Seeing Machines Limited (M2Z.F) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Seeing Machines Limited H1 results investor presentation. [Operator Instructions]We'd also like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Paul McGlone, CEO; Naomi Rule, CFO; and Kate Hill, non-Executive Chair of Seeing Machines. Good Morning, Kate.

Good morning. Good morning to all of our investors who are joining us in the U.K. Good evening to those joining us in Australia. And if you're joining us from anywhere else, like North America, it's some hideous time of the night. And thank you very much if you've joined from North America. But to everybody, welcome to this presentation of our first half results for Seeing Machines. It has been -- it continues to be a challenging business environment, as I'm sure you're all aware. But against this backdrop and despite, in fact, the backdrop, we're very pleased with our results for the first half. And in fact, we're extremely pleased for the momentum that we're seeing in our business across all of our target sectors. As you'd be aware, DMS has become central to safety outcomes across a range of industries, but what we're also seeing is a broadening community of stakeholders who are interested in this technology. And that includes, of course, more investors, it includes media, it includes government and, of course, regulators. So it's interesting to reflect on the history of Seeing Machines. Our founders, some 20 years ago, had the foresight to think about investing in this area or in this technology. And it's that foresight that was shown all those years ago that's led us to the position we're in today. When really we're just seeing opportunities arising from all sorts of areas. It's a very exciting period to be involved in the company. But we have to keep our feet on the ground, and we are keeping our feet on the ground by being focused on delivery. We've been doing this for some time now, and we continue to focus on delivery. It's terribly important. And by that, I mean, we're delivering to our customers, we're delivering to our people and our team and, of course, to our investors. So before I finish my opening remarks, I would like to give congratulations to Paul and to the whole team who have been focusing on delivery, keeping our feet on the ground. And really, the position we're in now is down to an awful lot of hard work by all of those guys. So thank you. We're now going to play a short video, which really speaks to the purpose of Seeing Machines. So if you can play the video please, Paul. [Presentation]

Thanks, Paul. So welcome to everybody. We have -- you've heard from Kate in the opening remarks. We have Naomi here with us as well. We thought it very important to share that purpose video with you, and it's something that we've been working on here for some time now. And I have to say it's central to what motivates our people to work as hard as they do across multiple time zones in order to achieve extraordinary results, frankly, in very, very testing environments with very demanding customers. So I hope you enjoyed that at that short presentation. I'll just walk us through some of the highlights before I hand off to Naomi, who will take us through the numbers in a little bit more detail. As Kate mentioned, we're quite pleased with revenue in the first half, a backdrop of difficult global trading conditions, I think everybody is well and truly aware of that. I mean we've mentioned before that we did get a recovery in the Southern Hemisphere, which has compensated for what is still a very sluggish set of operating conditions in the Northern Hemisphere, particularly in our Fleet business. Automotive, not impacted in the same way. And of course, the revenues from auto are a little longer tail. The recurring revenue, which is very important to us, has also grown more than 17% in the same period last year. Our cash position is very strong. And a big contributor to that was the placement that we did last year [ to accelerate it ]. We're very pleased to have a very significant U.S. investor want to invest in our company alongside all of you. And just a few weeks ago, we've made an investment, USD 10 million or almost AUD 13 million, to another specialist, U.S. fund manager called Tornado. Now the position today is that we have a very strong balance sheet, a balance sheet that can see us deliver our previously announced business plan and also afford us the opportunity to pursue incremental growth as it's presented over the course of the next several quarters and few years. So we're quite pleased with that headline results. So in terms of our operational highlights here. Sorry the screen is microscopic and I wear glasses for a different reason. So just on the operational highlights. Much of this you've heard before, and this presentation is really somewhat of a repeat of what we did at our interims. But we are really pleased with where our OEM business is going. The revenue sets to expand there. And what we're seeing now as our customers' vehicles hit start of production is, we're seeing underlying growth in the license revenues, and in time, that growth rate and those revenues will overtake what has been a historical OEM revenue of NRE. What that means, we're going to see significant margin expansion over time because, as I think everyone knows and I've mentioned before, the margins for licenses are in the 90-plus range versus NRE, which is single-digit margin and pretty hard work. So that's a very important pivot point for us in the shape of earnings, in the shape of revenue that we produce. Over 26,000 connected units, driving that annual recurring revenue of $15-plus million for the half that I discussed. The automotive business has been working very, very hard, delivering new proof of concepts to Tier 1s, and OEMs. We've successfully developed what is proving to be a highly sought after piece of technology that expands our driver monitoring capability at the same level of fidelity as we provide for the driver across the passenger. Now this breakthrough that we've developed is in high demand, and we see that this is one of several milestones that we think will increase the rate of penetration of DMS and combined DMS OMS. So we're pretty pleased with that. Our Fleet business continues to rack up the kilometers. As you know, those kilometers contribute to our truthing, enabling us to continue to develop algorithms that have performed at the highest levels. And this is very, very important part of our business going forward. And it's the reason why we remain focused on operating in OEM and aftermarket together. It's a very important ingredient in the overall mix. Last year, during COVID, as most other businesses did, we reduced our costs, both discretionary and permanent. We're very pleased to say that those costs -- reduction areas have started kind of flowing through to the P&L. You can see that in the numbers that Naomi will highlight that to you in a moment. That was a very difficult period. And you do what you have to do as the circumstances present themselves. Of course, now, as our business is beginning to grow, and we're seeing more and more RFQs come through and more and more demand for our technology, we have a different challenge. And that challenge is to double down on capacity, rebuild some specialization in our business that we think will be very necessary, not just to win in this competitive environment, but to deliver against what are, quite frankly, quite onerous requirements from our customer. So the mood has changed, the times have changed. And we're very, very much focused on winning and delivering. I'll talk about the U.S. just very quickly. As I've mentioned several times over the last year at least, we've been very focused on trying to attract interest from new U.S. investors. We've successfully done that through 2 raises, I think those 2 raises combined have continued to support our price to the levels where they are today, which is 3x where they were not so long ago. But not only that, we've also had new U.S. investors [ buy your ] company on market. And that's really the main game to get on-market support from investments that understand technology and in particular, our technology in the industries that we support. So we feel that, that work is paying off. And of course, we're also in an environment where the recognition of the role of DMS and the market in general perception of this technology has changed. And I think that's a permanent change, and it will support the growth in shareholder value as we continue to deliver over the coming months and years. In aviation, this is one of the areas of our business that is always on the agenda. And yes, it has taken longer, and it continues to be a long tail opportunity, but we are making progress. I want to make that point. I'm not going to be drawn into any questions on how imminent. There were 1 or 2 funny ones around that. But what I can say is we are making very real and very solid progress both in RFQs, in project work, in development work and getting our tech into simulators and control environments. So it's a low investment, long-term development with very, very high returns. So we're going to stick with that, and there will be more to report shortly. I'll hand over now to Naomi, and she can take you through more financial highlights.

Thanks, Paul. So dive straight into it. Our top line revenues for the group has improved 15% to $18.1 million on the previous period, which is a great result, especially under the business conditions that we're all facing globally. If we look to the results using constant currency, which isn't on this slide, and by that I mean applying the same exchange rate for both sets of results to compare year-on-year growth, we have an even better outcome. And our first half will show an underlying revenue improvement of 19%, which we are very pleased with. Aftermarket grew 17% to $15 million, and now both annual recurring revenues of $15.5 million, representing a growth rate of 17.4% on the prior period. Now this is an important metric for obvious reasons because annual recurring revenues indicates the annual committed revenue from existing customers. Meaning, we've locked in a minimum of $15.5 million in revenue for the next year before the year has started. Connected unit growth of over 3,000 units during the half is a major contributing factor to the growth, in addition to an increase in our hardware sales. Some may say it's incredible that all geographies grew to some extent and it is, given the extreme conditions in the Northern Hemisphere right now and over the past 12 months. However, the majority of our growth occurred across Australia, New Zealand and the Asia Pacific region, as the impact of COVID has been significantly less in the Southern Hemisphere, as we know. And it's made it easier to access trucks for installation, but also importantly to progress the sales cycle with less business disruptions. OEM, which covers our automotive and aviation businesses, grew 5% to $3.1 million during the half. Nonrecurring engineering was slightly up from prior years, as OEMs inched ever so closer towards production, and program milestones are met. However, it's actually quite exciting that this half saw the start of production for 3 OEMs, which generated production royalties, and we saw over 31.5 [indiscernible] vehicles come onto production line with our technology embedded in them. This actually marks the beginning of the transformation for our automotive revenue, and we'll see transition from nonrecurring engineering to high-margin, high-volume royalty revenue as OEMs [ started ] production vehicles hit the road, which will increase significantly over the next few years, where we expect to see 30 distinct car models hit dealerships with Seeing Machines' DMS over the next few years. Our group gross margins are in line with the prior year and is anticipated to improve as we continue to realize our lower hardware costs within the aftermarket segment and increased OEM royalties, which attract very high margins. With a significant focus on cost management over the past 12 months, I'm very pleased to confirm that our operating expenses have been reduced across all areas. Now some of these measures have been temporary to deal with the COVID-19 situation. But we also have a range of permanent savings that will further improve the net commission of the company. Now the normalized numbers to the right of the slide, add back the $3.5 million cost savings for half 1 '21 and also increased H1 2020 costs in line with the change in recognition of short and long term incentives. This normalized perspective highlights the improved performance on a like-for-like basis between periods. And as I said previously, it's a result of enhanced cost management and focus on delivering outcomes for all of our stakeholders. Our segment of financial position does remain heavily influenced by our cash and working capital movements, largely because we are expensing rather than capitalizing development costs associated with the development of our core technology. Importantly, we do not hold any debt. The liability is reflective of the requirement under the leasing accounting standard, but recognizes both leases as an asset and a liability on our balance sheet. Our inventory is at a healthy level and structured and managed to meet our near-term sales pipeline and commitments. And whilst our overall inventory in number has increased in line of sales, the actual cost and value has decreased due to the previously announced reduction in hardware costs of around 21%. Our working capital balances are very healthy and will enable us to move forward to profitability. Customer receipts are lower for this period compared to the prior year, and that's primarily due to timing between invoicing and cash receipts. Now this is in line with the financial year 2019 fourth quarter invoicing for OEM program milestones, about $1.5 million and $2 million for our aftermarket sales. The timing delta that you see here between revenue recognition and [indiscernible] cash will be a continuing trend over the coming years as our revenue from OEM royalties become a higher contributor to our top line growth. The monthly cash burn without grants is approximately $2.3 million, which is trending 8% lower than the prior year and improving in line with top line revenue growth and continued cost management strategies on a monthly basis. And as Paul pointed to this earlier, in October, we received $28 million in cash with the issue of 372 million shares to Federated Hermes. And this month, in fact, we welcomed an additional investor, Tornado Fund, with 68 million shares, further improving our cash position by an extra $13 million.

Thank you. I'll take you now through some highlights in each of the areas of our business. And again, look, some of these, I've mentioned before, and hopefully, I can provide some additional color. So 30 distinct car models will hit production in the next 2 years. So after a couple that we've announced, as Naomi said, we've got more than 31,000 vehicles have been produced with our technology in them. That rate is set to increase in linear fashion between now and 2025. It's a very important number to us, obviously, both in terms of top line growth, but in terms of margin contribution and cash. But large proportion of that license revenue flows to cash. So it's very, very important. I'll just add that when we talk about model here, and I know there's all kinds of different definitions in the marketplace, but we talk about a model class. So we're not talking about model trim levels or anything like that. It's just the model class, the highest level of definition for the model. We -- as we sign up with an OEM to do work, the specific allocation of the technology across the fleet is typically not known to us until much later in the peak. So we quote on a gross volume, gross delivered volumes are often higher than what we quote. But what lies underneath in terms of all of the different model variants is often not known until later. And we're seeing that today, as we ever so slowly announce these vehicles hitting production. Of course, I think as everybody knows, one of our great frustrations is that we can't announce them immediately. And that's essentially because of the type of commercial contracts that we have that prevent that from happening. But in due course, all of these 30 models will be announced, and the market will be able to determine the volumes on those models, in actual production rather than our quoted bid. And I think the end result of that will be largely positive. So we've got a picture of the Escalade there, a well-known car in the U.S. and we're able to talk about it. So that's fantastic. It's getting quite a bit of publicity, which is good. On the partnership side, this is really important to us, and we announced our 3-pillar strategy some time ago. And as you know, at the end of the day, we're delivering software. The only question is how is that software delivered? Do we deliver it bespoke, integrated on a silicon platform? Or do we enable others to access the intellectual property in an accelerated fashion that they can deliver in parallel with us? So we cover all of those conditions. The relationships that we have, starting with Xilinx, very, very important. The early work and the early investment in developing that chip strategy has really paved the way for what we've been able to do with Omnivision and Qualcomm. Both of those arrangements are quite different, but they are very, very real. Both companies are investing very heavily to get our technology integrated or embedded in the silicone and in their systems. And if you look at the scale of each of them, without trying to list all of the different OEMs that they work with, it's pretty evident that those relationships will facilitate a better sales outcome for us. And that's what this is all about. Occupant Monitoring. I've mentioned that's launched, and we will see some traction in this aviation business. The work continues, the interest continues and I think as the world returns to normality, we'll see an increase in the rate of exposure to aviation customers. In aftermarket, we've appointed a new GM to take over of the business. Mike Lenné is taking on a new role as Chief Scientist of Safety and Human Factors. He's playing a much more focused role on the external regulatory environment, he is deeply involved in the work that we're doing directly with Euro NCAP, regulators in the U.S. and forming new relationships to influence the regulatory framework in Japan as well. He's also working on a whole range of programs for us on the data side. And of course, they are very, very important because it's data that underpins the velocity in our technical road map or our feature development. So he's doubling down in that area. Max Verberne has joined us, a very strong background in telematics. So he's hit the ground running and he's really getting into the detail, and I'm very pleased with where we are so far. I'll talk a little bit about channels. The rest of those dot points we've already covered. So Northern Hemisphere, we have 15 channel partners for distributors. And I've mentioned already that the Northern Hemisphere remains a pretty difficult environment. And all of you would know better than I, given that you're living it day by day. But we are seeing some green shoots. We are seeing interest return in both the U.K., Europe and the U.S. Our business -- or our distributors in Latin America are continuing to grow. But really the powerhouse in this last period has been the Southern Hemisphere, primarily Australia, New Zealand and Southeast Asia. And we're very fortunate that that's been the case. And I guess here, in particular, in New Zealand, in particular, small economies on the global scale that given we're in Ireland, we've had very clearly the fastest recovery from COVID. And it's fair to say that we're back in full swing down here, which is, I think, very good for us, but also very good for our shareholders. On insurance, again, we've spoken about insurance and the importance of insurance. This is an area of interest that's increasing. We've mentioned NTI in the past. We are now running a formal program with NTI to support, and we'll wrap it up, take of our technology for their customers. That means new customers for us. So we're running several waves of new campaigns to drive our technology into the market. The regulators here and for that matter, in most of the markets that we operate in are upping the ante on the specific risk areas that our technology mitigates, and that's fatigue and distraction. So we've mentioned before that those 2 risks are the single highest contributors to fleet insurance claims costs globally, and our technology reduces the incidence of those risks by up to 90%. So insurers and regulators are building their confidence in the technology, and they're being more assertive and encouraging customers to adopt it. And that, I think all goes well for us going forward. So just to wrap up the formal piece here. The DMS market, and I'll focus specifically on automotive here, we had a period during COVID that was -- we didn't really know which way it was going to go. From November last year, we've seen a dramatic uptick in both the number of RFQs and the quantum of those RFQs. So this is a very major turning point. As I said earlier, we're increasing our capacity to make sure that we can win our fair share. The market, holistically, has accepted that DMS is a permanent feature of the automotive landscape. And I think -- look, this is strong for all participants in this sector. And there aren't many, as I think most of our shareholders know. Each day, we compete on our own strength. And we here are very, very pleased and very confident with the strategy that we're deploying, and as the market is now building up ahead of steam, which I would call a race to Euro NCAP 2024, I believe we're going to see a raft of additional RFQs over the next 6 to 9 months. Now we're seeing these RFQs across multiple jurisdictions, by the way. So we're seeing them in Europe, the U.S. and Asia, Japan in particular. So that gives us even more confidence that this is a permanent fixture and that we're well positioned to win our fair share. On the chip side of things, look, we're delighted with the relationships, the long-term relationship with Xilinx, the new relationships with the Qualcomm and Omnivision. We have, frankly, a very strong [ dance card ] of other semiconductor companies that are wanting to work with us, wanting to figure out how to deploy our intellectual property, seeing how they can get ahead of the market in terms of the combination of software/hardware pricing, which is mission-critical as OEMs are looking to mass market adoption. So these conversations, we think, are very, very positive. They all go well for our mid- and long-term strategy, and they make for different conversations, differentiating conversations with our customers. So we're really pleased with where that's going. I think you can see through the results, we are focused on performance, profitable growth. We no longer do a negative margin contract. We no longer have negative margin hardware sales. We are very pleased with the Fleet business' trajectory, and it is very close to profitability in its own right. So to sum it up, pretty pleased with the outcome. I'm going to turn to another video, which some of you, perhaps not all of you have seen, but I'll just ask to run that now, Paul, if we could. [Presentation]

Thanks, Paul.

That's great. Thank you very much, indeed, for the presentation. [Operator Instructions] I'll just let the company to take a moment to review those questions submitted already. I'd just like to remind you that a copy of the slide with published Q&A can be accessed on the investor meet company platform. I'd also like to remind your feedback is important to the company, and immediately after the presentation has ended, you'll be redirected for the opportunity to provide your feedback in order the company can better understand your views and expectations. Paul, we have a number of presubmitted questions from investors. And perhaps I could hand back to you just to run through those, first of all. And then once we've done that, we can just move on and click on that Q&A tab and read out the question where appropriate to do so and just run through the live Q&A, if that's okay?

Yes. Sure, sure. So look, we had, I don't know, 40 or 50 questions before the meeting. Many of them crossed over. So I've -- we've kind of got -- I'll say I, we, definitely we. We've categorized them into 4 areas, and I'll answer them accordingly without referencing the specific question. Otherwise, I think we might be here for a very long time. But the categories are automotive, significant partnerships, fleet and the road map and company future. Some of these I've answered in my commentary as well. But I'll just work through these categories and I'll answer the questions, and then we can go through those that have come through this morning. So I think we've covered the RFQ increase. We don't -- and I'm unable to talk about the volumes since there's no real point talking about the volumes until they're awarded. So we don't do that. And we haven't done that in the past. But my statement is true and clear, we have received more RFQs of what we believe to be a greater quantum than in at least a year or 2 prior. So it's a really a good indication of where the market is at. So the next thing is about naming cars that are coming into production. And again, we get this question all the time and must be repetitive to hear the same answer. We are restricted and each OEM has a different, slightly different take on the level of restriction, the time of the restriction. But typically, it's some time period after vehicles move into the distribution network, not when they start production. And we put in a lot of effort in order to try and get this communication released, and it's a very difficult thing for us to do outside of the rules that were predetermined. So I know it's frustrating. It's -- I can assure you, profoundly more frustrating for me than it's for most other people. With regard to awards and when we announce them, we announce all awards when they are formally won. Now we often work with Tier 1s and OEMs for long periods of time as we negotiate agreements, whether they be interim agreements, letters of intent, interim purchase orders, purchase orders or contracts. And all of these things happen, and they are all happening, but we're unable to make an announcement on a win until we have a contract that is signed, despite the fact that we continue to operate on all of those other mechanisms that I've mentioned. So when we execute, we announce. Someone mentioned Japan. I think I covered that in my remarks. So Japan is moving, and we're pretty pleased with the movement there. Engineers. There's a question about giving cars into production, what are you doing with all your engineers? Look, we've been running our engineering team at maximum capacity for quite some time. Our challenge is not what to do with the engineers. Our challenge is to increase capacity fast enough to win the business that's ahead of us. So if -- another question is, what's my biggest -- single biggest consideration or my single -- the thing that keeps me awake at night, it's being able to build appropriately skilled capacity fast enough to win at the rate we think we should win. And then deliver in accordance with those programs that we've signed up for. On the partnership side, look, I think I've covered that in my remarks. We have a long list of companies in SOC, semiconductor companies and sensing companies and others that now want to work with us. We are very open minded on third-party working relationships. We think it's a permanent fixture in our strategy going forward, and we'll continue to do so. And yes, it is difficult to quantify what opportunities come out of those, and we, frankly, haven't attempted to do so. I mean, as I said earlier, if a company like Qualcomm is investing their own money to embed or to preintegrate our software into their software stack on their platform, and they have a 50% or 60% share of a given area like infotainment in the industry, well, you'd have to have a view that, that would be incremental and positive. And the same applies for Omnivision. In terms of fleet, I had several questions about OEM fitment and trucks. Look, it's a really interesting question. We do have dialogue from time to time. We're very focused on auto because that's the primary volume market that's driven by the regulators at this point. And aftermarket can cover the Fleet business quite adequately, where it can't cover the passenger vehicle business. So I think there will be a market for OEM fitment in heavy vehicles. But I do think that that's some time off. But we keep a watching eye or we're watching brief on that. Yes, road maps, yes. Look, we are committed to providing the service here. There's a question as to whether we should do that or whether we should just move more hardware. I don't see any point in getting into a hardware-only business. I think that's the shortest way to be commoditized. And we've seen that across the market with players much larger than us that are in telematics. What's important here is that being able to offer the service dramatically improves the safety outcome. So having in-cabin alerts is one thing, but providing the 24/7 service improves the outcome by an additional 30-plus percent. So that's a very important part of the buying consideration of the company when you can see the significance of this particular risk that they're running. There were also a few comments around Caterpillar and [ BDMS ]. Look, [ BDMS ] is interesting. It's only now starting to pick up in interest. It's very good business for us, small volume, high margin. Look, it's not -- we don't see [ BDMS ] is an environment where we're going to send -- sell tens and tens of thousands of units. That's not really what it's about for us, but it's an important element in our overall business for both sales, margin and cash. So we'll continue to develop in that area. And we'll continue to support the customers that we have. Just on the company side, the investor side, we're well funded. And I think that's evident, and you can all see that through the numbers. The interest from U.S. investors has been a strategy, and it's a strategy that I would argue has worked. It's early days, and I do expect that interest will -- well, put it this way, if the inquiry rate that I have for meetings in the U.S. continues, I have no doubt that it will be successful. We frankly turned down more meetings than we accept just because there's only a certain amount of time in a day to do that kind of work outside of running the operations of the business. But we're really encouraged and really pleased with where that's going. The next group of questions, there were several around the NASDAQ listing. And look, my answer to that is, again, we keep an open mind. We do talk about other markets to list NASDAQ in particular amongst the management and the Board. My view on this is that in the next short period, let's say, for the next year or thereabouts, what's more important than entering into a new listing is to ensure that we win our fair share of business, and that we're on track to deliver those programs. Because if we move to NASDAQ too soon, and to be frank --- well bankers would argue it's a good thing to do. The rules change dramatically, the rules from AIM to NASDAQ are very, very different. They're considerably more onerous. And I'd like to be in a position where we have a level of confidence and a level of revenue visibility, particularly in order out beyond 2025 before we contemplate it. But it is on our mind. It is a subject that we talk about. And at the right time, we'll make a decision one way or another. So they were -- that's a summary of kind of the pre questions. So I'd read these out and...

Yes. If you could just click on that Q&A tab and just go through and pick out those questions, you're happy to respond to, and obviously, some that you've covered off during the presentation and that Q&A session as well. So [indiscernible] that would be great.

There's a question for Kate on the split of shareholders between private and institutional?

Yes. So I'd say about 65% of our institutional, about 35% is retail. And of course, our top 2 shareholders hold nearly 30% of our shares, so they obviously form a big part of institutional component.

Naomi, there's a question for you, has the cash started flowing from the Ford contract, the F-150 and the Marquis? Now look, this is one of those things, and I've read it out, it's not a mistake, I've read it out because it's in the public domain, and it's one of those things that we are yet unable to speak about specifically. So I think the official answer to that is, no. Another question on RFQs. What's the total value of the pipeline? We don't communicate the value of the pipeline, and I won't be joining to doing that today. But what I've said and what I'll continue to say, is that the RFQs that we've received since November are very significant when measured against the total 1 business today. Now there are a few very technical questions here. I'll put this one to Naomi. What are the withholding tax implications for your income from overseas countries? Will they add up to the effective tax rate of the company or be fully creditable? Now this is an area that we talk about frequently. So over to you, Naomi.

So we have a range of measures in respect to withholding tax. So once we're profitable, and we've burnt down all of our tax losses from prior years, they'll be fully creditable. But another avenue that we're taking whilst we're working through that process is to gross up for withholding taxes. So at the end of the day, there's no loss to shareholders and investors.

[Audio Gap] fast enough to win our fair share and that's closely followed by us being able to deliver that fair share. I've not got any lay awake moments from competitors. The market -- this is a -- DMS alone, if we just park fleet for a second is $1 billion a year market. There are a few competitors in it. And as I've said many times, I don't think it matters that much, whether you're going to win 35% or 40%. But we've got a strategy that differentiates, and we'll continue to prosecute that strategy. So it's skills and capacity that I'm focused on. Question about profitability, income exceeding expenses. We spoke about that several times before. It hasn't changed. It's in the FY '23 year. I think we've spoken about funding. Is the Tornado investment reflected in the number that Naomi presented in terms of the cash? No, it's -- because that cash number was at end of December and the Tornado funds were received only recently. Bear with me. Qualcomm. I know our focus is transport and Qualcomm has commercial relationships with others. But given they're doing work to integrate our technology on the auto side, is there any chance that they would expand into VR? Look -- or other verticals. Look, that's a great question. And it's a question that isn't -- I understand that whoever had asked this is talking about Qualcomm, but it's not specific to Qualcomm. To be frank, we get unsolicited proposals to explore eye-tracking in all kinds of new verticals on a semiregular basis. If we take the Omnivision business, for example, I mean they have a 30% share of order, but they have a significantly higher share of security, doorbells, for example. We think there's a fantastic application for eye tracking in doorbell because the one place where people are very okay with you being monitored is at your front door. So the question there is how quickly can you get the economics of high-performing eye tracking into a small device that you can sell in a doorbell, that probably retails for $20. So look, I think these things will come. But just to be straight on this, we are, at least for the next few years, very focused on transport. It's at least $1 billion market opportunity per annum in U.S. dollars if we exclude fleet from it. So that is, by far and away, our primary focus. There's a question about the raise. We did want to federate it. And we've done one to Tornado. There are several questions that are similar. And it's pretty simple. The answer to the question directly is do we have an intention of raising again in the U.S. and at this point in time, we don't. If the other questions were asked around NASDAQ, if that strategy comes to life, well, of course, that's a different set of characteristics that would cause us to reconsider. But we took Federated because it was a landmark investor that changed sentiment in the U.S. Tornado is a little different, specialist investor. We were able to do that at a premium, which we thought was a good thing to do. But they have a significantly higher book expectation than the $10 million. So we think another good investor, more on-market buying capacity and further support. Because the reaction that we've received from both of these investments from the U.S. market, is overwhelmingly positive. And this is drawing new U.S. investors to us who have the -- only the opportunity to acquire a market. The 31,000 units in OEMs, the question is over what period. That was in the half that we reported on. Look, there's a couple of similar questions in here about BDMS, about [ common bond ] and articles. Look, we have contracts with customers and we honor those contracts. Occasionally, journalists write things that are incredibly insightful and accurate and sometimes we can respond and sometimes we can't. Occasionally, we ask permission, whether we can or we cannot. And if we don't, you know what the answer is. Other articles that are written are miles off the truth. And we don't have a requirement to respond to those. So any contracts designed with any customers that have a confidentially clause in them will be honored by us without their permission. So look, I'm going to go to perhaps one final question here. I've answered some of those. Okay. Here's the final question I'll take on, we're running out the time. Are we working on a Gen 3 product for fleet? Yes, we are. So what would be different? Well, it will be over the lifetime of hardware and systems development since the first inception of Generation 1 and Generation 2 to now, there's been remarkable improvements in form factor, size, processing capacity, communications. So we are in the design phase of the Generation 3 product. And I can't really comment at the moment on what that looks like or when the timing is, but we're well advanced on those developments. So I apologize if I haven't got to every question. I think in aggregate, we've answered 50 or 60, one way or another. And I really appreciate your comments. We will get back on specific questions that we haven't had a chance to cover off.

Thank you very much. Thank you, and you, Paul, and Kate and Naomi as well. You have addressed a heck of a lot of those questions, and you will have the ability to review them later on the platform. And Paul, before we redirect the investors to give you some feedback, perhaps I could start you for a final few words just to wrap up, please?

Well, thank you. Well, look, I'd like to thank all of you for supporting our business or your business, I should say. I hope that everybody is quite pleased with the increase in the share price over the last year or so. I'm actually quite pleased that we're consolidating at the levels that we're at. If I consider where we're at today within the context of the market that I've just described, the intake of new business opportunity that I've described and the change in sentiment, particularly in the U.S. around our technology, I think this augurs well for a pretty bright future over the next few years. So I'd encourage you all to stay with us, and I hope you do so. Thank you.

That's fantastic. Thank you very much, indeed. Thank you for updating investors today. Could I please ask investors not to close the session, you'll be automatically redirected for the opportunity to provide your feedback. If you've accessed the meeting from our website, the feedback page will appear directly in front of you. If you've accessed by the link sent queue in an e-mail, please just click on the e-mail and look back in it, it takes just a couple of minutes and your feedback is greatly received by the company. On behalf of the management team at Seeing Machines Limited, we'd like to thank you for attending today's presentation. That now concludes today's session. Thank you, and goodbye.