Regarding Smart’s latest AIS small volume luxury SUV, I picked up a small speculation from the internet:
"Possible candidates: Ferrari Purosangue Ferrari’s first SUV, with a 715 hp V12 engine, sports car performance and exclusivity. Produced in limited volumes and aimed at an exclusive clientele. The model is due for 2025 and has a price tag of over $400,000. Known for its sporty driving feel and Ferrari character despite the SUV format. Lamborghini Urus (2025 Urus SE) A super SUV with a plug-in hybrid V8 engine with a total of 789 hp. Lamborghini has confirmed that the Urus is their only SUV in the near future, making it a unique luxury sports car SUV in their range. Produced in limited volumes and is one of the most successful luxury sports SUVs on the market. The model will be launched in a new hybrid version in 2025. Porsche Cayenne Turbo The Porsche Cayenne is a sporty luxury SUV with high performance, including Turbo and hybrid variants. Porsche is known for combining sports car dynamics with SUV functionality. Produced in smaller volumes than mass-market SUVs, but more than Ferrari and Lamborghini. Conclusion: Given that Smart Eye mentions a European manufacturer of small-volume luxury sports cars, and that production will start in the second half of 2025, the Ferrari Purosangue and Lamborghini Urus SE are the most likely candidates. Both are exclusive, high-performance luxury sports SUVs with limited production and are due for 2025. Porsche is also a possible candidate, but generally sells more cars than Ferrari and Lamborghini, which may make them less likely if the focus is on "small volumes". Thus, the available information strongly points to the customer being either Ferrari or Lamborghini. "I know that Smart Eye has Porsche before. Do they also have one from Ferrari or Lamborghini, considering that the automaker will use Seye in another car model?"
URUS is a good possibility, because Lambo has appeared in Smart’s brochures before and VW…
URUS sold something like 6k units in 2023; if a quarter or half of those were in Europe, that would make 2-3k units. Let’s say 2,500 units and over seven years, 17,500 cars… This would make the AIS price 285€.
Coincidentally, AIS pricing has previously appeared in forum speculations at the price levels of a “cheap consumer phone”, estimated at 200-300€/unit. This is what Martin himself has said.
https://x.com/markluft/status/1919120146729209977?s=46
The exhibition has been held in Shanghai, and Smart Eye’s exhibition host Martin is on fire again. Smart was on display not only at its own booth but also at the booths of Forvia, Cerence, and Omnivision, as well as in several cars.
The tweets feature the Dongfeng Nissan N7, whose design win is likely below. https://www.smarteye.se/news/smart-eye-announces-four-new-design-wins-from-two-global-japanese-oems/
An American cousin was also supposed to come to the market, but Nissan ended up canceling its production. The Chinese version costs about 15,000 euros, has plenty of features, and the factory has the capacity to produce over 200,000 vehicles per year. Immediately after its launch, over 10,000 cars were sold per hour. Martin wrote that production starts this month. I was a bit worried about this when I read somewhere that Chinese Momenta would make the ADAS system for Dongfeng Nissans. Fortunately, the news was corrected, and it is the same Propilot 2 system as in the Ariya, for example, but Momenta has tuned the system to suit Chinese conditions. Nissans will apparently get a new ADAS system in new cars starting from 2027. These upcoming Design Wins might face fierce competition with Mitsubishi Electric’s partially owned Seeing Machine.
Martin also highlighted the Audi Q6L.
Audi is doing this in cooperation with FAW, and production will start at the Changchun plant this year. The same plant also produces the Audi A6 e-tron, with a capacity of 150,000 cars per year for these models.
Audi also has its own brand for Chinese customers, AUDI.
Also Xiaomi and other interesting things on display. We’ll get back to these later.
Interesting position available, feel free to apply!
Decline for German auto industry in April
The latest business climate index for the automotive industry from the German Ifo Institute shows a decline in April, which is explained by the new US tariffs. Despite some positive signs within the EU and reduced job cuts, export expectations are falling. Overall, the situation remains challenging for the German automotive sector.
According to reports from Finwire, the Ifo Institute has recorded a decline in the business climate index for the German automotive industry in April. The index fell to minus 30.7 from March’s figure of minus 30.5, indicating a continued challenging situation for the industry.
US tariffs hit European car market
Industry expert Anita Wölfl from the Ifo Institute highlights that the new tariffs from the US, which were introduced in April, have had a negative impact on the European car market. This in turn has dampened the early signs of recovery in the sector. Despite some improvements in the order situation and competitive position within the EU, export expectations have fallen significantly.
Companies assess the current business situation as somewhat better, although still at a very low level, and the indicator rose in April to minus 36.4, up from minus 39.6 in March.Anita Wölfl, Ifo Institute
Reduced job cuts give hope
Despite the tough situation, there are some bright spots. Job cuts in the industry have decreased, and employment expectations have improved compared to March. This gives hope for a stabilization of the automotive labor market, despite the challenges facing the sector.
Germany, with its significant automotive industry, plays a central role in the European economy. How the German automotive industry handles these challenges could affect the broader European economy going forward.
Tobii’s result turned positive in the quarter, supported by strong cost cuts.
The uncertainty surrounding tariffs has had a limited impact on our business so far, while the situation surrounding academic research funding in the US has had a more tangible effect. This is an evolving situation that we are monitoring closely. Despite the uncertainties, we delivered a strong first quarter with all three segments contributing to improved operating results, and we continue to successfully deliver our market-leading technology to customers across a range of sectors.
French car manufacturers are gloomy about the European automotive industry and car sales in Europe. Hopefully, lobbying for deregulation will not succeed regarding GSR2.
Unfortunately, this result looks a bit subdued. What do they say about the upcoming quarters?
Smart Eye Interim Report Q1 January–March 2025
Cost savings and license revenues improve profitability
January - March 2025
Net sales amounted to SEK 90.1 (86.1) million, an increase of 5% compared to the corresponding period the previous year.
Adjusted organic growth amounts to 7%, driven by Automotive which amounts to +27%.
Gross profit amounted to SEK 79.9 (77.3) million and gross margin decreased to 89% (90%) due to a change in sales of the product mix.
EBITDA improved to SEK -17.9 (-23.0) million.
Adjusted EBITDA, excluding one-off items, amounted to -14.4 (-13.3) MSEK, a deterioration attributed to investment in sales and marketing activities.
Operating loss amounted to SEK -61.4 (-61.5) million, whereas the depreciation of the surplus value amounted to SEK- 28.9 (-28.4) million.
Earnings after tax per share are -1.47 (-1.53), and after full dilution -1.47 (-1.53).
Cash and cash equivalents totaled SEK 9.6 million at the end of March. The cash ending balance, including credit facilities, amounted to SEK 130.9 million.
Smart Eye has acquired a license for an Iris recognition technology from Fingerprint Cards AB (publ).
Smart Eye has won two more design wins with Interior Sensor with a Korean OEM, with an estimated order value of SEK 100 million.
Smart Eye has, after the period ended, announced six new design wins, of which three new with Interior Sensing, with a total estimated order value of SEK 325 million.
Our outlook is that we’re on the cusp of positive EBITDA in Q2 and solidly positive in Q3 of this year, riding the wave of increased automotive license revenue.
The first quarter went exactly as planned for Automotive Solutions, while Behavioral Research suffered from uncertainties regarding research funding in the US.
Here are the RE forecasts, so perhaps they will have to lower them a bit. But it’s certainly worth remembering that we are now pretty much at the point where automotive starts generating revenue.
What does it take to get into the black? We’ve been following and occasionally involved probably since the corona era (back then, some planned to go to the shareholders’ meeting with their own yacht with the profits they made). Design wins are coming, but no money? If the lifecycle of one car model is about three years, then soon two generations of cars will have passed in those five years.
Surely, the legislation in Europe is the driver that will significantly increase revenue for Automotive. In 2026, DMS will be mandatory in Europe.
So, roughly, the size of the DMS market this year is 8 million cars (in November, Smart Eye estimated it to be 10 million), and by 2026, it will be twice as large. By then, the company should already be significantly positive in terms of results.
And design wins are coming, but most of them are only just entering production. Here is the exact figure taken from the report.
We have a total of 365 design wins of which 75 entered production last year. Ten more were added in Q1 with two more OEMs, meaning that 12 out of 23 OEMs have started their production.
At first glance, the most important metric (automotive sales) +27% is quite OK, less than in RE forecasts but the direction is undeniably right. A decent performance. This growth came entirely from licenses, meaning the ramp-up of cars that went into production last year is starting to show, and this year even more models are going into production. So, within a +6-month radius, a ramp-up is truly coming.
Our automotive growth was 27%, consisting almost entirely of license revenue growing at over 100%, while services revenue was flat. For the rest of the year, we see services starting to increase again, in big part due to the large Japanese deal.
That guidance for positive EBITDA in Q2-Q3 is quite positive, as it has been expected, and considering the current market uncertainty (tariffs), this is naturally positive. This is, of course, a direct result of the ramp-up.
The pipeline is expected to continue growing this year. This is also a good sign.
We are involved in several big global procurements. Since we have a very strong technology offering as well as a reputation for always delivering high quality on time, we anticipate further successes during the year to come
The research side -5% due to US government cuts etc. is the negative aspect here, but in my opinion, this is completely secondary. However, the expectation is that the dust will settle and the “stable core business” will continue quite alright.
If the markets offer a significant minus at the open today, I’ll catch it and add more
Automotive growth “fourth quarter SEK 35.8 million” -------> “first quarter SEK 39.2 million” = 3.4M growth and really fast.
Behavioral decline “fourth quarter all-time high SEK 64.4” -------> “first quarter SEK 50.9” and a 13.5M decline.
If behavioral had achieved as great a result as Q4, the result would have been over 100M. Now, targets were missed because of it, and even automotive growth didn’t bring as big a jump as hoped, although it is still growing at a record pace.
Q4 is seasonally strongest for the research side. It is not (usually) realistic to expect Q1 figures to match Q4 figures. That is, usually. This is just a side note.
Odotetunlaiset kommentit, ja ennen kaikkea johtopäätökset.
Redeye notes that Smart Eye’s Q1 reflected mixed performance due to weaker than expected sales in both Automotive and Behavioral Research, but better than expected cost control and much lower capitalized R&D. The company reported an EBITDA-CAPEX of SEK-41.6m, very much in line with our estimate of SEK-41.3m. Adjusted for one-offs amounting to SEK-3.5m, EBITDA-CAPEX beat our expectations, clocking in at SEK-37.8m.
Päivitys: base 115 kr, eli tavoitehinta laski 5 kruunua. Redeye on kuitenkin sitä sitä mieltä että tästä tämä loistokkuus nyt lähtee kasvavassa määrin liikkeelle, ja että SmartEyen markkinaosuus olisi jotain päälle 50 %!
Redeye revises its estimates for Smart Eye following interesting industry developments. Despite downward adjustments to our automotive revenue assumptions in 2025, our forecasts for 2026 and 2027 are held roughly intact, reflecting a maintained positive view of the investment case. With strong momentum expected in its automotive business, fueled by more car models entering and ramping up production, and a steady recovery in Behavioral Research, we expect Smart Eye to reach EBITDA break-even in Q2, with a vastly positive EBITDA in Q3. We make minor downward adjustments to our fair value range and Base Case.
While all companies do not report according to the same standard, no matter how we calculate Smart Eye’s market share, we simply cannot yield a figure below 50%.
