Smart Eye Interim Report January - March 2023 - Seite 2

We are pursuing our focus on cost control and increasing sales. We are expecting that both Behavioral Research and Automotive will increase their revenue significantly during the coming quarters. That together with high gross margins and tight control over costs and cash flow will bring us to profitability no later than the second half of 2024. The first quarter of this year was a very important steppingstone towards that goal. We decreased our OPEX with 10% compared to quarter four 2022. We also increased top line slightly more than expected primarily thanks to strong Research sales. Together with that we managed to decrease the working capital, we improved the cash flow from operating activities from -54 MSEK in Q4 2022 to -34 MSEK, ending the quarter with 239 MSEK in the bank. We are expecting the growth of sales to continue in the coming quarters without us having to increase the cost base in any significant way.

Automotive
We are still in the starting blocks for several of the large platform SOP:s with many of the world's largest car OEMs. In several cases the production has started but isn't ramping as fast as the original production plan schedules. Sometimes it's because of components and sometimes because of general car software architectural issues. We are carrying on with the development work and the organic revenue increase of 20% is mostly coming from NRE, development services. Another source is that the fleet and aftermarket product has started to sell albeit at low levels. We are very positive in our outlook that our customers will ramp up production in the coming quarters and are expecting growth at higher levels than the current 20%. The upcoming European legislation is a hard stop for the OEMs and yields a market size of more than 18 million cars in Europe alone by 2026.

Behavioral Research
The research side of Smart Eye was already making profit on a stand-alone basis last quarter at a revenue of 41 MSEK. This quarter at 50 MSEK the three units were even more profitable. Organic growth has more than doubled, from 15% to 34% compared to last quarter, which is clearly above the market. Hence we are gaining market share. Our offering is very complete with eye tracking hardware, Emotion AI SaaS as well as the leading multi modal software platform, so it's no surprise that we are gaining momentum as the effects of the pandemic are losing its grip on the research market. We are expecting continued strong traction for the rest of the year.