Q2 2020 interim report
Sales growth despite Corona
Smart Eye Interim Report, January-June 2020
April – June 2020
- Net sales totaled SEK 13,848 (12,378) thousand which corresponds to an increase of
12 %. The increase in sales is mainly due to project revenues from the increasing number of active customer projects within Automotive Solutions.
- Operating loss totaled SEK -22,925 (-24,669) thousand, operating expenses are lower than the previous year depending on the measures the company has taken to handle the Corona situation. The positive sales development during the quarter also contributes to the improved result compared with the previous year.
- Profit/loss after financial items was SEK -22,998 (-24,803) thousand
- Profit/loss after tax per share is negative.
- Cash and cash equivalents totaled SEK 81,438 thousand at the end of June
- As a precautionary measure with the current market volatility due to the corona virus, Smart Eye decided to lower its operating costs to conserve cash. However, special emphasis is still placed on meeting the many delivery commitments the company has to the global automotive industry.
January – June 2020
- Net sales amounted to SEK 31,560 (24,084) thousand, which corresponds to an increase of 31%.
- Operating profit amounted to SEK -44,911 (-46,896) thousand, lower costs during the second quarter had a positive effect on earnings.
- Profit after financial items amounted to SEK -45,103 (-47,096) thousand
- Earnings after tax per share are 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 May 8th 2020.
The total estimated value of the company’s 81 (81) design wins announced to date currently amounts to at least 2,000 MSEK (2,000) over a product life cycle.
If the company’s system had been used in all car models on existing platforms by the twelve (twelwe) car manufacturers with whom design wins have been communicated, the estimated value would amount to at least 5,300 MSEK (5,300) over a product life cycle.
Comments from the CEO
External impact comes and goes, but the growth in DMS remains
The world is in a turmoil with Covid-19 reducing car use and with less travel, car sales decrease. Car manufacturers will have to adapt to declining sales numbers and many factories have closed during the second quarter. Under these circumstances, it’s not far-fetched to think that manufacturers will also reduce investment in the next generation of security systems. But that is not what we see happening. Instead, the industry continues the path it has set and is investing at a high pace for the introduction of increasingly advanced driver support systems. It’s one of the most important differentiators for new cars in the 2020s. We see an uninterrupted demand for our products and services with only a slight delay due to Corona. The time has come for DMS and like seat belts and airbags, it’s self-evident in new cars from the mid-2020s.
Market analysis Automotive Solutions
It may be appropriate to recall the market analysis concerning DMS procurements that was made in the quarterly report for the third quarter of 2019. Then we informed that car companies whose share of total world production was at least 20% were to decide in Q3 and that another 20% would be decided starting in 2020. The result has been very favorable for Smart Eye with an outcome that does not leave much to be desired from the first round of procurements, which we have communicated between November and March. The second round of procurements is on its way, with only minor delays due to Corona. Without anticipating the results of the next round of procurements, we can say that it continues to look very promising and we expect that our strong technology and skilled employees will ensure that the success continues.
One would think that Corona would put a spoke in the wheels for DMS, but we have not seen that. We see that the interest from customers is at least as strong as before, and in addition, they have begun to show a strong interest in the next generation of technology that was shown at CES at the beginning of the year. It is a technology that makes it possible to measure inside the entire cabin and in addition to DMS also keeps track of whether there are children, pets, keys, telephones, or the likes left in the car. In addition, you can measure seat belts and turn off airbags, thus replacing other expensive sensors. It is a very exciting opportunity that is relevant regardless of the car’s self-driving level, and we are surprised by the power of the customer response during an ongoing pandemic. We see this as a strong opportunity for Smart Eye to expand its offering and thereby increase the value added per car, starting around 2025. We are currently exploring together with several OEMs how we can best industrialize the new innovative solution.
Effects of the pandemic
Covid-19 affected all our operations during the quarter. We have created routines for people to work at home to the greatest possible extent and all customer contacts take place online. Safety for staff, customers and suppliers has been in focus. We have taken advantage of the governmental short-term furlough program and reduced all variable costs, partly as a precautionary measure and partly to adapt to our customers who have also implemented similar measures. If the pandemic continues to slow done, we are ready to shift the pace when the time is right.
The aftermarket system, primarily aimed at the Chinese market, was scheduled to launch at the end of this year. Corona has had a marginally negative impact on the schedule due to the impact on suppliers, the reduction in working hours and other savings. The shifted schedule is in line with customers’ propensity to invest and follows market dynamics. We expect that the delay will not have a significant impact on our business plan and that we will start during the first quarter of 2021.
The market for Research Instruments stalled sharply in the second half of March to slowly start up again in the second half of Q2. The decline we are seeing now is a result of the uncertainty among universities and researchers, which means that investment decisions are being postponed. We expect that it will go back to normal as the pandemic’s grip loosens.
In summary, the company is prepared to accelerate as soon as external circumstances allow. A big thanks to all employees who patiently fight on and make the success a fact no matter what difficulties we face.
CEO Smart Eye
For more information
Martin Krantz, CEO Smart Eye AB
Phone: +46 70-329 26 98
Email: firstname.lastname@example.orgAnders Lyrheden, CFO Smart Eye AB
Phone: +46 70-320 96 95
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 defence 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.
This information is information that Smart Eye AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above at August 26, 2020 at 8:30 am (CEST).
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 email@example.com.
8.30 AM CEST / 26-Aug-2020 / Smart Eye (SEMM:SEYE)