Smart Eye Interim Report 1 January–30 June 2017

Summary Q2 2017

• Net revenue amounted to TSEK 12,114 (10,486), equivalent to an increase of just over 15%.
• The operating result was TSEK –9,306 (–3,867), which is in line with the determined expansion with investments in primarily personnel, marketing and sales activities.
• The result after financial items was TSEK –9,435 (–4,240).
• Profit per share was negative.
• Cash and cash equivalents amounted to TSEK 43,244 as at the end of June.
• During the period, the establishment of a sales office in the USA proceeded according to plan, with the recruitment of two sales executives with considerable experience from sale of advanced technical systems.
• Smart Eye was awarded a new design win from a European premium vehicle manufacturer after the end of the period.

January–June 2017

• Net revenue amounted to TSEK 19,747 (16,077), equivalent to an increase of just over 22% compared to the previous year.
• Operating profit amounted to TSEK –18,469 (–7,688).
• The result after financial items was TSEK –18,717 (–8,464).
• The result after tax per share was negative.

Comments from the CEO

Q2 2017 shows that Smart Eye is continuing to develop according to plan. Thanks to intensive cooperation with our customers, we achieved a 74% revenue increase for the Applied Solutions business area. After the end of the reporting period, we were awarded our third design win.

The automotive industry is making major investments to develop technology to improve active safety. A large number of procurement procedures are being held by strategically important vehicle manufacturers. The companies which win these contracts in these early development phases have good opportunities to continue to develop together with OEM. We consider Smart Eye to be well-positioned to be one of the nominated companies, which in turn indicates stable income flows for the Applied Solutions business area for many years to come.

For many years, the automotive industry has worked to increase traffic safety. The initial focus was on developing passive safety, which concerns minimising the consequences of any accidents that occur. Today, there is also focus on increasing active safety by implementing systems to reduce the risk of accidents even occurring. The aim is for traffic accidents to be something we can read about in the history books. This will require autonomous vehicles.

Autonomous vehicles are defined at five levels, of which level 1 means that the vehicle alerts the driver of any risks, and level 5 signifies that the vehicle is completely autonomous, with no interaction with the driver being required. Until recently, no vehicles had achieved higher than level 2, but this year the first level-3 vehicles were presented by the automotive industry. This major new step means that in certain specific situations, the driver does not have to steer the car at all. Smart Eye believes that driver monitoring will be a central element of autonomous vehicles up to and including level 3. The result will be cars that can adjust their rhythm and distance to other vehicles, but that are also completely autonomous in certain traffic situations. The system is a major step forward for traffic safety.

The work on Smart Eye’s two design wins is running according to plan and we are an attractive collaboration partner, thanks to good access to and knowledge of the latest AI technology. In August, Smart Eye was awarded a third design win from an OEM in the premium segment that Smart Eye previously has not worked with. Together with a leading Tier 1 supplier, we will deliver a Driver Monitoring system for a vehicle model based on the vehicle manufacturer’s next production platform. The model is expected to go into production in 2019.

The company and Research Instruments products enable customers to measure, monitor and analyse human behaviour in various interesting situations. Development in the university world, space research and the aviation industry, for example, is positive, and Smart Eye is continuing to consolidate itself as a reliable supplier of eyetracking systems to help customers to understand human behaviour. The high investment rate within Research Instruments is in accordance with the long-term plan. This plan requires us to be there for our customers, in order to give on-site support when needed. This means that we are very happy to welcome our first American employees in Detroit!

This information is information which Smart Eye AB (publ) is required to disclose under the EU Market Abuse Regulation. The information has been provided by the contact person below for publication on 22 August 2017 at 08:30 CET.