Seeing Machines Shares Plummet as H1 Revenue Disappoints

Seeing Machines Limited (AIM: SEE), an AI-powered operator monitoring systems company, is facing investor skepticism as its shares plunged over 25% following the release of its H1 FY2026 trading update.

The report, covering the six months to December 31, 2025, revealed revenue figures that fell short of expectations, triggering selling pressure.

Reported revenue is expected to land between US$23.4 million and US$24.0 million, a dip from the US$25.3 million reported in H1 FY2025.

This decline is attributed to reduced non-recurring engineering (NRE) activity as major automotive programs mature, alongside the absence of license revenue from prior exclusivity arrangements. Annualized Recurring Revenue (ARR) saw a modest increase to US$14.0 million, up from US$13.5 million as of June 30, 2025, driven by growth in Guardian connections.

The company reported a decrease in operating expenses due to the strategic reorganization implemented in FY2025. However, cash reserves dwindled to US$3.4 million as of December 31, 2025, a significant drop from the US$22.6 million held on June 30, 2025.

A post-period-end accelerated royalty payment of approximately US$14.1 million from a Tier 1 automotive customer provided some relief. The adjusted EBITDA loss is projected to be in the range of US$13.1 million to US$13.7 million, an improvement from the US$17.7 million loss in H1 FY2025.

Despite the financial headwinds, Seeing Machines highlighted operational progress in the automotive sector. The number of cars on the road utilizing its Driver and Occupant Monitoring System (DMS/OMS) technology reached 4,818,731 units, a 67% year-over-year increase. Production volumes climbed by 62% to 1,088,530 units, with automotive royalty revenue increasing by 43% to US$9.0 million.

The company also announced the expansion of an existing European Tier 1 and OEM automotive program, expected to generate an additional US$10 million in initial lifetime value, supporting enhanced interior perception for semi-automated vehicle functionality, with production slated to begin in 2028.

A new production award in Japan with Mitsubishi Electric Mobility Corporation, coupled with an advanced development project with another Japanese OEM, is anticipated to further bolster the company's position.

In the aftermarket segment, Seeing Machines secured a US$1.8 million Guardian order from a leading North American autonomous vehicle operator and a major Guardian order of 1,100 units from a US-based multinational fleet operator. The formation of a dedicated Future Mobility Group underscores the company's commitment to the autonomous and next-generation mobility ecosystem.

The company's cash balance decreased by US$19.1 million during H1 FY2026, with approximately US$13.1 million attributed to operating performance, US$5.0 million to working capital movements, and US$1.0 million to deferred consideration for the acquisition of Asaphus. The increase in working capital was primarily due to higher inventory levels, which are expected to normalize during H2 FY2026 as delivery commitments are fulfilled.

Seeing Machines anticipates a material increase in automotive production volumes as the EU General Safety Regulation (GSR) deadline approaches. The company expects to benefit from accelerating royalty volume, expanding recurring revenues, and improved operating leverage. Adjusted EBITDA is projected to be positive in Q3 and the second half of FY2026.

Paul McGlone, CEO of Seeing Machines, commented: “During the first half, we made strong progress in reshaping the business for scale as we approach a key regulatory and commercial inflection point. Looking ahead, we expect royalty revenues to accelerate as OEMs roll out their compliance strategies, alongside continued growth in Guardian connections driving higher annual recurring revenue. Our focus remains firmly on generating positive cashflow in H2 FY2026.”