Seeing Machines (LSE:SEE) — H1 FY 2023 Results

0:01 Good afternoon, and welcome to the SEEING MACHINES LIMITED investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Simply type in your question and press in. To the number of attendees on today's meeting, we may not be able to get through every question received, but the company will review all questions submitted today. We'll publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Paul McGlann, CEO Martin Ives, CFO. Good afternoon.

0:31 Thank you. Thank you very much. Thanks everyone for joining us, to hear our h one results for financial year FY '23. This will be the first, time you get an opportunity to hear from Martin, who'll be taking us through the detail of the numbers today. But I'll just kick off with a with a summary. And, you know, from our perspective, this is a good set of results. I believe it's a good good strong set of results for the half. We're showing growth across the business. I think it's evident in the numbers that cost management initiatives that we put in place are appropriate and working. I think we have appropriate investment for both the short, medium, and long term.

1:16 Our r and d is is now balanced over the three horizons so that we can be certain that we can hit the requirements that we have for current programs, but still be ahead of the game for those programs that we know will be coming down the pipeline in the next year or two. And and I think furthermore, we have a a balance sheet today that is strong and will will see us through to the fulfillment of our current business plan. So all in all, a good set of results across the board. In terms of pipeline, remains strong also in each of the three areas of our business, automotive, fleet and aviation. Across the board, we're very focused not just on winning out our fair share of the market, but also doing that profitably.

2:09 And I'm I'm quite pleased with the results so far. We're holding our price premium in the market across the board, which I think is very important, not just for what we can announce as wins, but for the returns that are generated from each program that we do win and execute over what is, you know, a very long period of time. So from that perspective, very pleased. And I think just finally on on the opportunity side,

2:38 have a growing addressable market across the board and that is so in automotive, it is so in fleet and also in aviation as we see new markets and new segments within the markets that we operate opening up. Just in terms of the numbers from a very high level, I've been talking about the revenue mix and margin improvement over time. I think this set of results is the first time where you can see evidence of that revenue mix change and how that's beginning to affect margin. And I think the the important part of the news in in this set of h one results in so far as it provides an insight into the future is that we are seeing strong growth and at the time same time, the revenue mix change is delivering increasing margins.

3:37 And that augurs very well for our pursuit of profit. So so, you know, this is, I believe, a very good position for us to be in. All of the hard work and effort over the last few years and that coming to fruition and this combination of strong growth, revenue mix change to higher margin revenue streams happening at the same time will deliver us very good rough results over the coming next couple of years. And then just finally before I introduce Martin, you'll notice that we have switched our reporting currency to US dollars. Martin will explain why why we've done that and what it means and also take us through the the detail of the results. So thank you, and over to you, Martin.

4:23 Thanks, Paul, and good afternoon, everybody. Just to reiterate on on Paul's point there, because of the increasing proportion of SEEING MACHINES business conducted in US dollars from the July 1, the functional currency of the group has changed to US dollars. And And from now on, we'll report our financial information in in that currency. We're pleased to report that revenue was 24,400,000 US dollars for the half, an increase of 54% from the previous corresponding period. Underlying metrics of the performance was strong with Guardian Connections increasing to 46,018 and auto production volumes of 253,824, resulting in cars on the road with our DMS system of over 700,000.

5:20 Additional funding of 47,500,000 US dollars was secured from Magna through a convertible note, of which 30,000,000 US dollars has been accessed to date. This contributed to the cash balance, which increased to 52,200,000 US dollars at the end of the period. The balance sheet is now considerably stronger than at the start of the financial year, have sufficient funding for our business plans. Free cash flow was negative 18,500,000 US dollars for the half year. This has secured additional resources for current automotive projects, investment in research and development for next generation features, as well as the design and development of our soon to be launched Guardian Gen three units.

6:10 We expect a similar level of free cash flow in the second half as as working capital requirements increase with the delivery of more Guardian units during the half before free cash flow improves in FY '24. The balance sheet strength sets us apart from our tier two competitors. We are well funded and a trusted partner able to continue delivery on long tail business well into the future. As mentioned, revenue increased 54% on the corresponding period a year ago, which demonstrates the tailwinds that we're experiencing with the pending regulatory requirements from Euro NCAP and the European general safety regulation in the EU, expanding to more regions globally and the the increasing focus on driver monitoring systems to support semi automation.

7:03 The revenue mix for SEEING MACHINES has also started to change from nonrecurring engineering services referred to as NRE and other lower margin revenues to royalties and licensing, which are higher margin revenue streams. As a result, gross profit has more than doubled to 15,500,000 US dollars, just just $22,000,000 million US dollars short of the gross profit from f y fifty f y twenty two. Net loss reduced to 5,400,000 US dollars compared to 10,100,000 US dollars in the first half of last year. These results have been achieved in a period in which aftermarket, the traditional revenue generating business unit of SEEING MACHINES, has been constrained by supply of new units of Guardian hardware.

7:54 The result of this constraint meant that only 1,536 hardware units were sold during the first half compared to 4,285 units in the first half of last year. And overall business unit revenue declined 14% to 10,300,000 US dollars. The number of Guardian units connected and subscribe subscribing to our monitoring service continued to grow, reaching over 46,000 by the end of December. The recurring net revenue from monitoring services increased to 5,900,000 US dollars for the half with ARR increasing to 11,900,000 US as of the end of December. Churn on guardian monitoring services continues to be low at less than 2%, demonstrating the value of this accumulating recurring revenue stream.

8:51 Supply constraints for the production of Guardian have now started to ease with a delivery schedule in place from December, which will meet the majority of the pent up demand for Guardian hardware. The first shipments were received towards the end of December and will continue for the current production run into the first half of f y twenty four. The initial impact of this has been very positive with Guardian unit sales and and hardware revenue in this early stage of h two already exceeding what was achieved in the first half. Automotive revenues increased by over 300% on the prior corresponding period. This was largely driven by 5,400,000 US dollars in revenues from the exclusive collaboration agreement with Magna.

9:42 Royalty revenue also more than doubled as some of the early stage programs in production increased in volume.

9:50 Excluding the license payment from Magna, automotive revenue was more than double the revenue from the first half of f y twenty two and was 31% higher than the second half of f y twenty two. Production volumes for the half were 253,824, growing a 12325% from the first and second half of last year, respectively. Volumes from current programs are expected to continue to ramp in the second half of FY twenty three, and four new programs will enter production in the next twelve to eighteen months, including two of the larger programs that we have been awarded to date.

10:35 The shift in revenue mix in automotive from NRE to royalties and licensing will continue to increase gross profit and be a major contribution as we move along the path to profitability. Aviation generated 300,000 US dollars in revenue for the half year through a combination of hardware, license, and NRE sales. The aviation business is is in a similar position to the automotive business a few years ago and is primed to grow as the avionics industry recovers from COVID to deal with significant pilot shortages resulting in heightened risks of fatigue and distraction.

11:19 On the cost side, margin has improved due to the change in revenue mix for the period with the growth in higher margin revenues. It is expected that margin will reduce in the second half a larger proportion of second half revenue will consist of the lower margin Guardian unit hardware sales as product availability catches up with demand. However, it is expected that the ongoing trend for gross margin will be upwards as the revenue revenue mix continues to change with a larger proportion of royalty and services revenue as well as the introduction of the generation three Guardian product with its lower production costs.

12:01 Operating expenses increased by 20%, including capitalized r and d, compared to the prior corresponding period. The main contributor was growth in r and d expenses from additional resources used for automotive projects and the development of Guardian Gen three. No step change is required to meet current commitments from ongoing automotive projects. However, some incremental costs may be required for any new automotive wins, and cost growth in the other functions will be disciplined and measured.

12:36 This half year demonstrated the impact of the change in revenue mix from low or no margin n r NRE to high margin services, licensing, and royalty revenue. With the tailwinds from regulatory changes and the transport focus on fatigue and distraction, high margin revenue streams will continue to grow. In combination with the growing high margin recurring revenue streams from the aftermarket business, the financial performance of the company is on the path to profitability. In conclusion, SEEING MACHINES' total addressable market is expanding, underpinned by compelling structural drivers and regulatory tailwinds, which present an exciting opportunity to grow market share and deliver long term growth.

13:24 In the short term, company financial performance is expected to be in line with consensus expectations for FY 'twenty three. I'll pass over to Paul for some concluding remarks before we go to Q and A. Okay. Thanks, Martin. So just to recap, we have an expanding addressable market, which is good. The pipeline continues to grow, remains strong. We're seeing growth fall through to our numbers now, as demonstrated in this half's results. We expect that to continue. The revenue mix change that we've talked about for a while is real. You can see that coming through the numbers. And I think a very important sort of point to triangulate towards our profitability, which we now have a line of sight to.

14:12 And the final point, of course, the balance sheet that will support us to do what we need to do without any concerns about continuing to have to raise money or deliver any additional dilution. So pretty pleased with

14:27 the result, pretty pleased with the balance sheet. And I'll turn to some questions. Fantastic. Thank you very much indeed for your presentation. Ladies and gentlemen, do please continue to submit your questions using the Q and A tab situated in the right hand corner of your screen. But just while the team take a few moments to review those questions submitted today, I'd like to remind you that the recording of the presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard. As you can see, had a number of questions come throughout today's meeting. We did have a number of pre submitted ones. So perhaps I may start with those, Paul, and perhaps you can just take them or direct them to Martin. The first one reads as follows: In any future vehicles with no human driver input, do you see the role of your technology in occupant monitoring monitoring?

15:12 Yes. We do. I think there's a couple of factors there that are really important. It's very clear today that, full autonomous vehicles that are are gonna take material share of the total vehicle market, I mean, that's gonna be a very, very long way off. So the road to full autonomy is semi autonomy, and, that road requires interior monitoring and and specifically, driver monitoring. So we we see that, being relevant and required for a very long time. And even in an environment where you have full autonomy, there is already programs underway to deliver a whole range of features sensing inside the cabin. So so, yes, certainly.

16:01 Fantastic. Thank you very much indeed. Next one we've got here. How long will it take you to release the quarterly KPIs after each quarter? For the last quarter ended December 22, then approximately eight weeks to release date in February seems to be a long wait. Yeah. It is a long wait, but we release them when we get them. So the the terms and conditions that we have with the t ones that then back to back with the OEMs, the OEM provide the production schedule to the t one. The t one delivers the product.

16:32 And then, you know, roughly eight weeks after that, we get a report that shows us, you know, how many units have been moved, and that's the structure of the industry. So we put those out as soon as we receive them, and it's about eight weeks. That's great. Thank you, Paul. And what happened to the several collaborations with the aircraft simulator companies?

16:54 Well, they they still they continue. You know, some airlines over the last few years have continued. Others have put the handbrake on all kinds of development. I think what's important right now, though, if you look, around the world I mean, here we are in New York today. There's big news everywhere about issues, with airlines. The number of near misses are increasing. Back in our hometown in Australia, Qantas are recruiting 2,300 pilots over the next eighteen months. So this revitalization is happening all over the world, and I suspect that we'll see the same flow through to the, you know, the the inquiry patterns and the purchasing patterns of airlines for both training and pilot monitoring. You know, it's a it's a long time business. It's been badly affected. It's clearly coming back, And issues of, fatigue and and cognitive overload and the like in airlines today are profound. So that's a set of conditions that I think are positive.

17:53 That's great. Thanks, Paul. If SEEING MACHINES is the only company offering a DMS solution for commercial vehicles, then why are you so conservative? Why aren't you forecasting, not to sweep the board? Well, we're not the only company. We'd argue that we have the the the high performing signals that address the the specific risks of fatigue and distraction, but we're certainly not the only company. And and, you you know, the the matter of forecasting when you're small is complex, and the, as everybody would know, I think, the opportunity for significant variances up or down is is almost an absolute. So we tend to be somewhat measured, you know, positive but measured, and that's a function of, you know, where where we are in the market, our size, and a whole range of other normal commercial factors.

18:51 Thanks, Paul. And next one reads as follows. Why in a recent interview did Mobilize say they were working on their own DMS when they signed a collaboration agreement with us? I thought we only work with companies that abandon their own DMS projects.

19:05 Well, I I I think we're kind of mixing two subjects into the one. I mean, what we've discussed and agreed with Mobilize that we will offer our aftermarket product through their sales channel. So this is not the same as a conversation with a tier one that's developing DMS for an OEM. It's quite a different conversation. So it's specific what we're doing to mobilize specifically about aftermarket, it it's not the same conversation as what we would have with a tier one or an OEM. And and, you know, mobilized plans are mobilized plans. Our our focus with them today is in aftermarket. Thank you. Are you planning to list on Nasdaq, and what would be the timeline?

19:54 Look, as mentioned before, it it is on our horizon. It it's not on our immediate horizon. There's several reasons for that. Current markets would be one. I think we need to be in a position where our upward momentum is continued for another half or two, at least, so that we can be confident in the long term trajectory as we'd be telegraphing those long long term, forecast for for that kind of event. So it is it is, in our in our thoughts, but it's not in our immediate thoughts. Thanks, Paul. Smart Eye seems to be winning tenders there, the most recent being in commercial vehicles. Are they surprising you with their win rate and getting a foothold in the commercial vehicle sector?

20:40 Look at that. No. I don't get surprised at all. Well, I mean, if you if you look at announcements, that's one thing. If you look at, new automotive RFQs, that's a completely different thing. So if you break it down, of the last eight RFQs that were published to all participants, of the last eight that were awarded, yeah, we we won four of the eight. So that's the 50% I've been referring to for some time. And, you know, one of those, you know, a year and a bit ago was the the largest RFQ ever awarded. So, you know, 40 to 50% is is kind of where we sit. How people announce additional wins from incumbent programs is another method, but they're not RFQs. We don't participate in those.

21:30 But as as far as, truck OEMs go, I mean, we we've elected not to pursue that business. We have, received RFIs and RFQs. From our perspective, and I can't speak for others, but from from our perspective, we can't make the economics work. They're they're complex programs. They run over a much longer time frame than typical passenger vehicles, and the ASP tends to be challenging. So for us, given the opportunity cost, I mean, we we prefer to put our effort into higher value, higher margin passenger vehicle opportunities. I mean, our our focus for the truck market will be what we're calling after manufacture, and that's a specific opportunity driven by GSR,

22:20 primarily in Europe at this point in time. Thanks, Paul. Where are we with regards to Gardening 3.0? What are the differences between level three versus level two? Look, there's a lot of detail in that question. In summary, we're well advanced. We've received the prototypes. We've tested prototypes. That activity will continue right through this financial year. In summary, it's a small form factor. It has a very complete telematics integration capability that's very easy. It's got automotive grade features, which will be I've already mentioned that that we believe the performance of our features for the the risk that we we capture are best in market, but they'll be enhanced even further in this new product.

23:16 The it meets GSR requirements,

23:19 and it's it's the unit cost is materially lower and the installation process materially faster. That's great. Thanks, Paul. Is Maglamirror maybe their with their ClearView function, essentially Guardian three point o, or have we something further for aftermarket? Does this eventually die off once commercial vehicles add DMS during production? No. Look. I've I've I've heard all kinds of comments about Magnum, Magnum Mirror, and Guardian generation three, which is an aftermarket product. I mean, most trucks don't have rearview mirrors. Right? Because you they have a trailer behind the cabin. So that's that's I'm I'm not sure about the origin of that particular comment. That's that's not the starter.

24:08 And, no, we we we're not talking demanding about production of our fleet product. Great stuff. With a constant focus on cost, can you provide an update on the internal resource capability to handle the ongoing stream of new businesses?

24:22 It's new business we are winning. Yeah. Yeah. I can. I I mean, we've been focused on cost for a while. And importantly, at the same time, we've been beefing up our engineering capability for for a while. Yeah. More than a year, probably eighteen months now. And it takes that long to find them, bring them on board, upscale them, and and enable them to be fully productive. The big change that we've made is whilst we've continued to, bring in core personnel in in into our business as full time employees, we've also grown our relationship with external third parties, more than one, and depending on what activity we're specifically referring to. But in general terms, our core engineering capability has been complemented by a third party where we've offshored a significant number of resources that complement our local team, or teams.

25:19 So, I'm very comfortable that we have the right

25:23 level of capacity. But more important than that, we have the right mix of capacity in terms of, not just skills, but also in terms of, you know, full time employees and third party. Now that affords us considerable flexibility should we require increasing resources, let's say, for additional programs of complex that require extra work. We can up, you know, up those engineering numbers quite quickly externally. And by the same token, we can turn them down. So this level of flexibility is really important, and it's something we've been working on for a year and a half, and we have very good partners in place now that are operating at a high level of productivity.

26:12 I'm really confident in their capability. That's great. Thanks, Paul. Why has the ARR dropped from US dollar 12,700,000 on the trading update to US dollar 11,900,000 on the h one results?

26:28 Martin, you take that one? Yeah. Sure. So we we included an explanation to this, I think, in the in the in the results pack that went out yesterday. We we reviewed what was included in the ARR numbers of the trading update, which included some amount of hardware royalties that we received from Magna, which had previously been included in ARR as a recurring revenue. And whilst it is a recurring revenue stream of sorts, it does relate to one off sales that Caterpillar makes to through their mining vertical. So from Caterpillar, we get a royalty for sales as well as the monitoring services.

27:13 And so the monitoring services continues to be included in ARR, but we've now excluded the the hardware royalty. And so that's the difference between the two numbers that you would have seen in the trading update and what we've included in the more recent results announcement. That's great. Thanks very much indeed. Right. Moving on to some of the other questions we've had through. Paul, I think you have touched touched on on this, this, but if there's anything further to add, any comment on SMARSEID recent design wins in proportion to the same time period for SEEING MACHINES? I think I've answered that already. Perfect. Are you still confident of a 40% volume share and 50% value share in automotive after AllSmart, I've announced 13 wins to r four in the last twelve months? Yeah.

28:02 Yeah. I am. And like I said, the the number of wins is almost an an irrelevance. Mean, it's interesting. What's more important is the the volume of each new RFQ win and the value of the new RFQ win, and, obviously, the underlying average selling price for the licenses that are that are offered. So, you know, over the last eight RFQ awards, as I said, we've won about we're exactly 50% of those, including that which was the largest ever awarded. So, I'm still confident of that position. Thanks. But one for you, Martin. Why did you join SEEING MACHINES and make such a large personal investment very quickly? So I can I can I can answer the the why I joined SEEING MACHINES so that, you know, I've I've I've been been involved in the in the tech sector for a number of years both here and in The US? Also, we're here, you know, in The US at the moment.

29:00 So in in The US and and back in Australia. And it's, you know, it's a sector I enjoy. You know, I I was with a a company that grew significantly over over a number of years, and I saw that SEEING MACHINES was, you know, in a in a similar position to where I was at LTM about ten years ago. And I just feel that it was, you know, a a really enjoyable, you know, time for me, you know, working with a good group of people that could, you know, get a company to to grow significantly an extended period of time and add a significant amount of value to shareholders. And I see that that is, you know, something that I have the opportunity to do here again.

29:46 And And and and some people never get that opportunity. So for me to have had that twice in my career is, you know, something I I, you know, wanna make the most of. That's great. Thank you very much indeed, Martin. Paul, can you tell us about gen two supply and the flow through to the launch of gen three? Yeah. Yeah. So gen two has been constrained for more than a year. I think I've I've mentioned several times now that in the in h two last year, we actually ran out of stock. We oversold the stock balance. We've sold about 1,500 odd units in h one of f y twenty three as reported. And if you put that into perspective, if we didn't have the supply constraint, we we probably would have sold eight or 9,000 units in h one.

30:39 Now what's happened to that demand? Well, that demand's carried over. And and what I what I can say is that so far, in this second half, we've sold, more volume than the entirety of H 1. Okay? So we we we we just saw a return to normal production and delivery patterns at the very end of the year, which really didn't materialize until January. January is a difficult month because of, you know, availability of trucks for Christmas trading and New Year trading and the like. But since then, we've been receiving stock that will continue right through June, July. And as I as I say, we've we've we've sold more in the second half so far than the whole of of h one. So we we see that stock problem is resolved, and we see demand now being fulfilled.

31:38 So that's there's not really a strong correlation between that and generation three. Generation three is designed, you know, to access new markets because of the characteristics that I mentioned earlier. But that's that's the that's the position on on stock. That's great. Thank you very much indeed. How do you see your margins increasing? Maybe one for for you, Martin, perhaps first. Yeah. So, you know, I think as we've kind of talked through this this presentation, we are moving from low or or zero margin NRE to the the the stage with the automotive business that is generating royalties. Now the royalties are very high margin.

32:24 Most of the the the the the work that is undertaken for the production royalties is upfront in terms of the r and d work that goes into creating the features and then commercializing the features. So, you know, a a large part of that cost has already already been incurred. So as we move into the production phase for the automotive programs, you know, that's when that revenue switches to a very high margin revenue stream. Similarly, with the the aftermarket business, I think there are probably two drivers there. One of which is the accumulating balance of annual recurring revenue from the monitoring services as the number of connections increase.

33:14 And that, again, is a high margin revenue stream. And as we move from gen two to gen three, we will see an increase in margin from the hardware sales. So as as the the gen two unit is now even though it's been redesigned, it's still quite an old generation of product. And so over time, that has become more costly to produce. And so as we move to the new generation product, we'd see that unit cost decrease and the margin increase from those sales. So I think the combination of those three elements sees the overall margins for the the business growing. And as the revenue from those revenue streams increases, obviously, that flows through to the to the bottom line and generates the margins with our kind of disciplined cost growth in in operating expenses, sees those margins flow through to to the overall profit of the company.

34:13 That's great. Thanks very much indeed, Martin. Couple of questions here. I'll just blend them together. I'm just looking at profitability, accounting profit. SENCO's latest forecast once again shows costs increasing, previous revenue forecast downgraded and point of profitability being pushed out. What's your view on that? So I think I I think, you know, SENCOS actually increased their their revenue guidance for FY '23. I'm I'm not sure what their position on '24 and '25 was. But I I also know from the the cost side of things that they balanced up their their gross profit for the second half to account for the fact that we're gonna have a higher volume and a higher proportion of hardware sales, which will reduce the margin compared to the first half.

35:03 In terms of the the the point of profitability, and I saw there was another question about when will we reach an accounting profit, I think this really depends on the the timing of the ramp up of the production production royalties from the larger OEM wins that we've had. A couple of those will come online in the next twelve to eighteen months. I think as those ramp up, which is something that we, you know, we're we're not in control of those volumes, We do know that over time, they will increase and they will be significant, and they're effectively what what are gonna take us to the the point of being profitable. That's great. Thank you very much indeed. Right. The next one we've got here, where are we? Here we go.

35:50 Quite an in-depth question, but we'll break up into smaller parts. The recent trading update shows fleet installs of 46,018, up 6,126 or 15.3% from h one twenty two. Yet secured annualized monitoring recurring revenue only increased by US dollars 800,000 or 6.7%. That suggests those new installs will generate the following monthly monitoring income, $800,000 divided by 6,126 divided by 12 at $10.88. My understanding was more likely that that would be significantly higher, around sort of $20 and and direct around 40. Yeah. So I I can take that one. So there are a numb a number of things that impact. So I I think what the question is asking is is about the direct relationship between the ARR balance and the number of connected units.

36:45 And, conceptually, you would expect those two things to grow at the same rate. However, we do have a a number of things that do cause a dislocation in in those two numbers, rate numbers. One of one of which which is the most considerable over the last twelve months, which has been the depreciation of the Aussie dollar against the US dollar. And so there is a an FX on the IRR balance given that the majority of the connections are in Australia and are filled and run into the IRR in in Australian dollars. And so as the Aussie dollar's depreciated over the last twelve months, while the Aussie dollar amount has not changed, that amount reduces in US dollars.

37:31 So there's an impact there from that, which is, I think, the most significant dislocation over the last twelve months. We also have, which is picked up in the in the question, a difference in selling price between distributors or the distribution channel, the the channel through Caterpillar, and also our direct selling channel. And over particularly over the last six months, the majority of connections have been through the distribution channel, which is a much unit price than when we sell direct. So the skew has been more towards recent connections being at a lower rate as well as a a depreciation of the Aussie dollar in the overall IRR balance over the last twelve months. So they're they're the they're the the factors that have caused that dislocation to occur.

38:27 That's great. Thanks very much indeed, Martin. Smart Iron announced a fleece contract recently. Are we close to any OEM truck deals? Once again, I think you did touch on a little bit, Paul, earlier on. Yes, we did. Next one we've got here, can you tell us whether you've increased the number of RFQs since you last announced? I think it was 12 RFQs. Are are we close to completing? Well, what I can say, as as I've said before, you know, of the eight of the last eight RFQs, not extension wins, which is a different thing. We've won four of those. I expect of the balance of RFQs that we have on hand, you you know, and according to the best steer that we get from the tier one, there's probably four or five of those of the significant ones that are due in the next three to six months to be awarded. And just to reiterate, it's very similar to the issue around forecasting.

39:25 These are the indications that we get on the award time frame, and subject to a whole range of reasons that would cause them to move one way or another. But there's four to five significant RFQs that according to the the tier ones that we're dealing through are to be awarded in the next three to six months. Now there's probably a similar number that we expect to arrive in terms of new RFQs. And I'm talking now about significant RFQs, not not small extensions or or anything of that nature. So still a significant number. The number changes of of those that have been awarded with one half, I think there's four or five, probably five in the next three to six months to be awarded subject to the timelines driven down by the OEMs and and another three you know, four to five of the same same kind of volume of new significant RFQs to arrive.

40:30 I I think one other point I'd I'd just make is that as we look at the the volumes in in automotive, I mean and and if you take the the expected fitment rate that the external automotive analysts put out for now, let's just take f y twenty eight. F y twenty eight at a fitment rate of 60%, which is the third party's number, that's an addressable market of about 600,000,000 per year. If you look at how much DMS business has been awarded so far that that we can calculate, that's about $7,700,000,000. Right? And we're talking $700,000,000 awarded lifetime value versus a potential addressable market of 600,000,000 per annum in f FY '28.

41:29 So roughly speaking, there's about 10% penetrated, therefore, about 10 times more volume to be awarded just to get to the FY twenty eight forecast of the of the external, auto tech analysts. So, you know, there there's just a lot of a lot of road and a lot of runway to go, in terms of RFQs that will fall, OEMs that will simply expand models or expand volumes on existing programs. All of those things will happen. Fantastic. Thanks very much indeed. Right. Can I ask you the last few, I think, we're gonna get time in for here? Is the company close to license the aviation product?

42:16 Yeah. Look. We we are continuing to work down that path. It's it's these things are complex and, you know, it's it's a little bit similar to, you know, predicting an RFQ window. But but what I can say is we've been working on this for a long time. It is our our intent that it will be closed, and and I'm I'm confident that it will be. Thank you, Paul. Can you discuss the difference between an OEM project and a specific auto model and whether your competitors use a similar definition or not? I don't know what they use because they do what they do. An an OEM program is is an award that we would be issued by a single OEM for a certain volume of vehicles over a given period of time.

43:09 We we tend not to get involved in models. I don't know how you reconcile the model count with any veracity. We we seem to struggle to do that. You certainly don't know, typically, in in our case anyway, the exact number of models at the starting point. You're very clear about the target volume or the minimum target volume. And in our case, for about a quarter of our programs, have minimum guaranteed volume, which is quite unique. But in terms of model numbers, it's it's it's it's a moving phase in pre opaque, so we cannot do a. And that's us. We we tend to focus on who's the OEM, what's the the the volume over time. And, you know, to me, that's that's verifiable data, and and that's the important data.

43:58 That's fantastic. Paul Marshall, thank you very much. Indeed, you've covered off a lot of questions there. I know we have got a few more through that have come through from investors, but, of course, we can review those and publish responses where appropriate to do so. Paul, perhaps before redirecting investors to provide you with their feedback, know it's particularly important to you and the team. If I could just ask you for a few closing comments, please. Well, look, firstly, thanks for taking the time to to hear, I guess, the next level of detail on on what we write about our half. As as I've said, I'm pleased. The team are quite pleased with the progress that we've made. I think all of the numbers, despite the the supply constraints that we've had, show either significant growth or evidence of significant growth. We have the margin mix change, the revenue mix change that will drive margin. That's now evident and appearing in the numbers.

44:48 And we have, growing demand. And as I've just explained a minute ago, that demand must continue to grow, and it's driven by a whole range of regulatory factors that are harmonizing around the world. So pretty pleased with the half and we're on track for the full year. Well, that's great. Thank you very much indeed. Paul Martin, thank you indeed for updating investors today. Could I please ask investors not to close the session? Should we now automatically redirect it to provide your feedback, and all the team can better understand your views and expectations. This will only take a few moments to complete and is 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. Thank you, and good afternoon to you all.