Smart Eye - King of automotive’s Interior Sensing AI?

[Pohjolan_Eka]

@timontti

The manager’s fifth and final buy tip is the technology company Smart Eye, which develops eye-tracking equipment for cars. It is a company that Marlon Värnik has followed since its listing in 2016. “It is a growth company that will benefit from all car models in Europe having driver monitoring from 2026. Smart Eye is the market leader and has agreements with 23 vehicle manufacturers, which has the potential to generate around SEK 700 million in annual recurring license revenue.”

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.

But when will those wins start generating money for Smart Eye (Fiksuöögalle)? The guys have a hell of a lot of ‘design wins’, but revenue hasn’t moved by more than a few percentage points in a year, and the amount left from sales doesn’t even cover running SGA costs. Revenue is certainly hyper-scalable, but will sales revenue take a giant leap, multiplying for 2026 or 2027, or how long do we still have to wait for an invitation to those yacht parties?

[Tirehtoori3]

Well, looking in the rearview mirror, revenue growth is disappointing. There are probably many reasons, e.g., delay in the entry into force of EU regulation, COVID and the subsequent supply chain disruption, overly optimistic expectations for market development and the pace of technology adoption and penetration globally, etc.

But looking forward, do you have any specific reasons in mind why growth would not materialize now and in the coming years? Or is the reason for skepticism the lost promises of recent years?

[klaevv]

In Yle’s article, there shouldn’t be anything new for those following, but it’s a good reminder that 2026 and tightening regulation are just around the corner

In addition to being a good investment case, it’s appropriate to hope and assume that Seye’s algorithms save lives:

– In 15 years, the number of fatal car accidents in the EU has halved, even though the number of cars has increased. Absolutely, the safety benefits of these systems for both motorists and light traffic are significant.

Autot alkavat jarruttaa itse pyöräilijöiden ja jalankulkijoiden edessä –...

[Pohjolan_Eka]

In my opinion, my question was not an indication of skepticism. For Smart Eye to ever become a legitimate business, its revenue must multiply from the current level. Even doubling it is not enough due to high operating costs, as investors also want a reasonable return from this. Behavioral Research is flat, as is Automotive’s service revenue, meaning all growth in the coming years is presumably coming from car licenses.

The number of cars in production generating license revenue will apparently double this year, so let’s say Smart Eye achieves a 150%+ license revenue growth in 2025. We are still on far too slow a growth curve, because they are still too small a part of the company’s total revenue to reach decent growth figures for the company’s overall revenue in the coming years. License revenues should grow at a tremendous pace for years to get the total revenue to, say, a +30% annual growth rate, and that should continue far into the 2030s for the current valuation to be justified.

The company is apparently building some kind of “positive EBITDA” hype for the end of the year, which is a red flag, because EBITDA cannot be eaten and it is a completely useless, misleading figure mainly used by hype companies. Q1 revenue 90k TSEK, gross profit 80k TSEK. These top lines were paid for by burning almost -50k TSEK into operations + “investments”. So, quite rapid growth would be needed to become cash flow positive. It will probably inevitably extend to 2027, unless Behavioral Research provides support? So, isn’t a significant amount of future growth already priced in at the current share price, not to mention growth that would justify a higher share price than the current one?

[Lexus]

Unfortunately, I can’t give a very precise answer to this right now, but a little bit nonetheless.

It is clear, however, that Automotive’s growth has not yet truly begun. And even if decent growth figures are reached by 2025, the strongest growth, driven by European legislation, will come in 2026. And actually, for me, an even bigger deal than the EBITDA positivity you mentioned is that the company guides to being cash flow positive by the turn of the year (a couple of quarters after EBITDA positivity). Had you noticed that?

Smart Eye, however, has a 40-50% market share, so the widespread adoption and mandatory nature of DMS in Europe will certainly also contribute to the bottom line. In my opinion, for example, the RE analysis has been valid in terms of calculations. I have also worked through those scenarios myself.

[Tuulipuku]

Development is slow as long as we have to look at the steering columns of individual car models, sales area by sales area, to see if they have DMS and if it’s Smart Eye’s. However, the license fee paid is only about 55 SEK per manufactured vehicle, so even if about 15 new car models were obtained per quarter, this alone would not generate sufficient revenue growth. Especially since the monitoring camera will largely only be included with better equipment.

In a year, every car sold in Europe must have DMS according to mandatory legislation. At this point, I believe the situation will change completely. Currently, about 13 million cars are sold annually in Europe, and if we exclude Teslas, Chinese manufacturers, and Mercedes (according to Redeye, DMS is their own production), the market size is just over 10 million cars per year. If Smart’s share of this market in Europe is 40 percent, then one million cars will be sold in Europe quarterly. This year, Smart Eye seems to fall short of 2 million produced cars globally. The share sold in Europe is perhaps about one-third of that. I also believe the share of the rest of the world will grow, so that H2 2026 sales would total about 4 million systems sold. From this point onwards, a good growth path is visible with new car models, GM’s Super Cruise, Toyota and DMS, and the growth of full cabin monitoring features. However, rapid changes in the market share of Chinese car manufacturers could erode this growth.

Smart Eye, and Affectiva in particular, had change negotiations at the turn of the year, and cost savings should be fully reflected in the quarter now being reported.

I am a bit concerned that only about a dozen cabin monitoring design wins have been secured for two different manufacturers. To succeed in Euro NCAP tests, new car models should have various types of monitoring already from early 2026.

5 Key Updates to Expect from Euro NCAP’s 2026 Protocol

Competitors haven’t seen many design wins either. How do manufacturers plan to solve this need? Smart’s CEO stated that interior sensing solutions would become common in production by 2027.

My own calculations are therefore well below Redeye’s assumptions, especially for the near future, but even with these, I get a quite OK return expectation from this. Of course, assuming the research side doesn’t falter.

[Pohjolan_Eka]

@Lexus

It is clear, however, that Automotive’s growth has not yet truly begun. And even if we reach quite acceptable growth figures in 2025, the strongest growth, driven by European legislation, will come in 2026. And actually, for me, a bigger deal than the EBITDA positivity you mentioned is that the company guides to be cash flow positive by the turn of the year (a couple of quarters after EBITDA positivity). Had you noticed that?

Smart Eye, however, has a 40-50% market share, so the widespread adoption and mandatory nature of DMS in Europe will also contribute to the bottom line. In my opinion, for example, the RE analysis has been valid in terms of calculations. I have also calculated those scenarios myself.

@Tuulipuku

Development is slow as long as we have to scrutinize the steering columns of individual car models, sales region by sales region, to see if they have DMS and if it’s still Smart Eye’s. However, the license revenue paid is only about 55 SEK per manufactured vehicle, so even if about 15 new car models were obtained per quarter, that simply wouldn’t generate enough revenue growth. Especially since, for the most part, the surveillance camera will only be monitoring with better equipment.

In a year, every car sold in Europe must have DMS according to mandatory legislation. At this point, I think the situation changes completely. Approximately 13 million cars are now sold annually in Europe, and if we filter out Teslas, Chinese cars, and Mercedes (according to Redeye, DMS is in-house production), the market size becomes just over 10 million cars per year. If Smart Eye’s share of this market in Europe is 40 percent, then one million cars are sold in Europe quarterly. This year, Smart Eye seems to fall short of 2 million produced cars worldwide. The share sold in Europe is perhaps about one-third of that. I would also expect the share of the rest of the world to grow so that H2 2026 sales would total approximately 4 million systems sold. From this point onwards, a good growth path is visible with the growth of new car models, GM’s Super Cruise, Toyota, DMS, and full cabin monitoring features. However, rapid changes in the market share of Chinese car manufacturers could eat into this growth.

Redeye forecasts an increase of approximately 450 MSEK from 2025 → 2026, which, calculated with 55 SEK license revenues, would mean over 8 million additional new licensed cars on top of the three-digit license sales growth percentage in 2025 and these over 2 million Smart Eye cars.

With quick math, this would mean license revenues increasing tenfold in 2026. So, car license revenues will completely explode through the roof in 2026 and 2027, driven by both the EU’s own regulation and the Brussels Effect? Then we would indeed be in the right magnitude for the growth required by the investment, and it would look good to be on board right now if this happens.

@timontti posted news about Cipia’s acquisition. Is the market now consolidating particularly around Smart Eye and Seeing Machines, which would enable Smart Eye huge global market shares for eternity, also in future tenders? As competition decreases, margins tend to improve significantly. I’m asking some silly questions now because I know there are skilled investors here who have followed the company for years, and the discussion seems strangely quiet for a stock that should be taking off like a rocket very soon

[timontti]

@Pohjolan_Eka

With quick math, this would mean license revenues would increase tenfold in 2026. So, car license revenues will completely explode through the roof in 2026 and 2027, both by the EU’s own regulation and the Brussels Effect?

This is how I also think it will go.

RE does a pretty good analysis of this. J.B. (the analyst following the company) had been tracking this for years before he started working for RE (his own analyses were higher up in the thread years ago). We exchanged views quite a bit in previous years.

@Pohjolan_Eka

@timontti posted news about Cipia’s acquisition. Is the market now consolidating especially around Smart Eye and Seeing Machines, which would enable Smart Eye (Fiksuöögalle) huge global market shares for eternity, also in future tenders?

The market for DMS is already divided for several years ahead (5 years), interior sensing division will be the interesting next thing. The revenue potential it brings is roughly 2x greater compared to DMS, so there would be a big upside if things progress.

Consolidation has been expected, even Martin has talked about it in recent years. SM probably somewhat drifted into Mitsubishi Electric’s lap as they haven’t yet become profitable etc. Previously, their production growth has apparently been supported by individual high-volume models (F-150). This will probably strengthen their position in circles where Mitsubishi is present. Well, for GM too, they chose SEYE for 2027 with a very large order (NVIDIA presumably as the platform).

Cipia was in big trouble and likely fell cheaply into Harman’s hands.

SEYE and SM are the main players by all accounts. It is indeed interesting that SEYE is the only one not yet forced into the lap of a larger entity and seems to be able to stand on its own feet in a reasonably short time.

In the long run, it is very interesting to think that SDV (software defined vehicles) will grow, and the current biggest wins have come as part of NVIDIA Drive / similar ecosystems as a Tier-1 provider. Undoubtedly, this technology is of interest in various circles. But one should not build investment theses on acquisitions.

Based on NCAP ratings (e.g., Tesla Model 3), Tesla is still having trouble getting its own DMS system to work properly.

[Shamalamadingstock]

@Pohjolan_Eka

Redeye estimates an increase of approximately 450 MSEK from 2025 → 2026, which, if calculated with 55 SEK license revenue, would mean over 8 million additional new licensed cars on top of the three-digit license sales growth percentage of 2025 and these over 2 million Smart Eye cars.

Of this, approximately 200 MSEK per year is BR.
And not all of the rest are just license fees, but 250 MSEK would be approximately 4.5M cars in total if it covered the entire sum without development fees or anything else. If the car also has OMS, the price is 100 SEK per car, which complicates the calculation even further.

[Pohjolan_Eka]

Where does that additional 200 MSEK in Behavioral Research sales for 2026 come from? It hasn’t really grown much lately, so that’s an absolutely insane increase in sales.

[Shamalamadingstock]

Oops, my bad, I was talking about 2025 figures, I misunderstood that you were talking about 2026.
BR, in my papers, is no more in force after 2025 than it is until then, 200-250 MSEK with this information.
Growth at that stage is indeed only dependent on automotive licenses, with upcoming legislation as its driver, potential additional sales from OMS, fingerprint/iris authentication, and driver intoxication detection.

Edit. 200-250M BR, 150-200M AIS, plus development fees. The rest is license revenue per DMS depending on which system is integrated into the car, how many cameras, user identification, health status measurement/whether one is sober at the wheel/child locks for underage drivers. 500M is possible with OMS already if 100 SEK per DMS is sold, if other equipment is included besides passenger monitoring, that sum could end up being slightly even larger, and sales could still be around 4-5M cars per year.

Edit2, additional sales for OMS and other goodies naturally require that we don’t then have to start including Asia and the US. Globally, however, significantly larger numbers of cars are already sold than Europe’s 10-13M.

[Expaco_b]

It’s undeniably possible to make some quite compelling extrapolations here if that volume indeed grows so strongly in terms of license revenues over the next couple of years. For example, with a P/E ratio of 20-30, even a double price would already be quite justifiable now.

However, there are certainly many hurdles ahead. I wonder how well that 55 kronor per car will hold up in volume for cheaper cars? Is it set in stone, or will price competition start to interest the “brothers” (Seeing Machines) more at that point?

The share price development of the brothers has been quite identical for a few years now. Smarteye, however, has now risen by about 50 percent in a short time, to which Seeing Machines has not yet responded, at least.

Market values are also roughly the same for the companies. SE 2800 MKR, SM 206MUSD. I didn’t look at dilutions; this is enough for a rough estimate.

[timontti]

Colin’s posts, so I can’t read them myself (permaban). Apparently, however, it’s about Stellantis dual sourcing.

#ds8 #ds7 #strategy #distraction #gsr #automotive #driver #monitoring...

Otherwise, about Stellantis:

https://www.marketwatch.com/story/stellantis-gets-a-downgrade-its-rebound-may-never-come-analyst-warns-9b26b2d8

[timontti]

Industry R&D news

Not so fast: driver monitoring systems put on biometric brakes for drunk...

[timontti]

Volvo Cars announces one-off SEK 11.4 billion non-cash impairment charge

Volvo Cars is adjusting the financial assumptions for the EX90 and ES90 platform, due to previous launch delays and new import tariffs in several markets.

their volumes weren’t big, but a setback is always a setback

Kraftig kurskrasch för biljätte efter vinstvarning

The French car giant Renault is raging sharply on the Paris Stock Exchange after the company warned of profits on Tuesday evening. Morgan Stanley sees a great risk of several car manufacturers coming up with negative messages in the future.

[timontti]

Presenting the Mobileye Driver Monitoring System™, fusing road safety inside...

I’d guess that technically it’s clearly behind compared to Seye, sm… but time will tell how many wins they get.

[timontti]

Stellantis expects $2.7 billion first half loss as restructuring costs, US tariffs bite

https://www.investing.com/news/stock-market-news/carmaker-stellantis-sees-halfyear-net-loss-of-268-billion-hit-by-tariffs-4142971

Impact of tariffs in H1. Not too big if it generates 150 billion euros in revenue annually.

The owner of a sprawling portfolio of brands including Fiat, Peugeot (OTC:PUGOY), Chrysler and Jeep, said Trump’s tariffs have cost it 300 million euros so far as the company reduced vehicle shipments and cut some production to adjust manufacturing levels.

Pricing went wrong in the USA

Under Tavares, industry experts said Stellantis had priced itself out of the U.S. market and failed to update popular models, leaving the company with vast numbers of unsold cars. Stellantis’ North American sales fell 25% year-on-year in the second quarter, it said on Monday, showing the automaker still has a long way to go.

[timontti]

[timontti]

https://www.cnbc.com/2025/07/22/general-motors-gm-earnings-q2-2025.html?link_source=ta_bluesky_link&taid=687f8b9504821f0001156b42

Highlights regarding tariffs:

In May, the automaker lowered its full-year guidance to include a possible $4 billion to $5 billion impact from auto tariffs. It affirmed that guidance on Tuesday and said the estimated tariff impact remains unchanged.

CFO Paul Jacobson said during an interview on CNBC’s “Squawk Box” on Tuesday that tariffs impacted GM’s second quarter by $1.1 billion, which is in line with GM’s earlier expectations as part of the full-year impact.

Jacobson said on “Squawk Box” that the automaker does not expect any specific price increases related to tariffs.

Other:

GM reported 974,000 vehicle sales in the second quarter, less than the 1 million estimated by StreetAccount. Its electric vehicle sales totaled 46,300 for the quarter.

[timontti]

Japan must have worked very hard for this ‘deal’. Was it previously 25% and OEMs were certainly struggling?

Trump did not reveal the exact details of the agreement. Particular interest is focused on the automotive and steel industries. According to Reuters, Japanese Prime Minister Shigeru Ishiba said that tariffs on car exports would also be lowered to 15 percent. Car exports to the United States are a cornerstone of Japan’s economy. In June, car exports from Japan to the United States plummeted by 26.7 percentage points.

“Even a year ago, tariffs of that level (15%) would have been a shock. Now we breathe a sigh of relief,” says Brian Jacobsen, chief economist at Annex Wealth Management, to CNBC.

In Japan, stock markets reacted to the trade agreement with a clear rise, led by automotive giants. The broad market Topix index was up 3.1 percent, and the Nikkei index was up 3.4 percent. Among the car companies, Honda (+11.4%), Toyota (+15.1%), Nissan (+8.9%), Mazda (+17.8%), and Mitsubishi (+4.0%) were on the rise.

https://www.arvopaperi.fi/uutiset/a/a19c7f39-50ec-4d7e-b3aa-405ed3ffe811?ref=ampparit:25e6