Smart Eye : Q1

Smart Eye Interim Report January - March 2024

The foreseen Acceleration of

Automotive Sales has Started

January- March 2024

• Net sales amounted to SEK 86.1 (64.3) million, an increase of 34% compared to the corresponding period the previous year. Business area Automotive continuing to drive the growth in the quarter.
• Gross Profit amounted to SEK 77.3 million, an increase of 41% compared to the corresponding period the previous year. Gross Margin amounts to 90% (85%) which is due to a higher share of software sales in the quarter.
• EBITDA amounted to SEK-23.0(-44.2) million. The improved result is driven by higher sales and lower OPEX. One-time expenses due to restructuring costs impacted the result negatively with -11.6 million.
• Operating loss amounted to SEK-61.5(-81.9) million. Depreciation of the surplus value created in conjunction with the Affectiva and iMotions acquisitions amounts to SEK -28.4 million.
• Earnings after tax per share are-1.53(-2.33), and after full dilution -1.53(-2.33).
• Cash and cash equivalents totaled SEK 161.2 million at the end of March. The cash ending balance including credit facilities amounts to SEK 243.6 million.
• Strong order intake during the quarter included 19 design wins for DMS, 5 design wins for Interior Sensing and 2 design wins for a commercial vehicle manufacturer (AIS). The total estimated order value for these design wins amounts to SEK 785 million based on estimated product life cycle projections.

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Smart Eye Interim Report January - March 2024

Financial summary

		Jan-Mar	Full Year
TSEK
	2024	2023	2023
Net sales	TSEK
86 102	64 324	302 233
Operating profit/loss	TSEK	-61 511	-81 912	-282 902
Operating margin	%	neg.	neg.	neg.
EBITDA	TSEK	-22 983	-44 156	-127 667
Profit/loss after tax	TSEK	-56 481	-81 600	-75 543
Profit per share*	SEK	-1,53	-2,33	-2,14
Return on total capital	%	-3,27	-5,40	-4,85
Equity per share*	SEK	46,68	43,15	44,20
Equity per share after full dilution*	SEK	45,29	43,15	42,82
Equity ratio	%	86,90	82,55	85,28
Number of shares		36 995 768	35 007 156	35 262 405
Number of shares after full dilution		38 130 168	35 007 156	36 396 805
Average number of shares before full dilution	35 589 821	30 347 986	33 999 581
Average number of shares after full dilution		36 724 221	30 347 986	35 133 981

• The subscription price in the directed share issue carried out in March 2024 was SEK 91 per share, corresponding to approximately 96 % of the share's fair value on the last day before the publication of the directed share issue. The comparison figures are recalculated, as a consequence of the directed share issue, with the calculated bonus factor of 1,002.

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Smart Eye Interim Report January - March 2024

Comments from the CEO

The most significant development in the first quarter is that our software license revenue from the automotive sector is gearing up as planned. The company is growing 34% year on year, with the majority of the growth coming from Automotive. The costs are kept firmly in control, and we are eagerly anticipating that the revenues ramp-up, driven by higher car production volumes. In the period we chose to increase our cash position by 150 MSEK with a directed share issue. After our last earnings call it became clear to us that we had the option to raise cash that way on favorable terms, as an alternative to a debt facility. We concluded this was the best alternative, in terms of risk minimization, and executed the deal in a short time frame with low discount.

Automotive

We are proceeding according to our plan. The Automotive business is growing with 138% (121% in Q4 2023). The increased growth rate comes mainly from production volumes in Japan and North America. The production volumes also continue to rise in South Korea while Europe and China will start to increase shortly. Most of the 322 car models have not started production, so higher growth in the future is to be expected. The non-recurring engineering is on a higher level than last year, due to all the recently won car programs. We had our first two OEM programs with Interior Sensing during the quarter. It is very welcome, and we continue to push forward on this new and exciting development track. We intend to become market leaders here as well.

AIS's main achievement this quarter was securing a very big contract with a well-known European truck manufacturer, with a combined order value of 150 MSEK with start of production in 2025. We are pursuing several bus manufacturers that need a DMS system to comply with the upcoming European legislation starting this year. This will start to ramp up in Q3. The fleet customers are adding up and will during this year become a significant and welcome addition to the already fast-growing automotive business area.

Behavioral Research

The business area grew by 6% during the quarter, mainly coming from the eye trackers of Research Instruments. All product categories

and geographic regions grew and helped make Q1 the best quarter so far for RI. Both iMotions and Media Analytics slowed down a bit, which probably has to do with the strong end of year effect we saw in Q4. Next quarter looks very promising for the entire business area. We showcased a new reference measuring product at World NCAP conference in Munich, which has gained a lot of market interest. The timing for this product couldn't be better, given all the regulatory groundwork taking place currently.

Final Words

We are perfectly set up for the year to come. We have an uniquely strong automotive production program pipeline. We have a dedicated and enthusiastic organization in place delivering the production projects that we won. We have a solid research business as a base platform, and we have the exhilarating fleet and aftermarket business that quickly can turn into yet another cash cow. The inevitable ramp-up of the production programs is such that it supports our forthcoming profitability. We also filled up our war chest so that we are secure for anything unexpected that might occur. We have never been in a better position with Smart Eye.

Martin Krantz

CEO Smart Eye

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Smart Eye Interim Report January - March 2024

Estimated value of obtained design wins

As of the report for the third quarter of 2018, the company provides information on the estimated market value of obtained design wins at the time of publication of the report. The figures in brackets show the levels at the time of the publication of the preceding report, which in this case was February 21st, 2024.

The total estimated value of the company's 322 (315) design wins announced to date amounts to SEK 7,500 (6,915) million over a product life cycle.

If the company's system had been used in all car models on existing platforms by the 21 (21) car manufacturers with whom design wins have been communicated, the estimated value would amount to at least SEK 11,450 (9,715) million over a product life cycle.

The calculations have been made by the company based on OEMs estimated production volumes of car models and may change due to changed conditions for life cycle estimates of the car platforms.

One of the main reasons for the large number of Driver Monitoring System (DMS) design wins that has been awarded during the last year is due to the legislation that is about to take effect in Europe. Advanced Driver Distraction Warning will be required for new type approvals starting July 2024 and as of July 2026 all new vehicle registrations will require the same technology. Given the length of an automotive development project most of the OEMs have been making their decisions during 2021 and 2022, to fulfill the legislation once it becomes effective.

Design Win development / (MSEK)

2022

2023

2024

	Estimated revenue over the product life cycle from				3 835			6 715		7 500
	current design wins
	Estimated revenue over the product life cycle from
	possible additional design wins with existing car				4 075			3 000		3 950
	manufacturers on existing platforms
	Estimated revenue over the product life cycle including
	current and possible additional design wins with				7 910			9 715		11 450
	existing car manufacturers on existing platforms

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Smart Eye Interim Report January - March 2024

The Group

Revenue

First quarter 2024

Net sales for the period January to March 2024 amounted to SEK 86.1 (64.3) million, which is an increase of 34%. The growth is driven by Automotive, 138%, the growth for Behavioral Research amounts to 6%.

Net sales for the Automotivebusiness area (Automotive Solutions and Fleet & Aftermarket/AIS) during the first quarter was SEK 32.8 million, compared with SEK

13.7 million in the first quarter of the previous year. The revenue increase is driven by continued high activity in customer development projects (NRE), higher license revenue (related to ramp up of car volumes), and higher AIS sales.

For the Behavioral Researchbusiness area (Research Instruments, Media Analytics and iMotions) net sales during the first quarter amounted to SEK 53.3 (50.6) million. Revenue growth sums up to 6% driven by Research Instruments, while Media Analytic and iMotions declined slightly compared to same period last year.

Results

First quarter 2024

EBITDA amounted to SEK -23.0(-44.2) million. The improved result is due to increased sales and lower costs during the period. EBITDA is also affected by restructuring cost of SEK -11.6 million.

Underlying EBITDA(excluding one-time items) amounts to SEK -11.4 million and is considerably lower than last quarter (-22,6).

The operating resultfor the first quarter totaled SEK -61.5(-81.9) million. Depreciation of the surplus value created in conjunction with the Affectiva and iMotions acquisitions amounts to SEK -28.4 million in the quarter.

Financial position

In addition to cash and cash equivalents of

161.2 SEK million, the Group has two unutilized bank overdrafts facilities of SEK 20 million and DKK 8 million and a credit facility of SEK 50 million.

Cash flow during the quarter amount SEK

81.5 million, positive due to performed direct share issue in the quarter.

Cash flow excluding financial activities amounts to SEK -59.9 million, which is a decrease of SEK -11.3 million compared to the previous quarter. The main reason is due to one-time payments of restructuring cost and periodical changes in the working capital.

Important events during the period

The company has in the first quarter of 2024 taken its first five design wins to deliver its combined Driver Monitoring System (DMS) and Cabin Monitoring System (CMS) technology to new car models. By extending our world leading DMS technology to the entire vehicle interior and all its occupants, Smart Eyes Automotive Interior Sensing AI enables car manufacturers to offer new features for improved safety and comfort in their vehicles. Smart Eye's interior sensing technology incorporates key components from Affectiva, pioneers in Emotion AI and part of the Smart Eye group since 2021.

In March 2024, the company signed a contract to supply its Fleet Driver Monitoring system to two medium-sized truck models of a large European manufacturer of commercial vehicles. The newly launched product is a complete hardware and software system intended for original or aftermarket installation in commercial vehicles, mainly trucks and buses.

The Company has during March resolved on a directed share issue of 1,650,000 new

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Smart Eye Interim Report January - March 2024

shares, corresponding to approximately 5 per cent of the total number of outstanding shares and votes, at a subscription price of SEK 91 per share, which means that the Company receives SEK 150 million before transaction costs. The subscription price in the Issue has been determined through an accelerated bookbuilding procedure and corresponds to a discount of approximately 4 per cent compared to the closing share price as of 21 March 2024. The interest in the Issue was very large, from both existing shareholders as well as several new Swedish and international institutional investors.

proceeding as planned and in part to the company's success in recruiting qualified personnel to the necessary extent.

Financial risks

A positive cash flow is essential for long- term investment in the competitiveness of the Group. Demand and production of car models related to the Group's design wins significantly impact the company's license revenues and ultimately when the company reaches profitability and a positive cash flow. The company is currently financed through share capital and credit pending a positive cash flow.

Events after the end of the period

No specific event to report.

Parent company

Revenue

First quarter 2024

Net sales for the period January to March 2024 amounted to SEK 51.1 (25.0) million, which amounts to an increase of 104% compared with the same period last year. The growth is driven by Automotive as well as Behavioral Research business areas.

Results

First quarter 2024

The operating result for the first quarter totaled SEK -28.6(-61.1) million. Improved result is driven by higher sales and lower OPEX.

Significant risks and uncertainties in summary

Operational risks

The business operations are subject to risk factors that could impact the company's commercial and financial position. The risks relate in part to development operations

As sales increase, the company will face an increased currency exposure since most of the company's sales will be denominated in a currency other than Swedish kronor.

Market risks

Eye tracking is an emerging technology, whereby the company's products are currently used in behavioral research and as integrated products in the automotive industry. Regarding the Automotive business segment, a delay or the non- materialization of a launch of eye tracking in the automotive industry could entail a risk of a lower-than-expected growth rate. The future growth rate is strongly connected to the introduction of legislation in the European Union and at the time of publishing this report, there are no indications of a delay in this legislation.

In the Research business area, the biggest market risk is the availability of funding in the academic field. A general decline in funding could be partly offset by an increased penetration of the market as the presence of the group's technology is still emerging.

Otherwise, regarding risks and uncertainties, refer to the 2023 Annual Report, page 43-44.

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Smart Eye Interim Report January - March 2024

Transactions with related parties

Except for shared based incentive programs and intercompany transactions there were no transactions with related parties during the period.

Share Information

The Company is listed on Nasdaq First North Growth Market. Certified Advisor is Carnegie Investment Bank AB (publ.).

Number of shares

The number of shares as of March 31sttotals 36,995,768.

Share-based incentive scheme

At the AGM 2ndMay 2023 it was resolved on the adoption of a long-term incentive program in the form of performance-based share options directed at employees within the Smart Eye group. The maximum

number of performance shares will amount to 580,000.

The company also has three current incentive programs adopted by the 14thApril 2021, the EGM 8thOctober 2021 and the EGM 29thJune 2022.

Dividend policy

The Company is in a development phase and any surpluses are scheduled for reinvestment in the Company's develop- ment. The Board is not intending to submit a dividend proposal.

Accounting policies

The interim report has been prepared in accordance with the Annual Accounts Act and the general advice and guidelines of the Swedish Accounting Standards Board, BFNAR 2012:1, Annual Reports and Consolidated Financial Statements (K3).

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Smart Eye Interim Report January - March 2024

This interim report has not been reviewed by the company's auditor.

Signing of the report

The Board of Directors and the CEO assure that the interim report provides a fair overview of the Parent Company's and the Group's operations, position and results and describes the significant risks and uncertainties in the Parent Company and the companies included in the Group.

Gothenburg, May 14th, 2024
Anders Jöfelt	Lars Olofsson
Chairman of the board	Board member
Mats Krantz	Magnus Jonsson
Board member	Board member
Eva Elmstedt	Cecilia Wachtmeister
Board member	Board member
Tobias Sjögren	Martin Krantz
Board member	CEO
Smart Eye Aktiebolag (publ)

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Smart Eye Interim Report January - March 2024

Condensed Consolidated Statement of Income

	Jan-Mar	Jan-Mar	Full Year
TSEK	2024	2023	2023
Net sales	86 102	64 324	302 233
Cost of goods sold	-8 776	-9 645	-35 134
Gross Profit	77 326	54 679	267 099
Sales expenses	-43 537	-42 865	-174 770
Administrative expenses	-46 233	-39 259	-146 974
Research and development expenses	-50 498	-56 156	-232 880
Other operating income	2 517	2 639	13 423
Other operating expenses	-1 086	-950	-8 800
Operating profit/loss	-61 511	-81 912	-282 902
Financial income and expenses
Interest income and similar profit items	161	4	1 912
Interest expenses and similar loss items	-281	-579	-2 254
Total financial income and expenses	-120	-575	-342
Profit/loss after financial items	-61 631	-82 487	-283 244
Tax on the result for the period	5 150	887	207 701
Result for the period	-56 481	-81 600	-75 543

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