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

Good morning, and welcome to the Seeing Machines Limited results presentation. [Operator Instructions] Before we begin, we'd like to submit the following poll. I'd now like to hand over to Paul McGlone, CEO. Good morning, sir.

Good morning, and thank you, and thank you to everybody that's joining the call today. There's a bit of material to go through today. Some of it will go through quickly because it's already been announced, and it's no point really going over information already out there. There have been a large number of questions, as usual. So we've categorized those and the majority we will attempt to answer as we go through the presentation. The balance will cover live at the end. And in roughly an hour after the end of the presentation, the material will be uploaded to the website, so you'll all be able to take a look there. So kick off with the usual disclaimer, which I won't be reading out this morning. But just a reminder, today, we're focused on transport, 3 key areas: automotive passenger vehicles, aftermarket and aviation. Our purpose is to get everyone home safely. We are 20 years in the business, lots of research backs up the products and the delivery and also the performance in the programs that we operate through our OEM customers. In summary, we are expecting our automotive royalties to grow very substantially, driven largely by the change in regulations that kick in, in July 26 this year in Europe. And just as a reminder, that means that every vehicle sold in Europe from them must have a camera-based driver monitoring system installed. Now today, if we look at our market position on a production volume basis, so not on a reported win basis, but on how many units of our software are going into new vehicles compared to everyone else's, we have around a 50% share. Now this is a really important number today and over the next 2 years and in particular, as GSR kicks in, in July. So we're very confident of a strong uptick between now and then and certainly over the next few years. Guardian product, we are also confident we will achieve substantial growth that's driven by a whole range of factors, including regulations in the U.S., but general road safety advocates everywhere else in the world. And of course, we have some new collaboration partners, not the least of which is Mitsubishi, and we're starting to see wins occur through that relationship. The investment phase of the business over the last few years is largely complete. So we will see benefits of scale going forward, both in our R&D expenditure and our operating costs, and that will be made clear today as Martin goes through the numbers. We are recommitting to cash flow breakeven run rate at the end of this calendar and cash generative in this fiscal year. And that's a very solid and important commitment from us in the management. Just some highlights. The Mitsubishi investment in December last year, very, very important. Obviously, the money is important. But I think as I sit here today, more important than that even is the breadth and depth of areas that we're working on together, both in our current core business, but also exploring opportunities that are outside of our core, but very much in the core of Mitsubishi. In terms of production volumes, 35% up on '24 in the last fiscal year to just over 1.5 million. The commitment we made around cost has been achieved and that cost run rate improvement is now embedded in our monthly numbers and our outlook. Guardian is in production. And arguably, the sales aren't materializing as quickly as some would like, but it's pretty consistent with the sales pipeline and the time that it takes to get these sales through, and I'll go through that in a little more detail shortly. Regulations are really important. It's what's got us here in Europe. If we look at '25, there's been a sort of a redoubling on semi-autonomous driving and now on impairment. And if we look out beyond '25, we see the regulations continuing to evolve. And this is very, very important, not just for Europe, but also for other markets. So what we expect from this is the regulations will drive new requirements, new requirements will drive new and improved features. Those requirements will have positive pressure on our average selling price and also create a much broader and deeper regulated requirement for this tech worldwide. And I think it's very, very clear now that, that is underway. Just a reminder on the market opportunity. We've been through this before, so I won't belabor it. The opportunity in automotive is defined here as the market that we're in today. So driver and occupant monitoring software kind of as it stands. As I just mentioned, I do expect this to grow as features grow driven by the expanding requirements of the regulators and also the expanding requirements of OEMs to drive more capability inside the cabin. But by far and away, our Aftermarket business has the largest addressable market. There are also more competitors there for sure, but we do see that going forward as a major opportunity for us. We're going to deliver this through partners, and I think our message around the people that we collaborate with has been very, very consistent over several years. And I'll just talk about a couple of these. CAT, a very enduring relationship. And we are still very much in alignment on product development for the vertical that they own. And I'm very confident we'll see continued growth through our relationship with Caterpillar. At Valeo, we acquired a business called Asaphus from them. I was there yesterday in Berlin, very capable software engineering team, and that's really pulled us closer to Valeo. We're developing our products with them in more of a platform way that will drive efficiency and reuse so that they can sell better outcomes to their customers. At MiTAC, they're the provider of our outward-facing camera, and we're working very closely with them on a whole range of options, including product development and distribution and so on. Magna, a very long and enduring relationship with them. I think everybody knows there are 2 sort of aspects to our relationship. One was exclusivity, which Magna acquired for 3 years that concluded in June just passed. And Magna have enjoyed the benefit of that exclusivity and have really got a position in the market today where they have what is a world-leading product. We didn't renew the exclusivity that we had in the past. Neither of us saw the need. The reality is we've built a platform with Magna that is very unique to them, high performing, and we continue to work with them to develop new levels of capability and features. So I don't see any change at all in the relationship between ourselves and Magna. Finally, just Mitsubishi. Again, we're working on a whole range of opportunities in our core business significantly, automotive in Japan, but also in their push to resell our Aftermarket product first in the Americas, which we signed several months ago and now in Europe. So I am expecting a significant opportunity from that. Importantly, though, the Mitsubishi opportunity is opening up new adjacent markets. Now today, as I've said many times, we've been completely focused on automotive. And the question around whether we should be in adjacent markets has been asked many times. And under our own steam, we'd most likely defer this given our focus on auto and getting to profitability and the like. But with Mitsubishi working with us in parallel, they've identified a range of new adjacent markets where they have significant strength around the world, and we are now in the early stages of planning to determine where we can implement our technology to enhance their existing capabilities. And of this portfolio of opportunities, the 2 hard circled, both Insurance and Smart Factory are the ones that we've prioritized together and are being led by Mitsubishi. So I think this is a very exciting new chapter in our story. I want to just revisit for a minute the business model, and let's start with Automotive. And look, I think most people are very aware of how we go to market. But we essentially go to market through Tier 1s. There are relationships with other participants in the value chain like the silicon guys, and we have some conversations typically on a technical basis, direct with OEMs. Now we're driven by 2 factors: regulations and the increasing penetration of semi-autonomous driving features and now full autonomous driving features. We make money through royalties, engineering services, some R&D licensing and on occasion, but rarely exclusivity as was the case with Magna. But I just want to draw your attention to the -- really the business development and implementation process on the bottom of this page. So we start with a request for information. And as we begin to answer those questions, Tier 1s and OEMs formulate a view around what they want to put in a request for quote. We finally receive a request for quote, multiple parties receive these, and we begin a negotiation presenting a technical offer, presenting a price. And just so that it's clear, sometimes these RFQs, we have 4 or 5 rounds of price negotiation. And sometimes we have 15 rounds of price negotiation. And then within that, there are often delays brought about by -- as those things are being negotiated, changes that the OEM wants to implement before they issue the award. So it's a bit how long is a piece of string, but typically 6 to 18 months. Once the program is won, 12 to 36 months developing the tech with, in our case, typically the Tier 1. And then once we've hit start of production, depending on the production run 3 years or -- between 3 and 7 years sometimes. So it's a very long lead-in process, but it's also a very long and enduring relationship. If we look at our business today, and I'll just get you to focus on the black line, that's the line that we believe represents market share today on a production basis, not on a reported sales win basis over time, but on vehicles hitting the road with DMS technology insight. So 3.7 million cars. And for us, that's about -- we have about half of the market so far. Now as you look at the longer term, we are being a bit more conservative. We assume competition will arrive certainly, as we've looked at what others say they've won over time. We think a 35% share, perhaps a 40% share of revenue, 35% of volume is an appropriate level for us. It could be higher; it could be lower. But GSR is really supporting this. And certainly, over the next 2 or 3 years, if you look at the dark green bars, '26, '27 and '28, that is a significant increase in production volumes driven by GSR largely, but not entirely and based on work that we've already won. Now the OEM customers that we serve today will sell in '26 around 12.5 million vehicles. Now just to be clear, some of those OEMs, we are the sole provider and some of them are shared between us and our competitors. So it isn't a direct relationship for us to win the 12.5 million. But my point here is that's the number for our existing customers. So we do expect a material proportion of that to flow directly to us. The other thing I want to say here, and this is related to a lot of the questions that were asked, what's going on with RFQs. So look, we don't delay the RFQs, the OEM does. And unfortunately, there's been a litany of delay month after month, quarter after quarter. But as it stands today, again, we have a substantial number of RFQs on our book that we're actively working on. Of those, just over half are Japanese OEMs, followed by Europe and then the U.S. Of those, about 1/4 of those RFQs are based on the mirror location, the rest, multiple different camera locations. Our latest information, and again, this is subject to change at the OEM, but just to give you our latest information is that half of the RFQs that we're working on are planned to be awarded this half, i.e., by December this year and the other half in FY '26 -- second half FY '26. So hopefully, that gives you a refreshed picture of where we are with RFQs. We know the reasons for delay. You can see where we're at with share and importantly, what that means for us as we approach July '26 and the GSR drop dead date. In Aftermarket, I'll just draw your attention to a couple of points here. Look, we make money here in a few different ways. Obviously, the monitoring is key, hardware sales, installation fees. We have some NRE for specific developments, and we license also. We sell direct and through channels. Some of the channels are very large, others are more localized, and there's a real mix. The after-manufacturer opportunity is opening up, driven by GSR. But what's interesting is we're also seeing a strong pull to OEM fitment in Asia Pacific and ANZ in particular. Now that's not driven by GSR. That's driven by customer demand. So in those markets where we have a significant position, our existing customers are asking us, why can't we buy this in the truck when we acquire it. So we have recently entered into some new arrangements to provide our product through that channel. Just to cover this because there's been a lot of questions asked. There is a substantial sales process and lead time in this market also. So if you think about it, other than Asia Pacific, where we've been pretty -- we've been for a while, Europe and the U.S. are really new markets for us. And whilst everyone on this call knows who we are, there are plenty of people in Europe and the U.S. who don't. So it's a new opportunity in a very material market. We have to create the prospects, leads and qualify them. We go through the usual process of technical presentations and often early-stage commercial presentations. In new markets, typically a trial is required. Our trials used to be on average much longer, and we've tried to compress them into a sort of a 3-part 6-week trial. After that, there's a review and all kinds of people in the organization are typically the customer organization that is typically involved in that, and we get into commercials and then finally, a deal and we start the installation process. So it does not happen overnight. But the good news is that we have a very material pipeline. And just -- Martin will go through that. But just to give you a little more color, we announced a small win yesterday, and that was with MEAA in the U.S. In and of itself, it doesn't really move the needle. But what is mission-critically important here is that's the first opportunity that MEAA have gone through start to finish and working with us to close a deal that's a customer of theirs. So the knowledge is in place, the processes are in place and the ability to close is in place. And I'll just remind everybody that their customers in the U.S. alone manage more than 1 million trucks. In addition, in the U.S., we're in the final commercial negotiations with a large opportunity, probably the largest opportunity that -- single opportunity that we've seen to date. Similarly, in Europe and in particular, in the GSR environment, we are in the final stages there also on several but one in particular material opportunities. APAC, it's really a large portfolio of existing customers where there's a really strong organic growth possibility. And then just to wrap up on this, we're seeing a resurgence in BDMS as the robotaxi market is picking up a new head of steam. So that looks interesting for us this year. So despite the -- I guess, the questions and despite the concern of why it's taking so long, all of the things that you would expect to see leading up to a sale are, in fact, happening. In aerospace, it's a little different. Mind you, because we're completely connected to Collins. Mind you, we have the first capability in an aircraft. So we have been the first, and that's with Air Ambulance Victoria. We're in at least a dozen pilot training simulators, and we have very strong relationships with key players. That's a little slower for us, but we are with a major partner, and it's a very small investment from us on the way through. I'll hand over to Martin.

Thanks, Paul. Good morning, everyone. Great to be back here in London. What I'd like to do, particularly given we've provided the trading update and the KPIs already for FY '25 is not spend so much time going through the detail of the FY '25 numbers but maybe focusing on a few key themes that really flow through. You see them in the numbers for '25, but then really flow through and impact '26 and getting to that cash flow breakeven run rate and ultimately, how do we deal with the convertible note with Magna. So those 3 things, and you can see them here in the '25 numbers is the growth of auto royalties. So we saw about 30% growth in auto royalty revenue for '25. And as Paul mentioned, the impact of the GSR introduction in July '26 will really be what pushes auto royalties forward in FY '26. We've got the transition from Gen 2 to Gen 3 in Guardian, which obviously had a negative impact in FY '25, but we expect to see with the strong pipeline that we've got an increase in revenue from that product or from the Gen 3 product in FY '26. And then also the cost reduction program that we went through in FY '25, which really starts us out at a good base from a cost perspective as we go into '26. And you can see that there was some impact of that in the FY '25 numbers. So going through into the performance for '25, a decrease in revenue compared to '24, which is largely down to 2 items, one being the Guardian Gen 2 to Gen 3 transition and also a reduction in revenues from aviation. So that in total, from a hardware perspective and an aviation perspective totaled around $16 million of reduced revenue. And that's really what led to the decline there. We had some areas where we had increases. But the major thing here that I just kind of want to talk to is the reference we have now to adjusted revenue versus statutory revenue and what really drives that and why we've decided to use adjusted revenue. And this really comes from the guaranteed -- minimum guaranteed royalty agreements that we had with a number of programs that have started to go into production at the end of '25, and there will be some additional programs that will go into production in '26. So this will also be an impact that we see in the FY '26 numbers. So just to kind of outline what these agreements mean. We have agreed to get a guaranteed minimum amount of volume and therefore, revenue on a periodic basis. So on an annual basis for those programs from one of the Tier 1 customers that we have. So those amounts are fixed at the start of the agreement. They're paid on an ongoing schedule over the 5-year or 6-year period of the program. But they also enable us to receive additional revenue on top of those minimums if the volumes are higher in any particular year. So from an accounting point of view, we get to a point where we have a fixed fee, and we don't have any dependency on us for either a contingent volume or for any additional deliverables. So therefore, that fixed amount needs to be recognized upfront. And this is what has happened with the program that went into production in the fourth quarter of FY '25. So using that as an example, we recognized the $10.2 million in June. We'll then receive the cash as those minimum volumes come through over the period of the program, which is a 5- or a 6-year program. So statutory revenue, $10.2 million upfront. And then in any particular year where our actual volumes exceed the minimums, we'll have additional revenue recognized in those years. From an adjusted revenue point of view, and I think this matches more closely with how we view performance and then also cash flow is for us to recognize for include adjusted revenue as and when we see that production happen and the amounts owed to us. So again, using that $10.2 million, the amount due to us or paid to us prior to the end of FY '25 were between $600,000 and $700,000. So that's what we've included from an adjusted revenue perspective. And as we go through the remainder of that program, we will be including in adjusted revenue, the volumes and the revenue associated with those volumes as the program progresses. I think that's more aligned with demonstrating our performance for those particular periods. Just to kind of then focus on what does that mean for FY '26. So we have 3 additional programs that do have minimum guarantees. The amount of those minimum guarantees for the additional programs is $42 million. So we're likely to see those go into production in FY '26 and have that additional statutory revenue. We won't be booking for an adjusted revenue perspective, those amounts. But just to give you an indication of how they flow through, it will be about $1 million worth of adjusted revenue in the first half and then an additional $5.5 million in the second half. And I think that, that ramp there also demonstrates what we're expecting to see from a royalty perspective in terms of the lead into the GSR implementation in July of '26. And then as we go into FY '27, the amount of the minimums there will be around $13 million from a cash perspective, which will be the minimum from an adjusted revenue perspective. So continuing on with auto, just to give a quick overview of '25, we saw an increase of around 30% in royalty revenue throughout the year. You can see on the left-hand side in the pie chart there that the mix from auto is starting to shift more and more to royalties and away from NRE, and that will be something that we continue to see as we go through to FY '26. And I'll just run through a little bit more about that later in the presentation. In terms of aftermarket, the impact of the reduction in revenues from CAT, we had the one-off licensing revenue at the end of FY '24 as well as royalties, which have now discontinued. The impact of that as well as the hardware was about $17 million in terms of reduction. You see that there in the right-hand chart. Recurring revenue continues to increase, albeit it plateaued a little bit as part of this transition from Gen 2 to Gen 3. But as the revenues and the unit volumes start to pick up for Gen 3 throughout FY '26, we'll see an acceleration of that ARR number and the monitoring revenue. And then finally, from a revenue perspective, just to touch a little bit on aviation. As we've kind of talked about previously in the town hall, we had a bit of a pause with a restructure in Collins during FY '25. So the revenue that we recognize there from an NRE and a licensing perspective reduced. We do expect to see the activity there pick up as we go into calendar year '26. And we do have a number of opportunities for sales of our technology into simulators and that will be largely what underpins the aviation revenue, particularly in the first half. Then going on to the cost management. We talked about this at the town hall back in April, where we just kind of started the major process or finished the major process of headcount reductions and restructuring in the organization. That has pretty much been finished by the time we got to Q4, the end of the June period. There were some kind of changes that were really finalized in July. So we'd expect to see a full year of the benefit of those changes that we have made. Obviously, some of the impact, given that we started the process back in December, made its way into the second half numbers. And you can see when you look at the first half versus second half split of operating costs, including that capitalized R&D element, we had a significant improvement in the second half compared to the first half and that will be something that we expect to see continue as we go through FY '26. So I'd just like to change up now and go through some of the impacts that we have talked about here and that Paul has talked about and what we're seeing as we go through into FY '26. So in terms of revenue mix, we're starting to see a much larger proportion of the higher-margin revenue streams flow through. We saw that with auto. So we're seeing a significant increase in the proportion of auto royalties and royalties overall. In addition, what we'll see in FY '26 is a significant increase in the proportion of hardware. And as part of this transition from Gen 2 to Gen 3 and aftermarket, Gen 2 ended up being a very low-margin product at the end where we were seeing less than 10% margin on each hardware sale. As we go through into sales of Gen 3, it's a significantly higher margin that we're seeing there, and it's much cheaper for us in terms of cost of service from a monitoring perspective. So those services that you see there is largely the driver monitoring services for Guardian for the aftermarket business unit with a significantly higher margin with Gen 3 compared to Gen 2. It will take a while for that transition to happen from a services perspective, particularly given we've got around 45,000 units of Gen 2 that we're currently monitoring. But over time, we'll start to see the benefit of that as we go through FY '26. The biggest change here that we see is in relation to NRE, so a significant reduction in NRE for around 20% down to probably somewhere between 5% and 10% for FY '26. That's largely because of, as Paul mentioned, some work that we're doing with Asaphus for platform development. That significantly reduces. And what we're starting to see is a much higher level of reuse in terms of technology with new program awards. Going through then into auto royalties. And we've talked about this for a number of years with the pending implementation of GSR from July '26. Paul also talked about it. This is what we -- or how we currently view that kind of growth in volumes as we go through the next 4 quarters. We saw things pick up in the second half of FY '25, and we put a benchmark or reference point for getting to that breakeven cash flow position in our December quarter of around 750,000 units. The increase in volumes that we're seeing are really generated in FY '26 from the EU and those GSR regulations. We have a number of new programs that go into production during FY '26, one in the first half and then another 3 in the second half. And the take-up rate that we'll see for those EU programs will significantly increase. We talked about that at the town hall being at somewhere around 10% fitment rate. That over the next 4 quarters for the EU programs will be going up to 100%. So from an EU perspective, using now that Q4 numbers as a baseline, we see that increase in fitment being somewhere between 5 to 6x what we saw at the end of Q4. So it's pretty significant. By the time we get to the run rate at the end of June, what's going to be needed July and onwards, we'll be looking at somewhere around 2 million units per quarter as we go through the start of FY '27. But for us, I think the important thing is getting to 750,000 units during Q2 and then starting to see those volumes increase as we go through Q3 and Q4 above 1 million units per quarter. Just flowing through now to Guardian and just to have a look, Paul mentioned the pipeline and went through some of the specific opportunities. Just kind of want to talk a little bit about the different nature of the pipeline in each of the regions. In the U.S., a significant number of referrals from the Mitsubishi North America customer base. They've got over 1 million trucks that are starting to flow through the pipeline, and we started to see the first referral deals close. Also, we've got a direct team there that are focused on other large fleets and they're particularly focused on fleets where there have been a fatality. Those tend to be larger fleets. And given that there isn't the same regulation in North America that we see being introduced in the EU, focusing on fleets where there has been a fatality just gives us a high probability of a focus on safety and reducing the impact of fatalities throughout those fleets. So those larger opportunities tend to take a little bit longer to work through the pipeline. They all tend to go through a very structured trial process. So we expect to see the impact of those really kind of starting to influence our second half numbers. In terms of EMEA, we do have a number of large fleets there, but also driven by GSR and particularly the after-manufacturer fitment business. And then with ANZ, particularly, we've obviously got a number of distributors there and also ongoing customers where we're looking to expand the penetration that we have within their fleet. So ANZ, much quicker in terms of the flow-through of the pipeline. That will really be what is driving near-term opportunities Q2, and the second half is really going to be driven by North America and EMEA. Just going through operating expenses. I kind of talked about the cost management processes that we've been through. Here, we're just kind of demonstrating the impact that we've seen is a significant decrease of around $8.6 million in costs from what we saw at the peak point in December of 2023. The impact of that will continue to flow through the rest of FY '26. So starting off with a really good base from a cost perspective to be able to get to that cash flow breakeven position. And then just to go through kind of a similar table that we went through in April, which was focused on the first half of FY '25 as a reference point, but now looking at FY '20 -- sorry, the second half of FY '25 is the basis, and how the impact of the 3 elements that we've been speaking about impacts and gets us to that cash flow breakeven run rate at the end of this calendar year. So the run rate that we had at the end of the second half is just over $2 million of adjusted EBITDA loss or cash burn per month. The flow-through impact of the cost management changes that we've made will be around $460,000 for the rest of the first half. So there the -- either the items that were kind of done late in the half and then the impact of the changes that we made in December and also at the end of March flowing through for the rest of the first half of FY '26, around $460,000, gets us down to a cash burn of just over -- or just under $1.6 million per month. The remainder is all coming from the benefit that we see with auto royalties, 100% flow-through going from an average of around $420,000 per quarter in the second half of '25, looking to get to that $750,000 per quarter for Q2 of FY '26. That gives us the benefit of around $800,000 per month, just under $2.5 million per quarter. And then from a Gen 3 perspective, getting to the point where we're selling our production capacity run rate at the moment at 6,000 units a quarter, that will give us also around $800,000 of gross profit benefit per month. So those elements combined getting us to that cash flow breakeven run rate. And then as we go through into the second half, obviously, the increase in royalties, in particular, taking us to the point where we'll be generating cash for the second half of the financial year. So just to close out and summarize that, we got a cash balance in June of just over $22 million, looking to get to that breakeven run rate at the end of the calendar year, so the end of Q2 for us based on the table that we just went through previously and then being in a positive position for the second half of FY '26 and then going through for the full year and into FY '27. We'll be in a position towards the end of the '26 calendar year where we're generating around $10 million of cash a quarter. We have the convertible note maturing with Magna in October '26. So the focus for us is maximize cash generation prior to that point, building up cash reserves, which will give us the maximum number of opportunities to be able to meet those note obligations. We have already commenced the process to secure additional debt facilities to use in that mix of repayment options of the convertible note. That's the summary. I'll just hand over to Paul before we go to any Q&A.

Okay. Thanks, Martin. So just from me, without repeating the whole presentation again, we'll see this year high double-digit growth in revenue. We'll see margins north of 60%. The cost reduction is already in place, and we have a line of sight to profitability. I think that's very, very important, and we're completely focused on that and will remain so for the rest of this fiscal year. And in addition, though, we are seeing real opportunity for outperformance driven by GSR and some really important new opportunities that we'll manage appropriately presented to us through our relationship with Mitsubishi. So at that point, I'll leave it there. And many of the questions, I think, that were asked, we've answered along the way, but we will open to questions that have come through.

Fantastic, Paul Martin, thanks very much indeed for your presentation. And let's move on to those questions. We've received a number of questions from investors. So thank you for those that have come through, some of which by their nature will be best answered by the team in writing with those responses published on the Investor Meet Company platform. You will, of course, be notified once they're ready for your review. Let's start with the first question we got here from Paul, reads as follows. Tobii claim they've won a major North European German automotive manufacturer. It seems to be suggested it's BMW. Have we lost BMW in the future as a customer? If we have, what might that reason be?

Yes. Look, it's difficult to be super specific because I didn't make that claim, someone else did. But look, OEMs if we look at the pattern of OEM purchasing from the beginning of this process until now, many OEMs have elected to go with multiple suppliers for each new generation of software. And that's completely normal and entirely to be expected. And this is a good example. Now that was known to us 3 years ago. It's included in our forecast. And it very -- absolutely doesn't mean that if you lose a program to a party that you can't win another program with the same party. It happens all the time. It's the standard operating model for the OEMs. So it's -- I think what they've reported is true, but it's normal business. It's not unusual.

Fantastic. Two questions from David. I think you touched on this in the presentation, but just anything further to add. How is our relationship with Magna since their exclusivity expired? And also just touching on the town hall of October, you referenced respective after-manufacturer contracts of 50,000 to 100,000 units. Are those types of GT contracts still possible?

Okay. To the first question, I think I did answer that during the presentation, and our relationship is good, and we're continuing to bid for new business. So I'll leave that one there. On the after-manufacturer, what I said was that there are roughly 300,000 new trucks and buses that are sold into Europe each year. And they are a new opportunity because we wouldn't have had that opportunity in the past. So depending on what ASP you want to put on that, you can figure out the addressable market. It's pretty significant. Now the -- some of the deals that we're negotiating now are for companies that produce several thousand units a year. And the important part about this is that unlike our traditional aftermarket business, where we're selling to existing operating fleets, this tends to be a rolling contract of perhaps 3 or 5 years. So we do expect the volumes to be larger and more committed than in our traditional aftermarket business.

Question from Robert Em. If the business becomes cash flow positive in 2026 as planned, will the business look at measures to improve the share price like a share buyback program?

Look, once we're profitable and generating cash, I think there are all sorts of opportunities that present themselves, whether they be capital management or otherwise. And we are very focused on the share price. And perhaps you might say, well, it doesn't look like it given where it is today. But all of the things that we're doing in our normal course, for example, focusing on delivering high-quality programs that actually result in royalty flow. I think 2 quarters from now, it will become evident that, that effort was well worth it. So getting to profit is our first objective. Once we're there, we will explore all opportunities to maximize the share price.

Question from Liam. There are constant reports of China introducing new cars worldwide, e.g., BYD. How would China growth impact on Seeing Machines' business?

Well, interestingly, all the numbers that we present here exclude China. That's the first thing. But in parallel, we are developing our own China strategy. And it isn't the same as what we've executed in the rest of world. We're working through partners to deliver specific sets of features that are at the right price point that come at a far lower cost. And our objective is to participate in that growth, particularly for those Chinese OEMs that export through our partners. So we'll have more to say about that sort of in coming quarters, but it is a live strategy that we're working on, and these numbers exclude the Chinese market entirely.

Question from Michael. Your slides show a sharp drop-off in your market share from 2026 onwards. Why is this? Does this give weight to the general chatter that you're losing customers or the competitors? Even small ones are winning large contracts or OEMs doing in-house solutions, just as examples such as BMW, Volvo, et cetera.

No, it doesn't. I think the thing that skews that picture is that it isn't a flat 35%. And so we're looking at royalty flow, and we know what the numbers are today because they're more or less published. Certainly, we published them accurately. Now despite what all of the participants have claimed to win, on a quarter-by-quarter basis, we have around 50% of the total market. That's a fact. But we also assume, given all of the news that's been out there now probably for more than a few years, that an appropriate share position for anyone in automotive, about 1/3 is probably the right number. So it's not reflective of losses. It's not reflective of people winning business that we're not bidding for. Nothing material has been bid or won. It's entirely reflective of our outlook and represents a position that we think is a comfortable position to attain. So it's not a mathematical construct. The mathematical construct is in the nearing years where we know what the royalty flows are. But beyond, say, 2 years out, it's more of a reasonable assumption for the long run.

Thanks, Paul, and thank you for answering those questions. And of course, as mentioned earlier, the company review all questions submitted today, and we'll publish those responses on the Invest Meet Company platform. You will be notified of those as well. Before redirecting investors to provide you their feedback, particularly important to you and the team, Paul, could I just ask you for a few closing comments, please?

Yes. Look, firstly, thank you for staying with us. Thank you for attending this session. Hopefully, we've provided you with some new insight. And that new insight, certainly as far as we're concerned, underpins the confidence that we have in the short-term future of our business and in particular, in so far as it relates to getting to profitability. But I think you can also see that moving out 2 or 3 years, we expect the growth in our high-margin revenue lines to continue. And we'll be prosecuting that argument for the rest of the week as we're here talking to shareholders in London. But thank you all for your time this morning.

Fantastic. Paul, Martin, thank you indeed for updating investors. Can I please ask investors not to close this session? Should be automatically redirected to provide your feedback in order the team can better understand your views and expectations. It only take a few moments to complete. I'm sure it's greatly valued by the company. On behalf of the management team of Seeing Machines Limited, we'd like to thank you for attending today's presentation. That concludes today's session, and good morning to you all.

Thank you.

Thank you.