Seeing Machines Limited (SEEMF) H1 2025 Earnings Call Transcript

2025-04-03 05:09:06 ET

Seeing Machines Limited (SEEMF)

H1 2025 Earnings Conference Call

April 02, 2025, 7:00 AM ET

Company Participants

Paul McGlone - Chief Executive Officer

Martin Ive - Chief Financial Officer

Peter McNally - Equity Research Analyst, Stifel

Colin Barnden - Principal Analyst, Semicast Research

Richard Schram - Technical Director, Euro NCAP

Mike Lenne - Chief Safety Officer

Conference Call Participants

Presentation

Unidentified Company Representative

Thank you very much indeed. Channel Number One. Hey, gentlemen, thank you very much indeed. I think that's all, last few people walking through. Thank you. To the attendees online, please feel free to submit your questions just using the Q&A tab situated on the right hand corner of your screen. And of course management will take time to look at those questions at the Q&A point. When it does come to the Q&A session for those in the room, I will hand you the microphone. So please bear with me as I wait my way up and down the room. So, Paul, if I may, over to you, sir. Thank you.

Paul McGlone

Thank you very much. Welcome, everybody, and thanks very much, for taking the time to attend this event in-person. We're also -- we'll be recording the events and hosting online as well. So we have a full house here today, 60 to 70 people, and we have, over 220 people online. So reasonably well attended. The format for today is, Martin and I will go through a presentation that covers the results, but I think this time around, we're going to place an emphasis on outlook and some of the more recent events that we have talked about, but I think important to consolidate, whilst everybody's here.

We're then going to have a panel discussion and we have Richard Schram from Euro NCAP, Colin Barnden from Semicast, Mike Lenne from Seeing Machines hosted by Peter McNally from Stifel. And I'm sure everybody will find that, a really interesting and, frankly, quite unique experience because it's not often you get a group of people like that who are eminently qualified to talk about the regulatory landscape and how it impacts the industry that we're in. So please enjoy that and save up your questions either for the end of the session or afterwards.

We'll then have a Q&A and that Q&A can be live. We'll invite questions online as well. And then, we have a demo set up next door, which, Damien, one of our key engineers here will take groups of around 15 at a time through. So 10 or 15 minutes, 15 at a time, and we'll be looking there at the technology that we've deployed through Magna in the mirror. So you will see the actual mirror, in place, slightly modified so that we can put a TV screen in it. But you will see that it is real. It's not fake. It's in cars. It's in production and it performs at a high degree of -- with a high degree of capability.

You also see some new tech that we're developing and have recently announced around 3D, quite important for our future. Bringing depth into the equation enriches features that quite profoundly change the safety case for our customers going forward. And then you'll also get to see, what I know everybody, including me, has been waiting for some time, which is the new Guardian 3 unit, for our aftermarket business. And I will pass this around the crowd. It's essentially a black plastic box. I don't know what you'll actually do when you touch it, but you will get a chance to touch, a product that is, run off our full production line in the last few weeks. So this is it. But as we say in Australia, it is a boomerang, so please make sure it comes back.

So look, just with regard to questions, we've been asked 50 or 60 questions already online, and I've sort of structured those in broad themes that I think this presentation should cover most of. There are some that are a bit more egregious that I won't cover in an open forum. But I'm quite happy to take those questions one-on-one later. No problem at all. We should leave no rock unturned today. So that's my commitment to you. But before I get into the material, there's really a four point message, for this presentation and for all of you rather patient shareholders.

The first is, what is going on with automotive royalties? What are we thinking about the July '26 GSR legislation and the impact that will have on the growth rate of automotive royalties between now and then? We all know that we had an unannounced and disappointing reduction in our royalty flow in Q4 last year, December quarter last year. Prior to that, growing on average 20%, 25% a quarter and we thought we'd have a linear pathway to July '26. So that theory was debunked in December. But what we do know is that in July '26, the cars that are sold in Europe will have a camera-based DMS system and we'll cover that in a bit more detail shortly.

So the first point we want to get across, not in order necessarily, but there's a strong degree of comfort and conviction around the growth rate in automotive royalties and that is the primary factor that moves us from where we are to profitability and growth into the future. Very confident about that. Generation 3 is the second of the four points. Lots of problems. I'll talk about what those problems were and how they've been resolved. And I'll just start passing this around now, and you can touch it, if you wish. But we are now in production with Generation 3, and we've started shipping product. So the constraint that we've had that's created the volatility in revenue for our aftermarket business has largely been supply, not demand. So our intention is that or our expectation is that, that constraint is now removed and we should see a solid path forward....

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