APRIL 2017
Executive Summary Paul Angelatos, Chief Operating Officer 2017 has begun with great momentum as we continue to deliver the expected growth of the Guardian business with a strong sales quarter and solid traction on the integration with key global telematics partners. Our distributors and value added resellers continue to perform significantly better than originally anticipated and I look forward to providing more detail on some of those advancements in our next update. Our market presence is growing as we continue our investment in product development and remain focused on building commercial partnerships that will enable us to scale our support, harness volume opportunities and penetrate new geographical markets. The partnership with MiX Telematics announced in December 2016 is progressing well with our first joint customer offerings soon to rollout. The engineering work to integrate our current separate solutions has progressed according to schedule and without any significant technical challenges. We are working with other key telematics partners to ensure we are equipped to continue to harness the opportunities these relationships present while at the same time, reinforcing our direct sales efforts. I am delighted to announce that since the period of the half-year results, Guardian has added another $9.38M of total contract value to the business, bringing the current total of new contracts for the year (as at 1 April FY to date) to just over $16M. We expect this growth to continue in Q4. In North America alone, we have over 10 major carriers currently assessing the technology with fleet sizes ranging from around the low hundreds to well into the thousands. Globally, the ratio of carriers assessing the technology and converting into contracts is very high, and is confirmation of the model which provides Seeing Machines with greater revenue predictability, customer retention and ongoing product uptake. Although the sales cycle has yet to be reduced to a point where we are comfortable, the cycle is becoming more predictable, with a higher conversion from assessment to sale than previously experienced. We are delighted to be continuing our work with the large Asia Pacific business, Toll Group, for the next 5 years. Hard work, a great solution and an exceptionally well engaged customer has led to this milestone contract. We are proud of our role in helping Toll s people get home safely at the end of each shift. You ll read more about this in the Asia Pacific highlights. Lastly, it s important for our investors to understand the status quo for the Guardian business and medium term expected outcomes. To that end, I want to take this opportunity to focus on our evolving revenue model. Previously, Seeing Machines revenue was predominantly derived from capex sales to the mining sector. Since licensing the mining IP to Caterpillar in 2016, the Guardian division is delivering longer-term contracted, recurring monthly revenue streams. This means commercial fleet customers are billed on a per-truck, monthly basis with contract terms averaging between 36 to 60 months in length. In addition to providing Seeing Machines with greater revenue predictability, this change will support customer retention through multi-year contracts. Our Total Contract Value (TCV) as at the end of Q3, is more than triple last year s TCV. The graph in the following dashboard provides a clear picture of the growing nature of the business.
Dashboard 25 20 CUMULATIVE TOTAL CONTRACT VALUE (TCV) v REVENUE 22.8 Fleet Management Solutions Partner Update 15 10 5 0 6.9 2.5 3.3 FY 15 FY 16 TCV 13.8 1.6 FY 17 H1 Revenue 3 FY 17 30 Mar Seeing Machines Value Added Reseller (VAR) programme is focused on identifying global implementation partners like MiX Telematics with extensive industry experience, strong business to business relationships and a well-established global channel partner network in place. Progress with MiX Telematics (MiX) and other providers is ahead of schedule. We are delighted to announce that our first joint product solution with MiX will be under Assessment with a major global brand by Q3 2017. This Assessment will run for 8 weeks and will provide significant advancement towards launching the first combined sales solution for the global fleet market. 35 30 25 20 15 10 5 0 North America Current Guardian Assessments Asia Pacific UK, Europe Middle East, Africa Latin America Seeing Machines is also integrating well with MiX s marketing efforts. We have participated in an Australian-based seminar (Brisbane) recently to showcase the technology that Guardian brings to the MiX FMS suite and we will also be participating on a US-based MiX webinar in April where we will feature the science behind the Seeing Machines technology. Our organisations are well-aligned and eager to work closely together to maximise our combined opportunities. Assessments Recent conversions/under negotion
Asia Pacific Featured customer TOLL Toll Group is a leading provider of integrated logistics operating out of the Asia Pacific region, with a global reach. They employ approximately 40,000 people over a network of some 1,200 sites in more than 50 countries. Since 2011, Seeing Machines has been working closely with Toll to drive safety in its workplace. Throughout this journey, Toll has played an essential role in the development of the Guardian Solution sharing of industry knowledge and expertise with Seeing Machines. Toll has renewed this partnership with a commitment to deploy Guardian across the entire fleet of prime movers within its resources and government division. This five-year agreement will see Toll deploy 1,000 new Guardian units across its fleet in the resources and government division, over a six-month period and will enable Toll to upgrade legacy units with the latest Guardian technology bringing their fleet to a common platform. MR DAVID JACKSON, CEO, TOLL RESOURCES & GOVERNMENT LOGISTICS, SAID, AT TOLL, SAFETY IS OUR NUMBER ONE PRIORITY. TECHNOLOGY AND INNOVATION ARE ONE OF THE MANY WAYS WE ARE SUPPORTING THE CREATION OF A SAFE WORKPLACE AND THIS PARTNERSHIP WITH SEEING MACHINES HELPS US TO ACHIEVE THIS GOAL.
South East Asia Distributor Conference We continue to focus on maximising value from key distributors in Southeast Asia where these partners have a track record in experience, local relationships and regional capabilities in logistics, commercial fleet safety, insurance and commercial fleet technology engagements. This is key to the success of Guardian s distribution plan for the Asia Pacific region and forms part of a wider programme, aimed at delivering local support on a global level. Southeast Asia is certainly a growth region for telematics and GPS where high traffic arterial roads, largely made up of trucks and buses, serve as major links between cities and ports. In February 2016 Guardian s held its inaugural SEA Distributor Conference in Thailand, playing host to our key partners in the Asia region from Singapore, Malaysia and Thailand. The 2-day session was highly productive and focused on reviewing work done to date, setting an achievable plan for the next 24 months and mapping out a roadmap for regional marketing activities. Key developments in the region include: Increased focus in Thailand on vehicle safety this push is being driven by domestic and multinational fuel suppliers to their contract haulers; A similar focus is being experienced in Malaysia; Both Thailand and Malaysia are seeing an increased number of global logistics providers entering the market, also with a keen focus on emphasising safety as their point of differentiation against local providers; and Singapore is a more developed market with a longerterm focus, primarily in the public transport sector. We are seeing high unit numbers here, but the sales process is longer. The upshot was a strong sense of confidence in the Asia region for the Guardian product. We have chosen the right partners to help drive this business and are collaborating successfully to drive increased success in our target countries. Asia Pacific Recent Successes The Asia Pacific business development team continue to bolster the Guardian footprint with some significant contracts signed recently in Australia. The first contract with one of the largest Australian third party logistics provider represents a 5-year deal across a sizeable fleet, beginning with 150 vehicles and progressing to 300 in total. This success can be attributed to a well-planned approach, where the initial introduction was followed by assessment, leading to a partial deployment of the fleet, and finally, to a full fleet commitment. The other success of note is with an Australian provider of specialised transport and logistics solutions. The deal is structured across 2 of their divisions, with one division deploying immediately and the second one running a sample assessment with the intent to connect their fleet soon after. As a minimum it will mean 150 connections but likely to end up at just over 300 new connections, over 3 years.
North America Q&A We asked Chris Sluss, VP Business Development what made him join Seeing Machines in the first place, to comment on the marketplace and how he intends to drive increased sales to one of the world s biggest fleet markets. Chris joined Seeing Machines with more than 30 years experience in the fleet telematics industry. Prior to this he was with a major technology business focused on nationwide fleet tracking, data and voice communications systems. Chris has hand-picked our North American team of business development executives, and together they represent over 100 years of trucking industry experience. Why Seeing Machines? I joined Seeing Machines because the Guardian product was fulfilling a need. Guardian would save lives. I knew I could make a difference and wanted the chance to make Guardian mainstream in the North American fleet space. I have been involved in the fleet and technology space for a long time and would say that this is one of the most intriguing solutions I have seen. Guardian why do you think it s an exciting product to sell? What s our value proposition? We have never had a bad first meeting. Every Safety Director and CEO who sees the product perform sees its promise. Our approach to addressing the safety issue before it manifests itself in an accident is our key differentiator and taps into a real business issue for our customers and potential customers. What are some of your challenges? We are new, we are not the first one talking about safety in this space, but as I said before, our preventative approach sets us apart. We are also challenged by the fact that our device might not be the only hardware taking up real estate in a truck cab. This is being handled by our product development team in the first place and assisted by our integration with FMS providers where a combined solution will replace 2 (or more) potentially separate products. Highlights In the first 3 months of this year the North American team have closed contracts that will represent over 3,300 units. They range from food delivery to route and motor coach service. We currently have over 10 Assessments in place and more due to start for engaged and prospective customers. The fleets involved in these Assessments range in size from 150 trucks to 45,000 trucks. And we are encouraged by this as our success rate in closing deals once Assessments have been completed is consistently well above 60%. Seeing Machines is about to demonstrate our capabilities at 2 major US conventions. The TCA 79th Annual Convention will be held in Nashville, TN between 26-29 March and NPTC 2017 Annual Conference is taking place at the end of April in Cincinatti. These shows will feature Guardian in a new booth with live interaction to ensure our customers can experience first-hand, what the technology brings to their business. We expect to interact with dozens of potential customers at these shows as we raise the profile of the Seeing Machines and Guardian brand, and leverage the networking opportunities in one location, which will certainly help to speed up the sales process.
UK/Europe Commercial Vehicle Show Birmingham There will be more to come in our next update on general progress in UK and Europe as the sales team gets up and running building a pipeline of quality leads and finalises a key assessment with a leading service provider in UK and Europe, specialising in total supply chain management of temperature controlled products. In the meantime, Seeing Machines will be prominent at our inaugural UK show in late April. Our exhibition will have 2 focus areas: 1. A full Guardian system demo will serve as centrepiece to the stand, allowing visitors to try the technology and hear/feel the alerts. 2. Also showcased will be a DAF XF truck from one of our key prospective customers providing a true-to-life example of the technology sitting in the cab of a truck. This is the largest trucking show in the UK and the Seeing Machines, Guardian brands will be front and centre.
Seeing Machines strives to provide informative and regular communication to investors. We trust you find the information in this quarter s fleet investor update useful. We encourage you to contact us if you have any questions regarding this update. THANK YOU HEAD OFFICE: Level 1, Lonsdale Street Braddon ACT Australia 2612. (e): investors@seeingmachines.com (t): +61 2 6103 4700