Seeing Machines Ltd (AIM:SEE, OTC:SEEMF) reported first-half results in line with guidance and announced that production has begun on its largest-ever contract, a US$82 million interior cabin monitoring program for a large German automotive manufacturer.
Underlying revenue growth of US$25.6 million in the six months to 31 December was up 28% compared to a year earlier, as flagged in a pre-close update.
If including one-off Magna exclusivity payments, reported revenue growth was 5%.
OEM revenue from Automotive and Aviation was US$11.4 million, down from US$14 million last time, but high margin-per-vehicle royalty revenue from automotive production increased 35% to US$4.2 million of this.
Annualised recurring revenues was up 22% to US$14.5 million.
Aftermarket (fleet and off-road) revenue increased 38% to US$14.3 million.
A net loss of £19.8 million compared to £4.5 million a year earlier, with gross profit reduced due to a lower proportion of revenue from license fees, a higher proportion of revenue from hardware sales and a lower margin on services revenue, as well as increased development expenditure.
Development expenditure is expected to reduce in the second half.
Net operating cashflows improved to a net outflow of US$1.1 million from US$6.8 million, with the company stressing it maintained a disciplined focus on working capital management.
Cash of US$22.2 million was in the bank at the half-year stage, with a receivables and inventory balance of US$31.1 million with working capital unwind of $5-6 million expected in the second half.
Looking to the rest of the year, Seeing Machines has a typical weighting to the second half, and the board has retained its expectations that the full-year financial performance will be in line with consensus
Chief executive Paul McGlone hailed the start of the cabin-sensing project with the German OEM client on schedule and said “we look forward to volume from the ramping up over the course of the next few quarters as production gets into full swing”.
The project is groundbreaking as both driver and occupant are monitored by using a single camera system for the first time.
“With more than 1.5 million cars on the road featuring our technology today, generating high-margin royalty revenue, this milestone will play an important role in the achievement of Seeing Machines’ financial goals.”