January- March 2024

• Net sales amounted to SEK 86.1 (64.3) million, an increase of 34% compared to the corresponding period the previous year. Business area Automotive continuing to drive the growth in the quarter.
• Gross Profit amounted to SEK 77.3 million, an increase of 41% compared to the corresponding period the previous year. Gross Margin amounts to 90% (85%) which is due to a higher share of software sales in the quarter.
• EBITDA amounted to SEK -23.0 (-44.2) million. The improved result is driven by higher sales and lower OPEX. One-time expenses due to restructuring costs impacted the result negatively with -11.6 million.
• Operating loss amounted to SEK -61.5 (-81.9) million. Depreciation of the surplus value created in conjunction with the Affectiva and iMotions acquisitions amounts to SEK -28.4 million.
• Earnings after tax per share are -1.53 (-2.33), and after full dilution -1.53 (-2.33).
• Cash and cash equivalents totaled SEK 161.2 million at the end of March. The cash ending balance including credit facilities amounts to SEK 243.6 million.
• Strong order intake during the quarter included 19 design wins for DMS, 5 design wins for Interior Sensing and 2 design wins for a commercial vehicle manufacturer (AIS). The total estimated order value for these design wins amounts to SEK 785 million based on estimated product life cycle projections.

Comments from the CEO

The most significant development in the first quarter is that our software license revenue from the automotive sector is gearing up as planned. The company is growing 34% year on year, with the majority of the growth coming from Automotive. The costs are kept firmly in control, and we are eagerly anticipating that the revenues ramp-up, driven by higher car production volumes. In the period we chose to increase our cash position by 150 MSEK with a directed share issue. After our last earnings call it became clear to us that we had the option to raise cash that way on favorable terms, as an alternative to a debt facility. We concluded this was the best alternative, in terms of risk minimization, and executed the deal in a short time frame with low discount.

Automotive
We are proceeding according to our plan. The Automotive business is growing with 138% (121% in Q4 2023). The increased growth rate comes mainly from production volumes in Japan and North America. The production volumes also continue to rise in South Korea while Europe and China will start to increase shortly. Most of the 322 car models have not started production, so higher growth in the future is to be expected. The non-recurring engineering is on a higher level than last year, due to all the recently won car programs. We had our first two OEM programs with Interior Sensing during the quarter. It is very welcome, and we continue to push forward on this new and exciting development track. We intend to become market leaders here as well.

AIS’s main achievement this quarter was securing a very big contract with a well-known European truck manufacturer, with a combined order value of 150 MSEK with start of production in 2025. We are pursuing several bus manufacturers that need a DMS system to comply with the upcoming European legislation starting this year. This will start to ramp up in Q3. The fleet customers are adding up and will during this year become a significant and welcome addition to the already fast-growing automotive business area.

Behavioral Research
The business area grew by 6% during the quarter, mainly coming from the eye trackers of Research Instruments. All product categories and geographic regions grew and helped make Q1 the best quarter so far for RI. Both iMotions and Media Analytics slowed down a bit, which probably has to do with the strong end of year effect we saw in Q4. Next quarter looks very promising for the entire business area. We showcased a new reference measuring product at World NCAP conference in Munich, which has gained a lot of market interest. The timing for this product couldn’t be better, given all the regulatory groundwork taking place currently.

Final Words
We are perfectly set up for the year to come. We have an uniquely strong automotive production program pipeline. We have a dedicated and enthusiastic organization in place delivering the production projects that we won. We have a solid research business as a base platform, and we have the exhilarating fleet and aftermarket business that quickly can turn into yet another cash cow. The inevitable ramp-up of the production programs is such that it supports our forthcoming profitability. We also filled up our war chest so that we are secure for anything unexpected that might occur. We have never been in a better position with Smart Eye.

Martin Krantz
CEO Smart Eye