Seeing Machines announces strategic shift in its business model

Seeing Machines Limited (LON:SEE) expects revenues in the current fiscal year to be roughly on par with those in the fiscal year just ended as it implements changes to its Fleet division’s business model.

In its audited results for the year to the end of June the computer vision technology company reported a surge in revenue to A$30.7mln from A$14.2mln the year before.

The Aussie firm said revenue momentum accelerated throughout the year.

READ Seeing Machines sees increase in revenue momentum

The key driver for the rapid revenue growth last year was the Fleet business, with sales up more than 89% year-on-year.

Seeing Machines recently initiated a comprehensive business review in order to facilitate its transition to a pure original equipment manufacturer (OEM) supplier with high-margin services to provide revenue across multiple transport sectors. Henceforth, the group will focus on ongoing development of driver monitoring systems (DMS) technology, while partnering with distributors in the fleet business and others in order to reduce direct cost in the business.

Given the transition of the Fleet business model, it is expected that sales revenue in this division in the year to the end of June 2019 will remain in line with that reported for the fiscal year just ended.

Automotive sales increased five-fold to A$8mln from A$1.6mln last year and the expectations are that Automotive sales revenue will become a significant part of the group’s revenue over the next two to three years.

Gross margin for the group was 25% (2017: 5%) with gross profit totalling A$7.6 million (2017: A$0.7 million), largely because of a greater proportion of the revenue coming from the high-margin Automotive, Mining and Rail markets.

The loss before tax widened to A$36.0mln from A$28.6mln the year before, largely as a result of an increase in research & development expenses to A$20.2mln from A$15.9mln the year before and a rise in corporate services expenses to A$10.0mln from A$6.6mln the previous year.

Cash at 30 June 2018 stood at A$42.8mln, up from A$18.0mln at the end of the year, following a successful £37.4mln fund-raising exercise in January.

READ Seeing Machines increases size of fund raise as investors snap up shares

“A move to mandatory safety regulation across all transport sectors around the world is gaining strong momentum – this provides us with extensive opportunities to supply DMS to global OEMs and Tier 1 partners across all vehicle classes,” said Ken Kroeger, the chief executive officer of Seeing Machines.

“As a result of our internal review, we are transforming the business model of our Fleet business to improve the deployment of capital and resources across the group. At the same time, we are seeing substantial and growing demand from the global automotive sector for our DMS technology, which recognises the key role it is playing in transport, as autonomy and safety continue to drive the global agenda,” he added.

Learn more about the Guardian Backup-driver Monitoring System (BdMS), our latest retrofit solution that facilitates safe testing of semi-autonomous and autonomous vehicles in real world conditions https://t.co/Do6QPjskLu #seeingmachines #roadsafety #SEEGuardian

— Seeing Machines (@seeingmachines) September 18, 2018

Shares in Seeing Machines were down 0.32p at 6.5p in early deals.

Story by ProactiveInvestors