customers.

Now it has been a little over 18 months and the result of our hard work is starting to show. We have previously announced that we have been selected as the supplier to one of the world's largest vehicle alliances as well as South Korea's largest volume manufacturer.

The remaining major contracts will be settled shortly. There is no doubt that the standard for the 2020s for safety classified DMS is currently being set. The outcome of the procurement shows the way for what will be standard in high volumes. What is being procured in 2019-2020 and which goes into serial production at the largest manufacturers 2022-2023 will also set the standard for what Euro-NCAP and European legislation refers to as "advanced driver monitoring". What the majority of the largest manufacturers' cars chooses is the norm for the entire market and the supplier or suppliers that now are successful will have benefits that will remain for the foreseeable future. The leading supplier for the long term will soon be selected.

When new cars sold in Europe are equipped with advanced driver monitoring, starting in 2022 and fully implemented in 2026, accidents based on fatigue and distraction will become extremely uncommon and road safety will receive a much needed increase. There is every reason to believe that Europe is leading the way for the rest of the world and that we will see the same global spread of DMS as once with seat belts, airbags.

CES 2020

On January 7-10, CES took place. It is the World Championship in high-tech that takes place in the desert city of Las Vegas. This year, more than 170,000 visitors from all over the world came to exhibit or look at the latest in the tech sector. Smart Eye exhibited four innovative solutions that included measuring both the driver and inside the entire cabin, as well as showing the synergies of measuring both at the same time. By integrating DMS with interior cameras, you can achieve performance as well as cost benefits. We call the concept of multimodal interior sensing. It is the next large growth potential after DMS, nowadays mainstream in the automotive world, shown by the big interest and number of visitors in the booth.

Risks and setbacks

The fourth quarter and the beginning of the year have not only been positive. The Coronavirus has dampened the mood. First and most important to note is that our employees in Chongqing are all healthy and well, even though they are currently required to work from home. Both AIS and RI have parts of their supply chain in China, which is currently creating delays that we cannot yet quantify. Of course, we work hard to mitigate any effects.

In addition to the delays in the supply chain, the work for AIS goes forward according to plan and the customer interest is very large for the aftermarket product.

The delays in order intake for Research Instruments have continued in the fourth quarter.  But it’s not only grey skies as we are expecting a normalization in the near future.

Martin Krantz

CEO Smart Eye

For more information
Martin Krantz, CEO Smart Eye AB
Phone: +46 70-329 26 98
Email: martin.krantz@smarteye.se

Anders Lyrheden, CFO Smart Eye AB
Phone: +46 70-320 96 95
Email: anders.lyrheden@smarteye.se 

About Smart Eye

Since 1999 Smart Eye has been engaged in development of artificial intelligence (AI) in the form of eye tracking technology that understands, supports and predicts a person’s intentions and actions. By carefully studying eye, facial and head movement, our technology can draw conclusions about a person’s awareness and mental state.
    Today our eye tracking technology is used in the next generation of cars and is helping the automotive industry take an important step towards safer and more environment-friendly transport solutions. In the research field, Smart Eye’s solutions are providing new opportunities in complicated and real situations and are paving the way for new insights in the aerospace, aviation and defense industries as well as in the fields of psychology, neuroscience, medicine and academic research.
    Smart Eye’s head offices are in Gothenburg, Sweden, and the company also has offices in Detroit, Michigan (USA), Tokyo (Japan) and Chongqing (China). In addition to these offices of its own, Smart Eye also has partners, retailers and distributors in several locations in Europe, the USA and APAC. Smart Eye’s solutions are used around the world by more than 700 partners and customers, leading research teams, brands and laboratories, including the US Air Force, NASA, BMW, Lockheed Martin, Audi, Boeing, Volvo and GM, to name a few. 

    Smart Eye’s business is organized in three business areas, Research Instruments, Automotive Solutions and Applied AI Systems (AIS). In Research Instruments, Smart Eye provides advanced eye tracking systems for measuring and analyzing human behavior. In Automotive Solutions, the company provides eye tracking software for integration in vehicles. In AIS, Smart Eye provides both software and hardware for eye tracking integration in vehicles, specifically designed for retrofit for public transportation and commercial vehicles.
Visit www.smarteye.ai for more information.

Visit our investor web for more financial information: http://www.corp.smarteye.se/en/

This information is information that Smart Eye AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation.The information was submitted for publication, through the agency of the contact person set out above at February 20, 2020 at 8:30 am (CET).

Smart Eye is listed on Nasdaq First North Growth Market. Erik Penser is Certified Adviser and can be reached at +46-8-463 8000 or certifiedadviser@penser.se.