Year-end report January - December 2022

A Record Number of New Design Wins

October - December 2022

• Net sales amounted to SEK 55.3 (43.7) million, an increase of 27% compared to the corresponding period the previous year. Underlying invoicing was approximately SEK 9 million higher during the quarter, but as iMotions started periodization of recurring revenue as from Q2 2022, this revenue will instead be recognized over the contract period. With the two above effects in consideration, the organic growth for the total group was 12%.
• EBITDA amounted to SEK -60.6 (-21.1) million. The lower result is largely due to an addition of resources to deliver on the already won projects and further development of Driver Monitoring Systems (DMS) and Interior Sensing. The result is also burdened by one-time costs, mainly associated with the funding process that took place during the fourth quarter and finalized in the first quarter of 2023. During Q4 a cost reduction program was also carried out that generated one-time costs in the quarter. The total one-time costs in the quarter amounted to SEK 9 million, where of the costs associated with the cost reduction program was SEK 2 million.
• Operating loss amounted to SEK -100.1 (-43.6) million. Depreciation of the surplus value created in conjunction with the Affectiva and iMotions acquisitions amounts to SEK 29.7 million.
• Earnings after tax per share is -4.46 (-2.05), and after full dilution -4.46 (-2.05).
• Cash and cash equivalents totaled SEK 62.7 million at the end of December.
• In December, the Board of Directors in Smart Eye communicated the intent to resolve on a fully covered rights issue of approximately SEK 325 million. The decision was taken to ensure that the company can continue to invest in the long-term development of the future DMS generation and Interior sensing. The funding process was finalized in late February 2023, with total proceeds of approximately SEK 324 million before deduction of transaction costs.
• During Q4 the company was awarded a record number of new design wins, representing up to 100 car models, with a total estimated value of SEK 1,450 million. There were several significant contracts signed in the quarter, and the largest one represented up to 53 new Driver Monitoring System (DMS) design wins with a new North American car manufacturer. The estimated future revenue of that single contract is SEK 800 million, based on product life cycle projections.

January - December 2022

• Net sales amounted to SEK 219.5 (109.7) million, which corresponds to an increase of 100%. The full year organic growth was 14%.
• Operating loss amounted to SEK -343.0 (-130.9) million. Depreciation of the surplus value created in conjunction with the Affectiva and iMotions acquisitions amounts to SEK 111.1 million.
• Profit/loss after financial items amounted to SEK -344.1 (-131.2) million.
• Earnings after tax per share is -15.31 (-5.99), and after full dilution -15.31 (-5.99).

Comments from the CEO
Since our last quarterly report, we have secured 324 MSEK in funding that will take us all the way to profitability in 2024. The interest in the rights issue was high. It was concluded in February according to schedule without having to utilize the guarantees, a show of strength. We have also had a never-before-seen inflow of contracts for new car models. We started the fourth quarter with 94 design wins and ended the quarter with 194. We started 2023 strong with 23 more secured models already, with an industry leading total of 19 OEMs.

Automotive
We have recently commissioned a thorough study and analysis of the automotive market in the light of the delays experienced by the industry during the pandemic. Some of the results are worth sharing here, as, for example, the estimates on the development of the Driver Monitoring Systems (DMS) market. The pre-Covid estimates are added for comparative purposes: 

Conservative Estimation of market size, before and after the pandemic and the following supply chain effects.

Notable is the significant decrease in the expectation of market size in 2024 and 2025, due to the delays in the industry, while as of 2026 there is a substantial increase in volume expected, bringing the two estimations closer again. This is mainly because of the European volume of 18,5 million vehicles, driven by road safety legislation. It’s notable to see the large proportion of the world market being delivered in Europe until 2026. The non-European part of the market is surely more difficult to assess, but we believe there to be an upside potential. This study and analysis is the foundation for our stated financial goal of being cash flow positive in 2024, the year when the world production of DMS hits 6,5 million units. Given the recent streak of design wins and our expectations on the upcoming procurements, we confidently reiterate our targeted market share of at least 40%.

Behavioral Research
The research side of Smart Eye consists of three business units that all show profitable growth in the fourth quarter. Together they have had a revenue of 41 MSEK this quarter with 170 MSEK on full year basis. The organic growth continues at high levels and was 15% in the quarter. As the effects of the pandemic are abating, we expect further momentum for this business area for the year to come.

Final Words
We have set the stage for continued success by winning more automotive business than anyone else in the industry, by securing funding that lasts until breakeven and by having a vibrant research business unit that is back on profitable growth. The potential of the fleet product AIS and Interior Sensing has the potential to further improve growth and profitability in the years ahead. 

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

Martin Bjuve, CFO Smart Eye AB
Phone: +46 70-257 69 35
Email: martin.bjuve@smarteye.se
About Smart Eye

Smart Eye is the global leader in Human Insight AI, technology that understands, supports, and predicts human behavior in complex environments. We are bridging the gap between humans and machines for a safe and sustainable future. Our multimodal software and hardware solutions provide unprecedented human insight in automotive and behavioral research—supported also by Affectiva and iMotions, companies we acquired in 2021.
 
In automotive, we are leading the way towards safer and human-centric mobility through Driver Monitoring Systems and Interior Sensing solutions. Our technology is embedded in next-generation vehicles and available as a standalone aftermarket solution for existing vehicles, fleet, and small-volume OEMs.
 
Our industry-leading eye tracking systems and iMotions biosensor software enable advanced research and training in academic and commercial sectors. Affectiva’s Emotion AI provides the world’s largest brands and market researchers with a deeper understanding of how consumers engage with their content, products, and services. 
 
Smart Eye was founded in 1999 and is headquartered in Sweden with offices in the US, UK, Germany, Denmark, Egypt, Singapore, China and Japan. A publicly traded company since 2016, our customers include NASA, Nissan, Boeing, Honeywell, Volvo, GM, BMW, Geely, Harvard University, over 1,300 research organizations around the world, 70% of the world’s largest advertisers and 28% of the Fortune Global 500 companies.
 
Visit www.smarteye.ai for more information. 
 
Visit our investor web for more financial information: http://www.corp.smarteye.se/en/
Smart Eye is listed on Nasdaq First North Growth Market. Erik Penser is Certified Adviser.
This information is information that Smart Eye is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2022-10-20 08:30 CEST.