Smart Eye

July - September 2022

• Net sales amounted to SEK 50.9 (30.9) million, an increase of 65% compared to the corresponding period previous year, of which 23% was organic growth. Underlying sales in the quarter was SEK 10 million higher, but due to change in accounting principles of recurring revenue in iMotions this revenue will instead be recognized during the coming twelve months.
• EBITDA amounted to SEK -55.6 (-21.6) million. The lower result is mainly due to a continued addition of resources. These investments are made in order to deliver on the already won projects and further development of Driver Monitoring Systems and Interior Sensing
• Operating loss amounted to SEK -95.1 (-46.8) million. Depreciation of the surplus value created in conjunction with the Affectiva and iMotions acquisitions amounts to SEK 29.3 million.
• Earnings after tax per share is negative.
• Cash and cash equivalents totaled SEK 82.2 million at the end of September.
• The Board and management are investigating financing alternatives in order to secure that the company can continue to invest in the long-term development of the future DMS generation and Interior sensing. The process is expected to be finalized during the fourth quarter.
• In October the company was selected by its existing Korean customer to deliver its world- leading Driver Monitoring System (DMS) software to six additional car models on a new platform. The estimated revenue of the order is SEK 100 million based on estimated product life cycle projections.
• In July the company received one additional Driver Monitoring System Design Win with a North American car manufacturer. It is estimated to go into production in 2024 and the revenue for the order is estimated to SEK 10 million, based on product life cycle volume projections.

January - September 2022

• Net sales amounted to SEK 164.2 (66.0) million, which corresponds to an increase of 149%. The organic growth amounted to 25%.
• Operating loss amounted to SEK -242.9 (-87.3) million. Depreciation of the surplus value created in conjunction with the Affectiva and iMotions acquisitions amounts to SEK 81.4 million.
• Profit/loss after financial items amounted to SEK -243.4 (-87.3) million.
• Earnings after tax are negative.

Comments from the CEO

The strong organic growth continues in the third quarter, up with 23% since last year. We are also growing 2% compared to last quarter, discounting the effect of new accounting principles for iMotions. Basically, iMotions Software as a Service (SaaS) revenue will from Q3 and onwards be booked with 1/12th per month for the yearly subscriptions, which will create a transient effect lasting until Q2 next year. It’s a sign of strength that so many customers are onboard with the transition towards SaaS.
The strong organic growth is achieved in a difficult environment where global supply chains are disrupted, reverberating into many industries around the world, including ours. We are not out of the woods quite yet, but the production programs are starting to ramp up.

Automotive
A short summary of the status of our automotive business.

• We have 100 design wins with 14 OEMs, six more than a quarter ago. This is industry leading, and more is to be expected. We are well established in every geographic region of importance.
• The value of all the design wins is estimated to be SEK 2.5 billion.
• 6 OEMs have now started their series production.
• In October Polestar 3 was released, a new electric flagship SUV in the Volvo family. Smart Eye proudly announced that we are the chosen technology partner for DMS software.
• We continue to invest in delivering on existing production programs as well as in the future DMS generation and in Interior Sensing.
• We continue to be active in several large procurements globally and there are basically no new car platforms that aren’t prepared for camera based DMS.
• Interior Sensing is starting to be procured with expected start of production as early as 2025.

Behavioral Research
The organic growth continues and is now 33%. The growth is 104% but keep in mind that with previously used accounting principles it would be even higher since the revenue is burdened with SEK 10 million, corresponding to a growth of 158%. The Research Business Area is not only showing profitable growth, but we also see clear trends that we are surpassing pre- Covid levels on certain geographies and segments.

Final Words
We are growing at a steady pace that will increase as more and more car models go into production. At the same time, we see risks of delay in production programs and supply chains. We therefore constantly adapt our cost structure to the volatile market realities. We have also started a process to investigate financing alternatives that will shore up the company in the interim between now and when the volumes are ramped up. This will enable us to continue investments for the longer term in the future generation of DMS and Interior sensing. With cost adaptions and long-term investments, we stand even stronger than before, both today and tomorrow.

Martin Krantz
CEO Smart Eye