Todays IC8 Jun 2018 06:24
Seeing Machines
The World Health Organisation estimates that more than 1.3m people die in road accidents every year. Of course, these are not always caused by human error, but any safety features that can monitor and ultimately protect drivers could make a real difference. Seeing Machines (SEE) seeks to address this through its Driver Monitoring System (DMS) technology, which gauges whether drivers seem drowsy or distracted. DMS can issue a series of alerts before acting automatically to slow or stop vehicles, and is used in trucking and transport fleets, aviation and rail businesses. It�s easy to see how such products appeal � but is a revenue CAGR of 139 per cent truly feasible?
Sink:
In May, Seeing Machines cut its sales guidance for the year to June 2018 from A$38m-A$43m (�21.5m-�24.3m) to A$30m-A$35m. The group�s manufacturing partner has faced a global shortage in certain components, creating delays in the supply chain; associated revenues are now expected to fall outside the current financial year.
Pre-tax losses widened for the six months to December 2017, from A$14.1m to A$16.7m � largely as a result of an increase in R&D expenses from A$6.2m to A$10.5m.
Swim:
The group�s historic growth trajectory is still impressive. Half-year revenues to December 2017 rose by a whopping 267 per cent to a record A$14.6m, buoyed largely by an almost sevenfold increase in sales within its automotive segment.
Last month, the company�s shares climbed on the news that the European Commission is considering proposals to mandate that new vehicle models are equipped with advanced safety features like Seeing Machines� DMS. If the European Parliament and Council approves these recommendations, SEE may well enjoy heightened demand.
Perhaps most importantly of all, on 4 June Seeing Machines announced a programme design win with a US-based automotive original equipment manufacturer (OEM) � its largest automotive win to date. The group now expects to deliver its driver monitoring technology into multiple vehicle platforms for mass production from 2020. The deal could be worth over A$50m in revenues, with the first material production revenue expected to be recognised in the company�s 2021 financial year. We reckon this deal should drive broker upgrades.
We�re concerned by management�s recent revenue downgrade, and we�re also awaiting a new chief executive. But with sales growth set to grow � particularly in light of the latest OEM win � and legislative change potentially moving in Seeing Machines� favour, its AI-driven technology may prove successful in the long term. Swim.
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