Q2 2026 Smart Eye AB (publ) Earnings Call

August 26, 2026

Speaker #1: Good day and warm welcome to this earnings call for SmartEye Q2 2026, hosted by RedEye. We are here at SmartEye's headquarters in Gothenburg, broadcasting live, and we will usually— as usually— start with a company presentation.

Speaker #1: Followed by a Q&A session, and I will remind you already now to start submitting your questions in the chat. Form and I will ask you to management after the presentation.

Speaker #1: And with us today we have SmartEye CEO Martin Kranz and CFO Mats Benjaminsson, who will take us through the report. So without further ado, I will leave over to you guys.

Speaker #1: Welcome, Martin.

Speaker #2: Thank you, Jacob. All right, let's get started. These are the highlights of SmartEye's second quarter 2026. Automotive royalty is what is driving the growth, and we are still fighting in a bit of a headwind with regards to behavioral research.

Speaker #2: And the FX effect that has been against us for over a year is starting to fade. This results in organic net organic growth of 54%.

Speaker #2: We have 148 141 million SEC in top line, which is the best quarter so far for SmartEye. EBITDA has improved a bit to 27 million SEC, so we are on steady ground when it comes to EBITDA at least.

Speaker #2: The automotive. Organic growth is 128%. It's up from last quarter. I know that the market was expecting even quicker organic growth, but I think in the long run we will see that we are really transforming the company now from having small licensed revenues to significant licensed revenues, and that's the main takeaway, I should say.

Speaker #2: The automotive licenses, they grow also just like last quarter with more than 200% year on year. The car models continue to go into production.

Speaker #2: Last quarter we had 155, now it's 175. And 20 of the 24 OEMs that we have under contract are in production now, so it's really going well.

Speaker #2: Behavioral research is backing 7%. I will talk a little bit more about that later. OPEX is minus 17 million, and the free cash flow is minus 24 million, which is a big improvement from last year.

Speaker #2: Let's start with the automotive and licensed revenues. We have since our first BMW models in 2018, we have signed contract with— we call them the sign wins.

Speaker #2: One design win is one car model with 379 car models some of these car models including the BMWs and a few others are out of production now, ramped down.

Speaker #2: That's the 15— that's the number 15 at the bottom of this graph. 175 is the number that have reached production that has gone into production at one point in time.

Speaker #2: Which means that the net effect here is 160 car models that are generating licensed revenue for us right now. We speak. That's a big jump from last quarter 20 additional 20 car models, and we are very happy about that.

Speaker #2: That is exactly according to plan. Not all of those 20 car models have ramped entirely yet, so we are still for several of the 160 car models we are still in a ramp-up phase.

Speaker #2: And of course we are heading with some speed, I should say, towards the 379 car models. Some of these are far out, some let's say a few of those car models are even in the 2030s, but the vast majority of the 379 car models are going into production in this decade, I should say, between now and 2029.

Speaker #2: And that's of course what's going to continue to drive growth for us. We are keeping the same guidance as we had last quarter. We are now reaching 175 car models, and we expect to be above 200 in at the end of the year, but below 250.

Speaker #2: That's of course we have we have estimates from our customers telling us when the car different car models are going into production, but historically several of those estimates were delayed for some reason or another, so that's why we're keeping that range rather wide.

Speaker #2: Seen on the global market, most of the car OEMs and the car models that went into production this quarter was in Europe. So Europe the European legislation, general safety regulations, that's what's driving the growth.

Speaker #2: More than anything else. The other regions are also growing. So we do sell more. In Asia also both for the internal Asian market and for export vehicles, exported to Europe.

Speaker #2: But of course nothing can compare to the really strong regulation-driven growth in Europe, in Q2. We have made estimations of the order values all these 379 car models.

Speaker #2: I mean what went into production and what ramped up during Q2 are car models that were signed and contracted between 2020 and 2023. So that's the kind of lead time we're talking about.

Speaker #2: Now they're going to production. Now they start generating. Income for many years to come. If you do the same calculation over all the 379 car models, and subtracted BMWs and a few others that are out of production, our estimation is 7.6 billion.

Speaker #2: We are not changing that number. This quarter or. The calculation basis of calculation this quarter, the FX effects are so small since one quarter ago.

Speaker #2: So we just keep it as it is.

Speaker #1: Good morning, yeah. Let's continue with the financial summary for Q2 2026. Net sales up to 141 million and that is a growth of 23% and organic 54%.

Speaker #1: And then we adjust for the acquisition of Sciatic that has been done and the FX effect in the quarter. The rolling 12 net sales amounting to almost 490 million, so it's an organic growth of 43%.

Speaker #1: So really good to see that net sales is coming closer to 500 million. In rolling 12. We have a good gross profit improving with 44 million and we keep our gross margin on 90%.

Speaker #1: Automotive, you have heard Martin talk about it, the organic growth 128% and this is of course driven by the royalty revenue. And then we have also adjust for 1.6 million referring to the FX effects.

Speaker #1: But the project revenues, the NRE revenue is also on a high level. We have a good progress in the company and in our OEM programs.

Speaker #1: So we have a slightly increase there as well. The AIS portfolio also delivers more volumes and also have a good growth in the quarter.

Speaker #1: Behavioral research is down 6% but and also when we do the adjustment for the organic growth it's negative 7% in the quarter. But we have Sciatic as a new business coming in with and improving the net sales with 2.5 million in the quarter.

Speaker #1: And also if we adjust the FX effect for iMotion referring to the sales of multimodal software platform and the media analytic tool used for a ad testing.

Speaker #1: They actually report a really good growth organic growth in the quarter 7%. So applied AI revenue that is declined in the quarter. Looking into the OPEX development.

Speaker #1: We have increased the OPEX compared to Q2 last year. With 24 million. And this is driven by the acquisition of Sciatic and also that we have higher personal expenses.

Speaker #1: We have the salary review in Q2 that affecting the OPEX and we also have a slightly more resources in the company. And then we have higher amortization in the quarter.

Speaker #1: And this is referring to investments in IT referring to financial leasing. And also that we have increased amortization referring to our acquisition referring to surplus value like Goodwill etc.

Speaker #1: If we compare OPEX development between Q1 and Q2 we also increasing with almost 16 million. And this is driven by the amortization and the acquisition and the salary review and then we also have some one-time items in Q2.

Speaker #1: The effect on our profitability levels EBITDA improving to with 26 million. So we are now up on 27. And here we can see the one-time items affecting the EBITDA with 3.6 million.

Speaker #1: We also have a positive effect referring to FX 2.3. But if we take out the one-time items effect here the adjusted EBITDA is up to 31 million.

Speaker #1: So we still having good development on the EBITDA development compared to Q1. We have more amortization and but we still have a good improvement on EBIT level with 20 million.

Speaker #1: And then of course we have more financing expenses and this is referring to the issuing of the bond in December 2025. And also that we have some more expenses referring to the financial leasing investments.

Speaker #1: So the earnings before tax improved 14 million. Checking in on the balance sheet. We can see that the trade receivables increasing in the quarter with 21 million.

Speaker #1: So it's now up to 24 million. And here I would like to say that referring to the royalty revenue and the payments the royalty revenue that we reported in Q1 had not fully been paid in Q2.

Speaker #1: So these have a consequence an effect on the cash flow. So we can say that around one third of the royalty revenue for Q1 have been paid early in Q3.

Speaker #1: The cash ending balance amounting to 180 million. The free cash flow still improving 14 million if you compare to the same quarter last year.

Speaker #1: And also improving compared to Q1. The cash flow free cash flow now amounting to 24 million. Investment we still on around we have reported 33 million in Q2.

Speaker #1: And this is in line with last year and last quarter. Here I would like to point out that we have done a reclassification of one item of 10 million between the non-cash items and the other current liabilities.

Mats Benjaminsson: Grows SEK 14 million. Checking in on the balance sheet, we can see that the trade receivables increasing in the quarter with SEK 21 million. So it is now up to SEK 24 million. Here I would like to say that, referring to the royalty revenue and the payments, the royalty revenue that we reported in Q1 had not fully been paid in Q2. These have a consequence, an effect on the cash flow. So we can say that around one third of the royalty revenue for Q1 have been paid early in Q3. The cash ending balance amounting to SEK 180 million. The free cash flow still improving, SEK 14 million if you compare to the same quarter last year, and also improving compared to Q1. The free cash flow now amounting to SEK 24 million.

Speaker #1: And this referring to the cash flow generated to June. Finally let's summarize the Q2 development. So we have reported stronger royalty revenue that drives our growth.

Speaker #1: Checking in on the balance sheet, we can see that the trade receivables increased in the quarter by SEK 21 million. So it's now up to SEK 24 million.

Speaker #1: And here, I would like to say that, referring to the royalty revenue and the payments—the royalty revenue that we reported in Q1 had not fully been paid in Q2.

Speaker #1: This is supported by new business from Sciatic acquisition and also good organic growth from iMotion. So we have a very good profitability and cash flow development all in all.

Speaker #1: So these have a consequence, an effect on the cash flow. So we can say that around one-third of the royalty revenue for Q1 has been paid early in Q3.

Speaker #1: What can we say about the autumn? We see that there will continue to ramp up royalty revenue in Q3 and in Q4. We see that we have more design wins that will enter in production.

Speaker #1: The cash ending balance amounted to SEK 180 million. The free cash flow is still improving: SEK 14 million compared to the same quarter last year.

Speaker #1: And those design wins that have entered production in Q2 will report we expect to have a higher volumes in Q3 and Q4. We have a year-end effect for the behavioral research that we expect to happen in Q4.

Speaker #1: And also improving compared to Q1, the free cash flow now amounts to 24 million. Investment: we are still on around—we have reported 33 million in Q2.

Speaker #1: We have seen it before previous years. That Q behavioral research report higher net sales in Q4. So we expect that to happen in this year as well.

Mats Benjaminsson: Investment, we have reported SEK 33 million in Q2, and this is in line with last year and last quarter. Here I would like to point out that we have done a reclassification of one item of SEK 10 million between the non-cash items and the other current liabilities, and this referring to the cash flow January to June. Finally, let us summarize the Q2 development. We have reported stronger royalty revenue that drives our growth. This is supported by new business from Sightic acquisition and also good organic growth from iMotions. So we have a very good profitability and cash flow development all in all. What can we say about the autumn? We see that we continue to ramp up royalty revenue in Q3 and in Q4.

Speaker #1: And this is in line with last year and last quarter. Here, I would like to point out that we have done a reclassification of one item of SEK 10 million between the non-cash items and the other current liabilities.

Speaker #1: OPEX will decrease in Q3 referring to the seasonal vacation debt effect and that will also improve EBITDA in Q3. Referring to the cash flow we have tax items that is referring to the incentive program 2023 that has been issued during Q2.

Speaker #1: And this is referring to the cash flow generated up to June. Finally, let's summarize the Q2 developments. So, we have reported stronger royalty revenue that drives our growth.

Speaker #1: These tax items will be paid in Q3. So that will have a negative effect. And then referring to the payment schedules for our NRE programs that will also have an effect a small positive contribution in Q3 and a high positive contribution in Q4.

Speaker #1: This is supported by new business from Scitic, acquisitions, and also good organic growth from iMotions. So, we have very good profitability and cash flow development all in all.

Speaker #1: What can we say about the autumn? We see that we'll continue to ramp up royalty revenue in Q3 and in Q4. We see that we have more design wins that will enter into production.

Speaker #1: So all in all we see that Q4 is the most best option to see that we will become cash flow positive. That was all from us.

Mats Benjaminsson: We see that we have more design wins that will enter in production, and those design wins that have entered for the production in Q2, we expect to have higher volumes in Q3 and Q4. We have a year-end effect for the behavioral research that we expect to happen in Q4. We have seen it before, previous years, that behavioral research report higher net sales in Q4. So we expect that to happen this year as well. OPEX will decrease in Q3, referring to the seasonal vacation dip effect, and that will also improve EBITDA in Q3. Referring to the cash flow, we have tax items that is referring to the incentive program 2023 that has been issued during Q2. These tax items will be paid in Q3, so that will have a negative effect.

Speaker #1: And those design wins that have entered production in Q2, we expect to have higher volumes in Q3 and Q4. We have a year-end effect for the Behavioral Research that we expect to happen in Q4.

Speaker #1: Thank you.

Speaker #2: So I'll start with a couple of questions of my own and then we'll move on to the audience because we have a lot of activity today.

Speaker #2: And my first question is like you're obviously growing questions we're getting made the market affected a little bit more growth even. Given that like now all the cars in in Europe should be close to equipped with DMS so like is this quarter according to your plan and or like are we missing anything?

Speaker #1: We have seen it before in previous years that Q behavioral research reports higher net sales in Q4. So we expect that to happen this year as well.

Speaker #1: OPEX will decrease in Q3, referring to the seasonal vacation debt effect. That will also improve EBITDA in Q3. Referring to the cash flow, we have tax items.

Speaker #1: This quarter let's talk about automotive first.

Speaker #1: That is referring to the incentive program 2023 that has been issued during Q2. These tax items will be paid in Q3, so that will have a negative effect.

Speaker #2: For sure.

Speaker #1: When it comes to automotive when it comes to royalties like license revenues it is very much according to our plan. So we see we are very close to our own let's say estimates going into this quarter.

Speaker #1: And then, referring to the payment schedules for our NRE programs, that will also have an effect—a small positive contribution in Q3, and a high positive contribution in Q4.

Mats Benjaminsson: Referring to the payment schedules for our NRE programs, that will also have an effect, a small positive contribution in Q3 and a high positive contribution in Q4. So all in all, we see that Q4 is the best option to see that we will become cash flow positive. That was all from us. Thank you.

Speaker #1: So and the estimate is also which is kind of good is close to the estimate that our customers have given to us what they will produce.

Speaker #1: So, all in all, we see that Q4 is the best option to see that we will become cash flow positive. That was all from us.

Speaker #1: So we're we're finally back in a in a in a stage where the the production predictions or or or forecasts from our customers mean something.

Speaker #1: They are not constantly delayed. So so that's good. And I agree the market was expecting more growth. So it's several data points coming in from the market showing a strong structural growth pattern.

Speaker #1: Thank you.

Speaker #1: So I think we delivered 128% organic growth for automotive. I think the market was expecting 150% or more.

Speaker #2: Yep. And like you touched upon it in the presentation but you have like I think 160 design wins that are in production like producing right now.

Speaker #2: Everyone can hear us. We're going to start the Q&A session now. I'll start with a couple of questions of my own, and then we'll move on to the audience, because we have a lot of activity today.

[Company Representative] (Smart Eye): Everyone can hear us? We are going to start the Q&A session now. I will start with a couple of questions of my own, then we will move on to the audience, because we have a lot of activity today. My first question is, you are obviously growing questions we are getting maybe the market has expected a little bit more growth even, given that now all the cars in Europe should be close to equipped with DMS. Is this quarter according to your plan or are we missing anything?

Speaker #1: Yes.

Speaker #2: How far from like peak production would you say that this cohort of cars are? Like are we at.

Speaker #2: And my first question is: you're obviously growing, questions are getting made, and the market is a little bit more growth-driven even. Given that now all the cars in Europe should be close to equipped with DMS, is this quarter according to your plan, or are we missing anything?

Speaker #1: I I would say let's divide it in to Europe which is the biggest part of it and non-Europe which is a smaller proportion of it.

Speaker #1: And when it comes to Europe I should say we are right now at 80% or something like that of full production penetration capacity in Europe.

Speaker #1: This quarter, let's talk about automotive first.

Martin Krantz: This quarter, let us talk about automotive first.

Speaker #1: The European. Market will continue to grow Q2 to Q3 but it's sort of you're at the end of an S-curve. So I I think there will be 100% take rate in Europe in in Q3.

Speaker #2: For sure.

[Company Representative] (Smart Eye): Yeah, for sure.

Speaker #1: When it comes to automotive, when it comes to royalties and license revenues, it is very much according to our plan. So we see we are very close to our own, let's say, estimates going into this quarter.

Mats Benjaminsson: When it comes to automotive and it comes to royalties, license revenues, it is very much according to our plan. We are very close to our own, let us say, estimates going into this quarter. The estimate is also, which is good, it is close to the estimate that our customers have given to us, what they will produce. We are finally back in a stage where the production predictions or forecasts from our customers mean something. They are not constantly delayed. That is good, and I agree, the market was expecting more growth. There were several data points coming in from the market showing a strong structural growth pattern. I think we delivered 128% organic growth for automotive. I think the market was expecting 150% or more.

Speaker #1: So the growth between Q3 and Q4 will be negligent. But still like in percentage measured a good growth from 80 to 100% now.

Speaker #1: So, and the estimate is also— which is kind of good— it's close to the estimate that our customers have given to us for what they will produce.

Speaker #2: Yeah. Okay. So like Europe wise from Q2 to Q3 we should expect a take rate to increase from like 80 somethingish to 100. Yeah.

Speaker #1: We're finally back in a stage where the production predictions, or forecasts, from our customers mean something. They are not constantly delayed, so that's good.

Speaker #2: Yeah. And rest of world you expect to grow that as well?

Speaker #1: Yeah. Yeah. Rest of world is also growing. And also in the rest of world we have we have many cars that are pending to go into production shortly.

Speaker #1: And I agree. The market was expecting more growth. So, it's several data points coming in from the market, showing a strong structural growth pattern.

Speaker #1: We have production platforms where where additional cars are added and things like this. So so that's more of a structural growth not as quickly as we have seen in Europe during let's say Q4 25 to Q2 26.

Speaker #1: So I think we delivered 128% organic growth for automotive. I think the market was expecting 150% or more.

Speaker #1: Not that kind of steep growth but more like steady growing growth.

Speaker #2: Yep. And, like you touched upon in the presentation, you have—like, I think—160 design wins that are in production, like, producing right now.

[Company Representative] (Smart Eye): Yep. You touched upon it in the presentation, but you have, I think, 160 design wins that are in production, producing right now.

Speaker #2: And and I mean you kept your guidance on the 200 to 250 car models that will reach production by latest end of 2026.

Speaker #2: How far from, like, peak production would you say that this cohort of cars are? Like, are we at...

Martin Krantz: Yes.

[Company Representative] (Smart Eye): How far from peak production would you say that this cohort of cars are? Are we at

Speaker #1: Yeah.

Speaker #2: Like those that are that you expect to reach production this year are those mainly rest of world cars or are there still a mix of European cars in there or.

Speaker #1: I would say, let's divide it into Europe, which is the biggest part of it, and non-Europe, which is a smaller proportion of it. And when it comes to Europe, I should say we are right now at 80%, or something like that, of full production penetration capacity in Europe.

Martin Krantz: I would say, let's divide it into Europe, which is the biggest part of it

Martin Krantz: I would say, let's divide it into Europe, which is the biggest part of it non-Europe, which is a smaller proportion of it. When it comes to Europe, I should say we are right now at 80% or something like that of full production penetration capacity in Europe. The European market will continue to grow Q2 to Q3, but you are at the end of an S-curve, so I think there will be 100% take rate in Europe in Q3. The growth between Q3 and Q4 will be negligent.

Speaker #1: You have a lot of European cars that go both for the European market and export market and you have a lot of let's say especially Korean and Japanese car that are manufactured in other countries but exported to Europe.

Martin Krantz: non-Europe, which is a smaller proportion of it. When it comes to Europe, I should say we are right now at 80% or something like that of full production penetration capacity in Europe.

Speaker #1: So but also our Japanese customers and Korean customers do sell do do sell DMS on other markets not only Europe.

Speaker #1: The European market will continue to grow from Q2 to Q3, but it's sort of like you're at the end of an S-curve. So, I think there will be a 100% take rate in Europe in Q3.

Martin Krantz: The European market will continue to grow Q2 to Q3, but you are at the end of an S-curve, so I think there will be 100% take rate in Europe in Q3. The growth between Q3 and Q4 will be negligent.

Speaker #2: Yeah. And I mean you still have like something like 200 design wins left to enter production and so I think you mentioned it also in the presentation but just to be a bit more clear like what is the time frame we should expect like these to enter production is it three years five seven years?

Speaker #1: So the growth between Q3 and Q4 will be negligible. But still, in percentage terms, it's a good growth from 80 to 100% now.

[Company Representative] (Smart Eye): Okay.

Martin Krantz: Still, in percentage measured, a good growth.

Martin Krantz: Still, in percentage measured, a good growth. From 80% to 100% now.

Speaker #1: Yeah. Like we we're guiding for at least 25 of them this year probably more before the end of year. And then we will continue to have to they will continue to go into production at a quite high pace maybe accelerating in 20 let's say second half of 27 beginning of 28 it will be an acceleration of the of the SOPs start of production but but most of those 200 cars will go into production before the end of this decade.

Martin Krantz: From 80% to 100% now.

Speaker #2: Yeah, okay. So, like, Europe-wise, from Q2 to Q3, we should expect the take rate to increase from, like, 80-something-ish to 100.

[Company Representative] (Smart Eye): Yeah. Okay, so Europe-wise from Q2 to Q3, we should expect the take rate to increase from 80-something-ish to 100%.

Speaker #2: Yeah, yeah. And rest of world—you expect to grow that as well?

Martin Krantz: Yeah.

[Company Representative] (Smart Eye): Yeah. The rest of world, you expect to grow that as well?

Speaker #1: Yeah, yeah. Rest of world is also growing. And also, in the rest of world, we have many cars that are pending to go into production shortly.

Martin Krantz: Yeah. The rest of world is also growing.

Martin Krantz: Yeah. The rest of world is also growing. Also in the rest of world, we have many cars that are pending to go into production shortly. We have production platforms where additional cars are added and things like this. So that's more of a structural growth, not as quickly as we have seen in Europe during, let's say Q4 2025 to Q2 2026, not that kind of steep growth, but more like-

Martin Krantz: Also in the rest of world, we have many cars that are pending to go into production shortly.

Speaker #1: We have production platforms where additional cars are added and things like this. So that's more of a structural growth, not as quickly as we have seen in Europe during, let's say, Q4 '25 to Q2 '26.

Martin Krantz: We have production platforms where additional cars are added and things like this. So that's more of a structural growth, not as quickly as we have seen in Europe during, let's say Q4 2025 to Q2 2026, not that kind of steep growth, but more like-

Speaker #2: Yeah.

Speaker #1: But during this period we also expect to add new contract add new design wins multiple procurements going on many negotiations are are happening as we speak.

Speaker #1: Not that kind of steep growth, but more like steady, ongoing growth.

[Company Representative] (Smart Eye): Yeah

Martin Krantz: a steady going growth.

Speaker #2: And I mean, you kept your guidance on the 200 to 250 car models that will reach production by latest end of 2026. For those that you expect to reach production this year, are those mainly Rest of World cars, or is there still a mix of European cars in there, or...?

[Company Representative] (Smart Eye): You kept your guidance on the 200 to 250 car models

Speaker #2: Interesting. And another like question I mean how DMS is becoming mandatory across Europe of course and it is right now as we're standing here so more.

[Company Representative] (Smart Eye): You kept your guidance on the 200 to 250 car model that will reach production by latest end of 2026.

Martin Krantz: Yeah

[Company Representative] (Smart Eye): that will reach production by latest end of 2026.

Speaker #2: And in Japan of course 2031 I believe.

Martin Krantz: Yeah.

[Company Representative] (Smart Eye): Those that you expect to reach production this year, are those mainly rest of world cars or are there still a mix of European cars in there or?

Speaker #1: Yeah.

Speaker #2: And therefore more and more people obviously start to use DMS and therefore also have opinions about it. So I thought I was going to ask like when you read around online it seems like many people think the systems are like annoying that they they don't think they can save lives and so on.

Speaker #1: You have a lot of European cars that go both to the European market and the export market. And you have a lot of, let's say, especially Korean and Japanese cars that are manufactured in other countries but exported to Europe.

Martin Krantz: You have a lot of European cars that go both for the European market and export market. You have a lot of, let's say especially Korean and Japanese cars that are manufactured in other countries but are exported to Europe.

Speaker #2: So what is your view on the skepticism towards DMS from the customers and like is there actual data supporting that it can save lives?

Speaker #1: But also, our Japanese customers and Korean customers do sell DMS in other markets, not only Europe.

Martin Krantz: Our Japanese customers and Korean customers do sell DMS on other markets, not only Europe.

Speaker #1: Okay. To to two questions basically. Yes. It can save lives definitely. Distraction and drowsiness are two very well documented causes of accidents and accidents in turn can be lethal or non-lethal.

Speaker #2: Yeah. And I mean, you still have something like 200 design wins left to enter production. And so, I think you mentioned it also in the presentation, but just to be a bit more clear, what is the time frame we should expect for these to enter production?

[Company Representative] (Smart Eye): Yeah. You still have something like 200 design wins left to enter production.

[Company Representative] (Smart Eye): Yeah. You still have something like 200 design wins left to enter production. I think you mentioned it also in the presentation, but just to be a bit more clear, what is the timeframe we should expect these to enter production? Is it three years, five, seven years?

Martin Krantz: Yeah.

[Company Representative] (Smart Eye): I think you mentioned it also in the presentation, but just to be a bit more clear, what is the timeframe we should expect these to enter production? Is it three years, five, seven years?

Speaker #1: al. But the so so it's it's very clear let's say scientific evidence that that this legislation has a sound scientific basis for for it to be there.

Speaker #2: Is it three years, five years, or seven years?

Speaker #1: Yeah, like we're guiding for at least 25 of them this year, probably more before the end of the year. And then we will continue—they will continue—to go into production at a quite high pace.

Martin Krantz: Yeah. We are guiding for at least 25 of them this year, probably more.

Martin Krantz: Yeah. We are guiding for at least 25 of them this year, probably more before the end of year. Then they will continue to go into production at a quite high pace, maybe accelerating in H2 2027, beginning of 2028, there will be an acceleration of the SOPs and start of production.

Martin Krantz: before the end of year. Then they will continue to go into production at a quite high pace, maybe accelerating in H2 2027, beginning of 2028, there will be an acceleration of the SOPs and start of production.

Speaker #1: So but if you go to the customer experience I mean if you get a warning that says you are drowsy you should take a break but you're not feeling drowsy because the DMS system was not accurate enough to detect your drowsiness with high accuracy and the same goes for distraction.

Speaker #1: Maybe accelerating in the second half of 2020, or at the beginning of 2027 or 2028. It will be an acceleration of the SOPs—Start of Production—but most of those 200 cars will go into production before the end of this decade.

[Company Representative] (Smart Eye): Okay.

Martin Krantz: Most of those 200 cars will go into production before the end of this decade.

Speaker #1: You will be very irritated and a lot of systems on the Chinese market DMS systems that you can turn them off. I've even seen examples where you can hide the camera lens with a little sliding what do you say?

Martin Krantz: Most of those 200 cars will go into production before the end of this decade.

Speaker #2: Yeah.

Speaker #1: But during this period, we also expect to add new contracts, add new design wins—multiple procurements are going on, and many negotiations are happening as we speak.

[Company Representative] (Smart Eye): Yeah.

Martin Krantz: During this period, we also expect to add new contracts, add new design wins, multiple procurements going on. Many negotiations are happening as we speak.

Speaker #2: Yeah. I understand. Some kind of protection.

Speaker #1: Yeah. Yeah. So so for me this is like this is you know early adopter problems the technology is still quite young in many cases it's immature a strong DMS system will warn when it's supposed to warn and it will not warn when there is nothing to warn about.

[Company Representative] (Smart Eye): Mm-hmm. Interesting. Another question. DMS is becoming mandatory across Europe, of course, and it is right now as we are standing here.

Speaker #2: Interesting. And another, like, question—I mean, how DMS is becoming mandatory across Europe, of course, and it is right now as we're standing here.

Speaker #2: So more.

Speaker #1: And in Japan.

Martin Krantz: And in Japan.

Speaker #2: And in Japan, of course, 2031, I believe.

[Company Representative] (Smart Eye): And in Japan, of course, 2031, I believe.

Speaker #1: Yeah.

Martin Krantz: Yeah.

Speaker #2: And therefore, more and more people obviously start to use DMS, and therefore also have opinions about it. So I thought I was going to ask—when you read around online, it seems like many people think the systems are annoying, that they don't think they can save lives, and so on.

[Company Representative] (Smart Eye): Therefore, more and more people obviously start to use DMS, and therefore also have opinions about it.

Speaker #1: And if you look at the Euro NCAP scores of Volvo the new Volvo cars and and the Polestar cars they have very high scoring for for the DMS and we are extremely proud of being part of that solution.

Martin Krantz: Yeah.

[Company Representative] (Smart Eye): I thought I was going to ask, when you read around online, it seems like many people think the systems are annoying, that they do not think they can save lives and so on. What is your view on the skepticism towards DMS from the customers, and is there actual data supporting that it can save lives?

Speaker #2: So, what is your view on the skepticism towards DMS from the customers, and is there actual data supporting that it can save lives?

Speaker #2: Yeah. And moving on for some financial questions I have for for you Mats. It would be good once again to understand like how your increased revenue and earnings will translate into cash flow from this ramp up.

Speaker #1: Okay, two questions, basically. Yes, it can definitely save lives. Distraction and drowsiness are two very well-documented causes of accidents, and accidents in turn can be lethal or non-lethal.

Martin Krantz: Okay. Two questions, basically. Yes, it can save lives, definitely. Distraction and drowsiness are two very well-documented causes of accidents, and accidents in turn can be lethal or non-lethal. It is very clear, let us say, scientific evidence that this legislation has some scientific basis for it to be there. If you go to the customer experience, if you get a warning that says, "You are drowsy, you should take a break," but you are not feeling drowsy because the DMS system was not accurate enough to detect your drowsiness with high accuracy, and the same goes for distraction, you will be very irritated. A lot of systems on the Chinese market, DMS systems, you can turn them off. I have even seen examples where you can hide the camera lens with a little sliding, what do you say?

Speaker #2: So you gave a pretty good outlook here in the presentation but like when is it that you get paid from automotive customers or OEMs or tier ones for for this quarter's revenue when will it turn into cash flow?

Speaker #1: But so, it's very clear—let's say there's scientific evidence that this legislation has a sound scientific basis for it to be there. But if you go to the customer experience, I mean, if you get a warning that says you are drowsy, you should take a break, but you're not feeling drowsy because the DMS system was not accurate enough to detect your drowsiness with high accuracy...

Speaker #1: So we can see now the latest quarter is that the license revenue that we have received report on in late July early August we invoiced them and usually they are paid in in the quarter after in Q3.

Speaker #1: But as I mentioned we can see that up to one third of the license revenue for Q1 have been pushed into Q3. So so and we saw that I mentioned that also last earnings call referring to Q4.

Speaker #1: And the same goes for distraction. You will be very irritated. And a lot of systems on the Chinese market—DMS systems—you can turn them off.

Speaker #1: So that have an impact haven't seen that before. So that is new for us. And then also talking about NRE revenue because we have payment schedules there.

Speaker #1: I've even seen examples where you can hide the camera lens with a little sliding, what do you say?

Speaker #2: Yeah, I understand. Some kind of protection.

[Company Representative] (Smart Eye): Yeah, I understand. Some kind of protection.

Speaker #1: Yeah, yeah. So for me, this is, you know, early adopter problems. The technology is still quite young—in many cases, it's immature.

Martin Krantz: Yeah. For me, this is early adopter problems. The technology is still quite young. In many cases, immature. A strong DMS system will warn when it is supposed to warn, and it will not warn when there is nothing to warn about. If you look at the Euro NCAP scores of Volvo, the new Volvo cars and the Polestar cars, they have very high scoring for the DMS, and we are extremely proud of being part of that solution.

Speaker #1: So some quarters we are invoice heavily and we have the payment within one or two months. And some quarters that are a little bit lower contribution.

Speaker #1: So and I also got this

Speaker #1: A strong DMS system will warn when it's supposed to warn, and it will not warn when there is nothing to warn about. And if you look at the Euro NCAP scores of Volvo, the new Volvo cars and Polestar cars, they have very high scores for the DMS.

Speaker #2: question from an investor. Like how's the work going on with transitioning to to IFRS? You stated last time that it will be made in Q3.

Speaker #2: Do you think you will make the deadline?

Speaker #1: We should make the deadline. Yes. We are having a good progress in the in that project. So we have gone through all the IFRS policies and we know how to manage it.

Speaker #1: And we are extremely proud to be part of that solution.

Speaker #2: Yeah. And moving on to some financial questions I have for you, Mats. It would be good, once again, to understand how your increased revenue and earnings will translate into cash flow from this ramp-up.

[Company Representative] (Smart Eye): Yeah. Moving on for some financial questions I have for you, Mats. It would be good once again to understand how your increased revenue and earnings will translate into cash flow from this ramp up. You gave a pretty good outlook here in the presentation, but when is it that you get paid from automotive customers or OEMs or tier ones for this quarter's revenue? When will it turn into cash flows?

Speaker #1: So we're now planning for how we change the coming interim report for Q3.

Speaker #2: Okay. Great. And a question about AIS. Like how is that business developing and how is it affected by the GSR legislation if if it is and yeah can you mention anything maybe about procurements or aftermarket deals or anything?

Speaker #2: So, you gave a pretty good outlook here in the presentation, but when is it that you get paid from automotive customers, or OEMs, or Tier Ones for this quarter's revenue?

Speaker #2: When will it turn into cash flow?

Speaker #1: We we have a previously we're communicated that we have a lot of let's say bus OEMs and small truck OEMs that are that we have received nominations and and we will deliver the AIS system to them.

Speaker #3: If we can see now, the latest quarter is that the license revenue that we have received, report on in late July, early August—we invoice them, and usually they are paid in the quarter after, in Q3.

Mats Benjaminsson: We can see now the latest quarter is that the license revenue that we have received report on in late July, early August, we invoice them, and usually they are paid in the quarter after, in Q3. But as I mentioned, we can see that up to one third of the license revenue for Q1 have been pushed into Q3. I mentioned that also last earnings call referring to Q4. That have an impact. Haven't seen that before, so that is new for us. Also talking about NRE revenue, because we have payment schedules there. Some quarters we are invoiced heavily, and we have the payment within one or two months, and some quarters they are a little bit lower contribution.

Speaker #1: But we have also seen that they have ordered as little as is possible in Q1 and Q2. But we see now without guiding too much on the Q3 result but we see now that in Q3 the AIS deliveries are increasing rapidly.

Speaker #3: But, as I mentioned, we can see that up to one third of the license revenue for Q1 has been pushed into Q3. And we saw that—I mentioned that also last earnings call, referring to Q4.

Mats Benjaminsson: I mentioned that also last earnings call referring to Q4.

Speaker #3: So that has an impact. I haven't seen that before, so that is new for us. And then also, talking about NRE revenue, because we have payment schedules there.

Mats Benjaminsson: That have an impact.

Speaker #1: This type of customer. So so that's that's positive and I think they waited to the last moment to equip their trucks and buses with with with the system mandatory for the GSR requirement.

Mats Benjaminsson: Haven't seen that before, so that is new for us. Also talking about NRE revenue, because we have payment schedules there.

Speaker #3: So, in some quarters we invoice heavily and receive the payment within one or two months. And some quarters have a little bit lower contribution.

Mats Benjaminsson: Some quarters we are invoiced heavily, and we have the payment within one or two months, and some quarters they are a little bit lower contribution.

Speaker #1: Then we have a few stable customers that are according they they are very predictive and long-term contracts one big fairly big heavy truck manufacturer and one sports car manufacturer.

Speaker #3: So yeah.

[Company Representative] (Smart Eye): Mm-hmm. I also got this question from an investor, how's the work going on with transitioning to IFRS. You stated last time that it will be made in Q3. Do you think you will make the deadline?

Speaker #2: And I also got this question from an investor: How is the work going on with the transition into IFRS? You stated last time that it will be made in Q3.

Speaker #1: And that's just rolling along I should say that it's it's it's just the contract was signed several years ago and now we just executing on the contracts.

Speaker #2: Do you think you will make the deadline?

Speaker #3: We should make the deadline. Yes. We are having good progress on that project. So, we have gone through all the IFRS policies, and we know how to manage it.

Mats Benjaminsson: We should make the deadline, yes.

Mats Benjaminsson: We should make the deadline, yes. We are having good progress in that project. We have gone through all the IFRS policies, and we know how to manage it.

Speaker #2: Yeah. And what about the aftermarket? Any in any like negotiations or procurements regarding that? I mean you had a nice order from optics.

[Company Representative] (Smart Eye): Yeah.

Mats Benjaminsson: We are having good progress in that project. We have gone through all the IFRS policies, and we know how to manage it.

Speaker #1: Yeah. Yeah. And we we continue. Work closely with optics as you say there are other customers as well for the aftermarket. They are not they are not necessarily ordering or getting deliveries every quarter.

Speaker #3: So we're now planning for how we change the coming interim report for Q3.

[Company Representative] (Smart Eye): Yeah.

Mats Benjaminsson: We are now planning for how we change the coming interim report for Q3.

Speaker #2: Okay, great. And a question about AIS: how is that business developing, and how is it affected by the GSR legislation, if it is?

[Company Representative] (Smart Eye): Okay, great. A question about AIS, how is that business developing, and how is it affected by the General Safety Regulation legislation, if it is? Can you mention anything maybe about procurements or-

Speaker #1: It's more like a something which will happen when it happens.

Speaker #2: Yeah. And just a few more from me before I will jump into the questions online here. But if we talk about procurements and activity for automotive regarding intoxication and IRIS recognition and other like interior sensing features.

Speaker #2: And yeah, can you mention anything maybe about procurements, or aftermarket deals, or anything?

Martin Krantz: Yeah

[Company Representative] (Smart Eye): Aftermarket piece?

Speaker #1: We have previously communicated that we have a lot of, let's say, bus OEMs and small truck OEMs from whom we have received nominations, and we will deliver the AIS system to them.

Martin Krantz: We have previously communicated that we have a lot of, let's say, bus OEMs and small truck OEMs that we have received nominations, and we will deliver the AIS system to them. We have also seen that they have ordered as little as is possible in Q1 and Q2. We see now, without guiding too much on the Q3's result, we see now that in Q3, the AIS deliveries are increasing rapidly to this type of customer. So that's positive, and I think they waited to the last moment to equip their trucks and buses with the system mandatory for the General Safety Regulation requirement.

Speaker #2: How is the activity there?

Speaker #1: That's where the procurements are the procurements are ongoing. I mean let let's talk about pure DMS minimum requirement to meet the GSR European requirement.

Speaker #1: But we have also seen that they have ordered as little as is possible in Q1 and Q2. But we see now, without guiding too much on the Q3 results, that in Q3 the AIS deliveries are increasing rapidly.

Speaker #1: Those deals were made between 2020 and 2023. Now in 26 we are mostly talking to customers about a full interior sensing software stack. Both cabin monitoring and driving monitoring with different types of camera setups, camera configurations.

Martin Krantz: We see now, without guiding too much on the Q3's result, we see now that in Q3, the AIS deliveries are increasing rapidly to this type of customer. So that's positive, and I think they waited to the last moment to equip their trucks and buses with the system mandatory for the General Safety Regulation requirement.

Speaker #1: This type of customer, so that's positive. And I think they waited until the last moment to equip their trucks and buses with the system mandatory for the GSR requirement.

Speaker #1: And they are much more feature rich. They are more complex. It's a higher value per car that we can deliver in this procurements. And that's I I say that's maybe the most interesting story of all is who will be successful and who will not be successful in the let's say ongoing procurement season.

Speaker #2: Yeah.

[Company Representative] (Smart Eye): Yeah.

Speaker #1: Then we have a few stable customers that are, according to them, very predictable and have long-term contracts—one fairly big heavy truck manufacturer and one sports car manufacturer.

Martin Krantz: Then we have a few stable customers that are according. They are very predictive and long-term contracts, one fairly big heavy truck manufacturer and one sports car manufacturer, and that's just rolling along. I should say that the contract was signed several years ago, and now we're just executing on the contracts.

Speaker #1: And that's just rolling along. I should say that it's just that the contract was signed several years ago, and now we are just executing on the contracts.

Speaker #2: Interesting. I will move on to questions from investors here. We have a lot so if you can try to answer as briefly as you can so we can manage many of them.

Speaker #2: Yeah. And what about the aftermarket? Any negotiations or procurements regarding that? I mean, you had a nice order from Optics.

[Company Representative] (Smart Eye): Yeah. What about the aftermarket? In any negotiations or procurements regarding that? I mean, you had

Speaker #2: But one investor is wondering you're showing explosive growth momentum in automotive. Yet EBITDA and EBIT declined quarter over quarter. How do you explain that and when do you see EBIT positivity?

Martin Krantz: Yeah

[Company Representative] (Smart Eye): a nice order from Optix.

Speaker #1: Yeah. Yeah. And we continue to work closely with Optics. As you say, there are other customers as well for the aftermarket. They are not—they are not necessarily ordering or getting deliveries every quarter.

Martin Krantz: Yeah

[Company Representative] (Smart Eye): a couple quarters ago.

Martin Krantz: We continue to work closely with Optix. As you say, there are other customers as well for the aftermarket. They are not necessarily ordering or getting deliveries every quarter. It is more like something which will happen when it happens.

Speaker #1: It's more like something which will happen when it happens.

Speaker #1: The acquisition I think I'm yeah those cost items that I mentioned earlier it's that about the acquisition more resources a few more resources one time items investments in in IT etc.

Speaker #2: Yeah, and just a few more from me before I jump into the questions online here. But if we talk about procurements and activity for automotive regarding intoxication and iris recognition, and other interior sensing features.

[Company Representative] (Smart Eye): Yeah. Just a few more from me before I will jump into the questions online here, but if we talk about procurements and activity for automotive regarding intoxication and iris recognition and other interior sensing features.

Speaker #1: That is and the higher amortization coming with that. But at the same time now when we looking in to the transition to IFRS we will change the the way of report the EBIT level.

Speaker #2: How is the activity there?

[Company Representative] (Smart Eye): how is the activity there?

Martin Krantz: That is why the procurements are ongoing. Let us talk about pure DMS minimum requirement to meet the General Safety Regulation European requirement. Those deals were made between 2020 and 2023. Now in 2026, we are mostly talking to customers about a full interior sensing software stack, both cabin monitoring and driving monitoring, with different types of camera setups, camera configurations. They are much more feature rich. They are more complex. It is a higher value per car that we can deliver in these procurements. I say that is maybe the most interesting story of all is who will be successful and who will not be successful in the, let us say, ongoing procurement season.

Speaker #1: That's where the procurements are. The procurements are ongoing. I mean, let's talk about pure DMS minimum requirement to meet the GSR European requirement. Those deals were made between 2020 and 2023.

Speaker #1: So but we will come back on that on on next so yeah.

Speaker #2: Yeah. And follow up from the same investors also about cash flow positivity and I think you mentioned like softly not anything like firm but Q4 is a a potential quarter.

Speaker #1: Now in '26, we are mostly talking to customers about a full interior sensing software stack—both cabin monitoring and driver monitoring—with different types of camera setups and camera configurations.

Speaker #2: Is that how to we should interpret it?

Speaker #1: Yes. Yeah. Because we talked I mentioned these long-term incentive program share program that we have for the employees. That was issued in mid Q2.

Speaker #1: And they are much more feature-rich. They are more complex. It's a higher value per car that we can deliver in these procurements. And I would say that's maybe the most interesting story of all—who will be successful and who will not be successful in the, let's say, ongoing procurement season.

Speaker #1: There is tax items that we need to pay in Q in July to be more exact. So that is you know one one extra additional payment that will have a consequence in Q3.

Speaker #2: Interesting. I will move on to questions from investors here. We have a lot, so if you can try to answer as briefly as you can.

[Company Representative] (Smart Eye): Interesting. I will move on to questions from investors here. We have a lot. So if you can, try to answer as briefly as you can so we can manage many of them. One investor is wondering, you are showing explosive growth momentum in automotive, yet EBITDA and EBIT declined quarter-over-quarter. How do you explain that, and when do you see EBIT positivity? Mats?

Speaker #1: And then also mention the NRE pro revenues referring to our ongoing programs. The schedules there so there are not contributing so much in in Q3.

Speaker #2: So, we can manage many of them. But one investor is wondering: you're showing explosive growth momentum in automotive, yet EBITDA and EBIT declined quarter over quarter.

Speaker #2: Could you say like this a little bit of headwind in the cash flow in Q3 and a little bit of wind tailwind in Q4?

Speaker #2: How do you explain that, and when do you see EBIT positivity?

Speaker #1: That was a good summary.

Speaker #2: Okay. Great. Moving on. You added only 2020 car models into production in Q2. How come the numbers this low considering the new EU requirements?

Speaker #3: The acquisition I think I'm yeah those cost items that I mentioned earlier it's that about the acquisition more resources a few more resources one time items investments in IT etc.

Mats Benjaminsson: Requisition. I think those cost items that I mentioned earlier, it is that about the acquisition, more resources, a few more resources, one-time items, investments in IT, et cetera, and the high amortization coming with that. But at the same time now, when we looking into the transition to IFRS, we will change the way of report the EBIT level. We will come back on that on next.

Speaker #2: There should be a lot of car models in the EU.

Speaker #1: So the the the ques the person questioning once more car models in in in Q2. Yeah. This was very close to the our own internal projections about how many more cars would go into production and it was very close to our customers forecasts about how many cars would go into production.

Speaker #3: That is, and the higher amortization comes with that. But at the same time, now when we are looking into the transition to IFRS, we will change the way we report the EBIT level.

Mats Benjaminsson: But at the same time now, when we looking into the transition to IFRS, we will change the way of report the EBIT level. We will come back on that on next.

Speaker #3: We will come back to that next, so yeah.

Speaker #1: Additional cars will go in production in Q3 or has already actually gone into production in Q3 and in Q4.

Speaker #2: Yeah. And follow-up from the same investors also about cash flow positivity, and I think you mentioned, like, softly—not anything firm—but Q4 is a potential quarter.

[Company Representative] (Smart Eye): Yeah. The follow-up from the same investor is also about cash flow positivity, and I think you mentioned softly not anything firm, but Q4 is a potential quarter. Is that how we should interpret it?

Speaker #2: Moving on here there are a lot of questions that are about the same topic so I will try to skim through it here. Can you give an overall estimation on automotive sales world worldwide between the different geographies so like Europe US or Asia in percentages like what regions are the largest in terms of automotive sales?

Speaker #2: Is that how we should interpret it?

Speaker #3: Yes. Because we talked, I mentioned this long-term incentive share program that we have for the employees. That was issued in mid-Q2. There are tax items that we need to pay in Q3, in July to be more exact.

Mats Benjaminsson: Yes.

Mats Benjaminsson: Yes. Because I mentioned this long-term incentive program, share program that we have for the employees that was issued in mid Q2. There are tax items that we need to pay in July, to be more exact. So that is one extra additional payment that will have a consequence in Q3. Also mentioned the NRE revenues referring to our ongoing programs. The schedules there. They are not contributing so much in Q3.

[Company Representative] (Smart Eye): Yeah.

Mats Benjaminsson: Because I mentioned this long-term incentive program, share program that we have for the employees that was issued in mid Q2. There are tax items that we need to pay in July, to be more exact.

Speaker #3: So that is, you know, one extra additional payment that will have a consequence in Q3. And then also mention the NRE pro revenues, referring to our ongoing programs.

Speaker #1: We we used to have a a slide where those those percentages were were written down but we didn't update that slide on for this report.

[Company Representative] (Smart Eye): Yeah.

Mats Benjaminsson: So that is one extra additional payment that will have a consequence in Q3.

[Company Representative] (Smart Eye): Yeah.

Mats Benjaminsson: Also mentioned the NRE revenues referring to our ongoing programs.

Speaker #1: So I I don't have the exact numbers but I would say now since the ramp up was so strong in in Q2 in Europe so maybe Europe is 60% of the global market or or maybe 50 depending exactly what what's going on in China.

Speaker #3: The schedules are there, so they are not contributing so much in Q3.

[Company Representative] (Smart Eye): Yeah.

Mats Benjaminsson: The schedules there.

Mats Benjaminsson: They are not contributing so much in Q3.

Speaker #1: Could you say, like, there's a little bit of headwind in the cash flow in Q3 and a little bit of tailwind in Q4?

[Company Representative] (Smart Eye): Could you say like this, a little bit of headwind in cash flow in Q3 and a little bit of wind-

Martin Krantz: Tailwind.

[Company Representative] (Smart Eye): Tailwind-

Mats Benjaminsson: Tailwind

Speaker #3: That was a good summary.

[Company Representative] (Smart Eye): in Q4.

Mats Benjaminsson: That is also a good summary.

Speaker #1: But but something like this.

Speaker #2: Yeah. Will you keep the gross margin over 90% also in 2027?

Speaker #2: Great. Moving on. You added only 20–20 car models into production in Q2. How come the number is this low considering the new EU requirements? There should be a lot of car models in the EU.

[Company Representative] (Smart Eye): You are right. Moving on, you added only 20 car models into production in Q2. How come the number is this low considering the new EU requirements? There should be a lot of car models in the EU.

Speaker #1: Over 90? I don't know if it will be over 90 but I can say it's been around 90 I would like to say.

Speaker #2: Good enough answer I think. Has the average sales price changed as GSR related cars are increased like are manufacturingers choosing more basic features just to meet the requirements?

Speaker #1: So the question—the person was questioning once more about car models in Q2. Yeah. This was very close to our own internal projections about how many more cars would go into production, and it was very close to our customers' forecasts about how many cars would go into production.

Martin Krantz: The person questioning wants more car models in Q2.

[Company Representative] (Smart Eye): Yeah.

Martin Krantz: Yeah. This was very close to our own internal projections about how many more cars would go into production, and it was very close to our customers' forecasts about how many cars would go into production. Additional cars will go into production in Q3 or has already actually gone into production in Q3 and in Q4.

Speaker #1: A lot of the cars that went into production in Q that's a great question and and so thanks for that question. In Q2 now a lot of the cars are execution of contracts with written between 2020 and 2023 where bare minimum for GSR was procured.

Speaker #1: Additional cars will go into production in Q3, or have already actually gone into production in Q3 and in Q4.

[Company Representative] (Smart Eye): Yeah. Moving on here, there are a lot of questions that are about the same topic, so I will try to skim through it here. Can you give an overall estimation on automotive sales worldwide between the different geographies, like Europe, US, or Asia, in percentages? What regions are largest in terms of automotive sales?

Speaker #2: Moving on here. There are a lot of questions that are about the same topics, so I will try to skim through them here. Can you give an overall estimation of automotive sales worldwide between the different geographies?

Speaker #1: The ASP is on the lower side in our range. We have everything from let's say threeish up to 10 euros per car depending on what kind of systems.

Speaker #1: Actually even more than 10 for some cars where it's both cabin monitoring and driver monitoring. But so so some of these GSR cars let's say low cost cars mass market cars that just have GSR for for legal purposes not for let's say driver experience purposes.

Speaker #2: So, like Europe, US, or Asia in percentages—what regions are largest in terms of automotive sales?

Speaker #1: We used to have a slide where those percentages were written down, but we didn't update that slide for this report. So, I don't have the exact numbers, but I would say now, since the ramp-up was so strong in Q2 in Europe, maybe Europe is 60% of the global market, or maybe 50%, depending exactly on what's going on in China.

Martin Krantz: We used to have a slide where those percentages were written down, but we didn't update that slide for this report. I don't have the exact numbers, but I would say now, since the ramp-up was so strong in Q2 in Europe, maybe Europe is 60% of the global market, or maybe 50%, depending exactly what's going on in China.

Speaker #1: They they are on the low side. And if you look in the future what is being procured what is what we have up our sleeves let's say what's what's coming it's a lot of much more feature rich cars.

Speaker #1: You have seat belt detection, posture detection, face identification, iris identification, intoxication and these kind of things that add value to the offering.

Speaker #1: But something like this.

Speaker #2: Okay. Interesting. And we have received like a a couple of questions from investors or questionnaires that are wondering like comparing smart I to seeing machines and there's a lot of different questions here.

Martin Krantz: But something like this.

Speaker #2: Yeah. Will you keep the gross margin over 90% also in 2027?

[Company Representative] (Smart Eye): Yeah. Will you keep the gross margin over 90% also in 2027?

[Company Representative] (Smart Eye): Yeah. Will you keep the gross margin over 90% also in 2027? Over 90?

Speaker #1: Over 90?

Martin Krantz: Over 90?

Speaker #3: I don't know if it will be over 90, but I can say it's been around 90, I would like to say.

Mats Benjaminsson: I do not know if it will be over 90, but I can say it will be around 90, I would like to say.

Speaker #2: Good enough answer, I think. Has the average sales price changed as GSR-related cars have increased? Are manufacturers choosing more basic features just to meet the requirements?

[Company Representative] (Smart Eye): Good enough answer, I think.

Martin Krantz: Yeah.

[Company Representative] (Smart Eye): Has the average sales price changed as GSR related cars are increased? Are manufacturing, you're choosing more basic features just to meet the requirements?

Speaker #2: But I think like one is about if you can disclose like the number of cars on road but we know that you don't do that so I won't ask that.

Speaker #2: But I think you can overall summarize it as like is is do you see that seeing machines are overtaking you or like grabbing grabbing market share from you or eating your lunch so to say?

Speaker #1: A lot of the cars that went into production in Q— that's a great question, so thanks for that question. In Q2 now, a lot of the cars are execution of contracts written between 2020 and 2023, where the bare minimum for GSR was procured.

Martin Krantz: A lot of the cars that went into production in Q2. That's a great question, thanks for that question. In Q2 now, a lot of the cars are execution of contracts written between 2020 and 2023, where bare minimum for GSR was procured. The ASP is on the lower side in our range. We have everything from, let's say, three-ish up to 10 euros per car, depending on what kind of systems. Actually, even more than 10 for some cars where it's both cabin monitoring and driver monitoring. So some of these GSR cars, let's say low cost cars, mass market cars that just have GSR for legal purposes, not for, let's say, driver experience purposes. They are on the low side.

Speaker #1: Seeing machines is eating our lunch. Yeah. Great question. I I should start by saying that we don't really talk or comment individual competitors. I mean it's a it's a it's a fast growing very interesting market where all the competitors we respect all our competitors and so on and so forth.

Speaker #1: The ASP is on the lower side in our range. We have everything from, let's say, three-ish up to 10 euros per car depending on what kind of systems.

Speaker #1: Actually, even more than 10 for some cars where it's both cabin monitoring and driver monitoring. But some of these GSR cars, let's say low-cost cars, mass market cars, that just have GSR for legal purposes, not for, let's say, driver experience purposes.

Speaker #1: Now having said that I think it's important to to not live in the past and and what was going on between let's say 2015 to 2020 this was purely it was purely a a premium car thing to have DMS.

Speaker #1: It was BMW, Volvo, Audi these kind of cars Lexus they they they Cadillac they had DMS and not really the mass market. What happened actually before the GSR regulation came in the end of 2019 was that the the mass market car OEM started to procure it.

Speaker #1: They are on the low side. And if you look into the future, what is being procured, what we have up our sleeves, let's say what's coming, it's a lot of much more feature-rich cars.

Martin Krantz: If you look in the future, what is being procured, what we have up our sleeves, so let's say, what's coming, it's a lot of much more feature-rich cars. You have seat belt detection, posture detection, face identification, iris identification, intoxication, and these kind of things that add value to the offering.

Speaker #1: You have seat belt detection, posture detection, face identification, iris identification, intoxication, and these kinds of things that add value to the offering.

Speaker #1: So 2019 was the year when those kind of procurement started and 2020 to 2023 was the year when the nominations happened. A little bit delayed due to COVID and so on but still.

Speaker #2: Okay, interesting. We have received a couple of questions from investors, or questionnaires, that are wondering about comparing Smart Eye to Seeing Machines. There are a lot of different questions here.

[Company Representative] (Smart Eye): Okay. Interesting. We have received a couple of questions from investors or questioners that are wondering, comparing Smart Eye to Seeing Machines, and there's a lot of different questions here. I think one is about if you can disclose the number of cars on road, but we know that you don't do that, so I won't ask that. I think you can overall summarize it as, do you see that Seeing Machines are overtaking you or grabbing market share from you or eating your lunch, so to say? Seeing Machines is eating our lunch.

Speaker #1: And that's what we see now. The the the the production numbers that we see now is the result of the 20 let's say 2019 to 2023 wave of procurements.

Speaker #1: And what's important to see is that that happened in the past history and we see the rollout now. So I would not trade our 3079 design wins that OEM which is also unmatched I will not trade it trade it for anything that any competitor sits on whether it's old contracts or or anything like this.

Speaker #2: But I think, like, one is about if you can disclose the number of cars on the road, but we know that you don't do that.

Speaker #2: So I won't ask that. But I think you can overall summarize it as, do you see that Seeing Machines are overtaking you or grabbing market share from you, or 'eating your lunch' so to say?

Speaker #1: Seeing Machines is eating our lunch. Yeah. Great question. I should start by saying that we don't really talk about or comment on individual competitors. I mean, it's a fast-growing, very interesting market where we respect all our competitors and so on and so forth.

Martin Krantz: Yeah, great question. I should start by saying that we don't really talk or comment individual competitors. It's a fast-growing, very interesting market where we respect all our competitors, and so on and so forth. Now, having said that, I think it's important to not live in the past and what was going on between, let's say, 2015 to 2020. It was purely a premium car thing to have DMS. It was BMW, Volvo, Audi, these kind of cars, Lexus, Cadillac. They had DMS and not really the mass market. What happened actually before the General Safety Regulation came in the end of 2019 was that the mass market car OEM started to procure it. So 2019 was the year when those kind of procurements started, and 2020 to 2023 was the year when the nominations happened, a little bit delayed due to COVID and so on, but still.

Speaker #1: We think that we are never better than our latest game that we played and the game that we play is a game of procurements.

Speaker #1: That we need to win.

Speaker #2: I think that's a good colorful answer enough. A quick one from this the same questionnaire here is is the automotive design win pipeline value entirely licensing revenue or does it include NRE revenue as well?

Speaker #1: Now, having said that, I think it's important not to live in the past. What was going on between, let's say, 2015 to 2020—this was purely, it was purely a premium car thing to have DMS.

Speaker #1: It includes NRE but that's what you say max 5% maybe.

Speaker #2: Okay.

Speaker #1: Nothing like that.

Speaker #2: Not oh not even oh maybe say haven't calculated on that specific actually. An issue.

Speaker #1: It was BMW, Volvo, Audi—these kinds of cars—Lexus, Cadillac. They had DMS and not really the mass market. What happened actually before the GSR regulation came in at the end of 2019 was that the mass market car OEMs started to procure it.

Speaker #1: Yeah.

Speaker #2: And also I think this is an interesting question. Can Martin give his comments on the competitive threat of mobilize DMS?

Speaker #1: Again don't want to talk about don't want to talk about specific competitors that they are all there and we meet them every day in in in the market so to say.

Speaker #1: So, 2019 was the year when those kinds of procurements started, and 2020 to 2023 were the years when the nominations happened. A little bit delayed due to COVID and so on, but still.

Speaker #1: So they are a company. Who who are. The market leads in ADAS and their claim for DMS is that that it's very well integrated into their ADAS but of course it's there are more than one way to integrate the DMS system in an ADAS system.

Speaker #1: And that's what we see now. The production numbers that we see now are the result of the 2019 to 2023 wave of procurements.

Martin Krantz: The production numbers that we see now is the result of the, let's say, 2019 to 2023 wave of procurements. What's important to say is that happened in the past history, and we see the rollout now. So I would not trade our 379 design wins that is unmatched with 24 OEM, which is also unmatched. I would not trade it for anything that any competitor sits on, whether it's old contracts or anything like this. We think that we are never better than our latest game that we played, and the game that we play is a game of procurements that we need to win.

Speaker #1: And what's important to see is that that happened in the past, history, and we see the rollout now. So I would not trade our 379 design wins—that is unmatched—with 24 OEMs, which is also unmatched. I will not trade it for anything that any competitor sits on, whether it's old contracts or anything like this.

Speaker #1: So I leave it by that.

Speaker #2: Great. And a question for you Mattias. Are you planning a list change and if so how's that going?

Speaker #3: The board haven't decided on any list change and only decision is for the bond that we issued in December. That will happen in Q4.

Speaker #3: That is a list change for for the bond and not for the share.

Speaker #1: But it's not ruled out either right? It's open.

Speaker #1: We think that we are never better than our latest game that we played, and the game that we play is a game of procurements.

Speaker #3: Yeah.

Speaker #2: Good. We'll continue here for a couple of more minutes. There's a lot of questions that we have also already covered so pardon me for trying to read through here at the same time.

Speaker #1: That we need to win.

Speaker #2: I think that's a good, colorful answer—enough. A quick one from the same questionnaire: is the automotive design win pipeline value entirely licensing revenue, or does it include NRE revenue as well?

[Company Representative] (Smart Eye): I think that's a good colorful answer enough. A quick one from the same questioner here is: Is the automotive design win pipeline value entirely licensing revenue, or does it include NRE revenue as well?

Speaker #1: It includes NRE, but that's what you say, Mark—maybe 5%.

Martin Krantz: It includes NRE, but that's, what did you say, Mats, 5% maybe?

Speaker #2: Like okay here's a question regarding maybe Chinese competition here. Like how much is is your like how much do you think you are impacted by Chinese competitors that are like either winning procurements in Europe and other Western markets or exporting Chinese cars to the European markets?

Mats Benjaminsson: Not even. Or maybe. I haven't calculated on that specifically. An issue, yeah.

Speaker #3: No, not even. Maybe say I haven't calculated on that specifically, actually. An ish, yeah, that's good.

[Company Representative] (Smart Eye): Yeah. That's good. Also, I think this is an interesting question: Can Martin give his comments on the competitive threat of Mobileye DMS?

Speaker #2: And also, I think this is an interesting question: Can Martin give his comments on the competitive threat of Mobilize DMS?

Speaker #1: Okay. And don't want to talk about don't want to talk about specific competitors that they are all there and we meet them every day in the market so to say.

Martin Krantz: Again, don't want to talk about specific competitors. They are all there, and we meet them every day in the markets, let's say. They are a company who are the market leaders in ADAS, and their claim for DMS is that it's very well integrated into their ADAS. But of course, there are more than one way to integrate a DMS system in an ADAS system, so I leave it by that.

Speaker #1: The Chinese market is very large and it's very important both for let's say ICE cars, electrical cars and also it's also important for safety systems and DMS and and many many other automotive tech stuff.

Speaker #1: So, they are a company who are the market leaders in ADAS, and their claim for DMS is that it's very well integrated into their ADAS. But of course, there is more than one way to integrate the DMS system in an ADAS system.

Speaker #1: So I I say we are very small. Our market share in China is very very small. We are mostly there together with international OEMs who sell not very big volumes of cars in China with Smart IDMS in it.

Speaker #1: So, I'll leave it at that.

Speaker #2: Great. And a question for you, Mats: Are you planning a list change, and if so, how's that going?

[Company Representative] (Smart Eye): Great. A question for you, Mats, is: Are you planning a list change, and if so, how's that going?

Speaker #1: We are exploring opportunities in China both for Chinese export car that are going to be exported to Europe and will be sold manufactured in China and sold in China.

Speaker #3: The board hasn't decided on any list change. The only decision is regarding the bond that we issued in December. That will happen in Q4.

Mats Benjaminsson: The board haven't decided on any list change. The only decision is for the bond that we issued in December. That will happen in Q4. That is a list change for the bond and not for the share.

Speaker #3: That is a list change for the bond, but not for the share.

Speaker #1: But it's it's a it's a let's say a white white almost a white spot on the map for us. I mean we're not there yet that we have a clear China strategy that we are executing on.

Speaker #1: But it's not ruled out either, right? It's open.

Martin Krantz: But it's not ruled out either, right?

Mats Benjaminsson: No.

Martin Krantz: It's open.

Speaker #3: Yeah.

Mats Benjaminsson: Yes. Yeah.

Speaker #2: Good. We'll continue here for a couple more minutes. There are a lot of questions that we have already covered, so pardon me while I try to read through here at the same time.

[Company Representative] (Smart Eye): Good. We will continue here for a couple of more minutes. There is a lot of questions that we have also already covered, so pardon me for trying to read through here at the same time. Okay. Here is a question regarding maybe Chinese competition here. How much do you think you are impacted by Chinese competitors that are either winning procurements in Europe and other Western markets or exporting Chinese cars to the European markets?

Speaker #2: Okay. And another question how many models do you think will go out of production during 2026 or 2027 if you can say?

Speaker #1: Oh I don't think we really calculated it but it's more like it's more like we're in a ramp up phase than in a ramp down phase for most of our OEMs.

Speaker #2: Like okay here's a question regarding maybe Chinese competition here. Like how much is your like how much do you think you are impacted by Chinese competitors that are like either winning procurements in Europe and other Western markets or exporting Chinese cars to the European markets?

Speaker #1: We had so many OEMs that were delayed during COVID and during the semiconductor crisis shortage crisis. So it's more more of a ramp up I should say not many go out of production that I know.

Speaker #3: No I I thinking the same here. Maybe after 2027 or later I think maybe come back on on reporting number on that.

Speaker #1: The Chinese market is very large, and it's very important both for, let's say, ICE cars, electric cars, and also important for safety systems, DMS, and many other automotive tech solutions.

Martin Krantz: The Chinese market is very large, and it is very important both for, let us say, ICE cars, electrical cars, and it is also important for safety systems and DMS and many other automotive tech stuff. I say our market share in China is very small. We are mostly there together with international OEMs who sell not very big volumes, of course, in China with Smart Eye DMS in it. We are exploring opportunities in China, both for Chinese export cars that are going to be exported to Europe and otherwise, and also cars that will be manufactured in China and sold in China. But it is almost a white spot on the map for us. We are not there yet, that we have a clear China strategy that we are executing on.

Speaker #2: And just maybe a clarification someone is wondering here did did Mats mention that roughly one third of the royalty revenue was delayed from Q1 and was instead received in Q3.

Speaker #2: I mean we were talking about the cash flow there right not the.

Speaker #3: Yeah that was right. That's correct.

Speaker #1: So I say we are very small. Our market share in China is very, very small. We are mostly there together with international OEMs who sell not very big volumes of cars in China with Smart Eye DMS in it.

Speaker #2: So cash flow that is driving from the Q1 revenue was received early Q3 because of yeah. Slight delays there. Okay.

Speaker #3: Yeah.

Speaker #2: And some investors are also wondering about should you interpret it as a sign of a start of production slowdown because in Q1 you put I think it was like 30 car models into production and now it was 20.

Speaker #1: We are exploring opportunities in China, both for Chinese export cars that are going to be exported to Europe and elsewhere, and also for cars that will be manufactured in China and sold in China.

Speaker #2: So people are interpreting as like a slowdown when it should be ramping up but maybe if you want to comment.

Speaker #1: But it's, let's say, almost a white spot on the map for us. I mean, we're not there yet; we don't have a clear China strategy that we are executing on.

Speaker #3: Should I start the comment? You know for some customers and OEMs we have very precise information about car models and so on and and for some we just don't have it.

Speaker #2: Okay. And another question: how many models do you think will go out of production during 2026 or 2027, if you can say?

[Company Representative] (Smart Eye): Okay. Another question: How many models do you think will go out of production during 2026 or 2027, if you can say?

Speaker #3: We so it's on very high level. So therefore we need to figure out which car models that have we think that have entered the production in in Europe or elsewhere.

Speaker #1: Oh I don't think we really calculated it but it's more like it's more like we're in a ramp up phase. I mean a ramp down phase for most of our OEMs we had so many OEMs that were delayed during COVID and during the semiconductor crisis shortage crisis.

Martin Krantz: I do not think we really calculated it, but it is more like we are in a ramp-up phase than in a ramp-down phase for most of our OEMs. We had so many OEMs that were delayed during COVID and during the semiconductor shortage crisis. So it is more of a ramp-up, I should say. Not many go out of production that I know of.

Speaker #3: So it's so therefore there is not the exact number we can say. So therefore it's really difficult to to to see yeah to to calculate on that.

Speaker #1: So it's more of a ramp-up, I should say. Not many go out of production that I know.

Speaker #1: But I would say of the 30 cars in Q1, 20 in Q2, most of them are European intended for the European market whether they are made in Europe or made in Asia.

Speaker #3: No, I’m thinking the same here. Maybe after 2027 or later, I think maybe we’ll come back to reporting numbers on that.

Mats Benjaminsson: No, I am thinking the same here. Maybe after 2027 or later, I think maybe you will come back on reporting number on that.

Speaker #1: Or in some cases actually the US. They're intended for European market.

Speaker #2: And just maybe a clarification someone is wondering here: did Mats mention that roughly one-third of the royalty revenue was delayed from Q1 and was instead received in Q3?

Speaker #2: Yep. And also just a question on the behavioral research we have touched a lot upon automotive but you have a second business area as well actually.

[Company Representative] (Smart Eye): Just maybe a clarification, someone is wondering here, did Mats mention that roughly one third of the royalty revenue was delayed from Q1 and was instead received in Q3? We were talking about the cash flow there, right?

Speaker #2: It showed a slight decline in the quarter. Can you update us on the market activity here like?

Speaker #2: I mean, we were talking about the cash flow there, right? Not the—

Speaker #3: Yeah, that was right. That's correct.

Mats Benjaminsson: Yeah. That was right.

Speaker #1: So so the decline is year on year. So 7% is the organic decline year on year. If you look quarter by quarter it's a little bit different story.

[Company Representative] (Smart Eye): Yeah.

Speaker #2: So cash flow that is deriving from the Q1 revenue was received early Q3 because of, yeah, slight delays there. Okay.

Mats Benjaminsson: That is correct.

[Company Representative] (Smart Eye): Cash flow that is driving from the Q1 revenue was received early Q3 because of

Speaker #1: It's a small small less than 1% increase actually if you compare to Q1. So we have we know that following the traditional pattern that Q1 Q4 should be strong.

Mats Benjaminsson: Yeah, that is correct.

[Company Representative] (Smart Eye): Slight delays there. Okay.

Speaker #3: Yeah.

Speaker #2: And some investors are also wondering about whether you should interpret it as a sign of the start of a production slowdown, because in Q1 you put—I think it was—like 30 car models into production, and now it was 20.

Mats Benjaminsson: Yeah.

[Company Representative] (Smart Eye): Some investors are also wondering about, should you interpret it as a sign of a start of production slowdown? Because in Q1 you put, I think it was 30 car models into production, and now it was 20. So people are interpreting as like a slowdown when it should be ramping up in terms of language of GSR. But maybe if you want to comment.

Speaker #1: But we have also good hoops that Q3 can be better than Q2. So that maybe Q1 was actually the bottom. But it's too early to you know hail you know hail victory here.

Speaker #2: So people are interpreting it as a slowdown when it should be ramping up in terms of languages. But maybe if you want to comment.

Speaker #3: Should I start the comment? You know, for some customers and OEMs, we have very precise information about car models and so on, and for some, we just don't have it.

Mats Benjaminsson: Should I start the comment? For some customers and OEMs, we have very precise information about car models and so on. For some, we just don't have it. So it's on very high level. Therefore, we need to figure out which car models that we think that have entered the production in Europe or elsewhere.

Speaker #1: But because the the market is is has been not strong I should say especially for hardware. Hardware was hardware sales was down a lot.

Speaker #3: So it's on a very high level. So therefore, we need to figure out which car models we think have entered production in Europe or elsewhere.

Speaker #1: Luckily it was compensated for by by quite quite good software sales.

Speaker #2: We are moving through the questions here. I think we have covered almost all of it. I just have one final question as that is how is CITEC developing regards to like the deal with the police authority.

Speaker #3: So it's so therefore there is not the exact number we can say. So therefore it's really difficult to see yeah to calculate on that.

[Company Representative] (Smart Eye): Yeah.

Mats Benjaminsson: Therefore, there is not the exact number we can say.

Speaker #2: Have you started getting paid for that deal or how is the potential deal pipeline forward?

Mats Benjaminsson: Therefore, it's really difficult to calculate on that.

Speaker #1: Yeah absolutely. Yeah we we are getting paid from from let's say the day we announced the deal almost maybe just a few days difference.

Speaker #1: But I would say, of these 30 cars in Q1 and 20 in Q2, most of them are European, intended for the European market, whether they are made in Europe or made in Asia.

Martin Krantz: But I would say of these 30 cars in Q1, 20 in Q2, most of them are intended for the European market, whether they are made in Europe or made in Asia, or in some cases, actually the US, they're intended for European markets.

Speaker #1: But yes we have a big European police authority that we work closely with deploying this new and very interesting technology and this is super interesting.

Speaker #1: Or, in some cases, actually the US. They're intended for European markets.

Speaker #2: Yes. And also, just a question on the behavioral research: we've touched a lot upon automotive, but you have a second business area as well, actually.

[Company Representative] (Smart Eye): Yep. Also, just a question on behavioral research. We have touched a lot upon automotive, but you have a second business area as well, actually. It showed a slight decline in the quarter. Can you update us on the market activity here?

Speaker #1: It's not a big revenue stream yet but it has a good potential. I mean if it works with one police authority in Europe it will work with many.

Speaker #2: It showed a slight decline in the quarter. Can you update us on the market activity here?

Speaker #2: Yeah.

Speaker #1: So we we see a strong strong potential for it.

Speaker #1: So, the decline is year-on-year, so 7% is the organic decline year-on-year. If you look quarter by quarter, it's a little bit of a different story.

Martin Krantz: Yeah. The decline is year-on-year, so 7% is the organic decline year-on-year. If you look quarter by quarter, it is a little bit different story. It is a small, less than 1% increase, actually, if you compare to Q1. We know that following the traditional pattern that Q4 should be strong, but we have also good hopes that Q3 can be better than Q2. So that maybe Q1 was actually the bottom. But it is too early to hail victory here. Because the market has been not strong, I should say, especially for hardware. Hardware sales was down a lot. Luckily, it was compensated for by quite good software sales.

Speaker #2: Good. I think hope that I have covered like all the subjects here. I understand we haven't been able to answer each and every individual question but overall I think we've covered it well.

Speaker #1: It's a small, small—less than 1%—increase, actually, if you compare to Q1. So, we know that, following the traditional pattern, Q1 and Q4 should be strong.

Speaker #2: So I will end the Q&A session here and maybe do you want to take some few words and summarize your thoughts?

Speaker #1: Yeah. I I should say of course I was very disappointed when the stock market opened today. The stock is trading down. The expectations were higher from market was higher than what we delivered.

Speaker #1: But we also have good hopes that Q3 can be better than Q2, so maybe Q1 was actually the bottom. But it's too early to, you know, hail victory here.

Martin Krantz: So that maybe Q1 was actually the bottom.

Martin Krantz: But it is too early to hail.

[Company Representative] (Smart Eye): Yeah

Martin Krantz: hail victory here. Because the market has been not strong, I should say, especially for hardware.

Speaker #1: We will continue to do what we think is the important stuff. We will deliver our production program so that the cars reach production so that they can start generate license revenue.

Speaker #1: Because the market has not been strong, I should say, especially for hardware. Hardware sales were down a lot. Luckily, it was compensated for by quite good software sales.

[Company Representative] (Smart Eye): Yeah.

Martin Krantz: Hardware sales was down a lot. Luckily, it was compensated for by quite good software sales.

Speaker #1: We will keep costs under control. We will have tight cost control we have had it. We will continue to have it. And we will win new business.

[Company Representative] (Smart Eye): Yeah. We are moving through the questions here. I think we have covered almost all of it. I just have one final question, and that is how is Sightic developing regards to the deal with the police authority? Have you started getting paid for that deal or how is the potential deal pipeline looking forward?

Speaker #2: We are moving through the questions here. I think we have covered almost all of it. I just have one final question, and that is: how is Scytic developing with regards to the deal with the police authority?

Speaker #1: And hopefully behavioral research has bottomed out and will grow from here.

Speaker #2: Perfect. Thank you both gentlemen for the conference call today and thank you everyone for listening in. See you again next quarter.

Speaker #2: Have you started getting paid for that deal, or how is the potential deal pipeline moving forward?

Speaker #1: Yeah, absolutely. Yeah, we are getting paid from, let's say, the day we announced the deal—almost, maybe, just a few days' difference. But yes, we have a big European police authority that we work closely with, deploying this new and very interesting technology, and this is super interesting.

Martin Krantz: Yeah. Absolutely. We are getting paid from, let's say, the day we announced the deal, almost, maybe just a few days difference. But yes, we have a big European police authority that we work closely with deploying this new and very interesting technology, and this is super interesting. It is not a big revenue stream yet, but it has good potential. If it works with one police authority in Europe, it will work with many.

Speaker #1: It's not a big revenue stream yet, but it has good potential. I mean, if it works with one police authority in Europe, it will work with many.

Speaker #1: So, we see a strong potential for it.

[Company Representative] (Smart Eye): Yeah.

Martin Krantz: We see a strong potential for it.

Speaker #2: Good. I think—and hope—that I have covered all the subjects here. I understand we haven't been able to answer each and every individual question, but overall I think we've covered it well.

[Company Representative] (Smart Eye): Good. I hope that I have covered all the subjects here. I understand we haven't been able to answer each and every individual question, but overall, I think we've covered it well. I will end the Q&A session here, and maybe do you want to take some few words and summarize your thoughts?

Speaker #2: So I will end the Q&A session here. Maybe you would like to take a few moments to summarize your thoughts?

Speaker #1: Yeah. I should say, of course, I was very disappointed when the stock market opened today. The stock is trading down. The expectations from the market were higher than what we delivered.

Martin Krantz: Yeah. I should say, of course, I was very disappointed when the stock market opened today. The stock is trading down. The expectations from the market was higher than what we delivered. We will continue to do what we think is the important stuff. We will deliver our production program so that the cars reach production so that they can start to generate license revenue. We will keep costs under control. We will have tight cost control. We have had it, we will continue to have it. We will win new business. Hopefully, behavioral research has bottomed out and will grow from here.

Speaker #1: We will continue to do what we think is the important stuff. We will deliver our production program so that the cars reach production and can start generating license revenue.

Speaker #1: We will keep costs under control. We will have tight cost control. We have had it. We will continue to have it. And we will win new business.

Speaker #1: And hopefully, behavioral research has bottomed out and will grow from here.

Speaker #2: Perfect. Thank you both, gentlemen, for the conference call today, and thank you everyone for listening in. See you again next quarter.

[Company Representative] (Smart Eye): Perfect. Thank you both, gentlemen, for the conference call today, and thank you everyone for listening in. See you again next quarter.

Martin Krantz: Thank you.

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