Seeing Machines (AIM: SEE), an industry leader in computer vision technologies that enable machines to see, has confirmed that it expects the first firm sales of a new driver monitoring rail product by Progress Rail before the end of the financial year.
This follows an announcement on September 8th that it had signed a new extended Partnership Agreement with Progress Rail Services Corporation (Progress Rail).
In an exclusive interview, Paul Angelatos, Senior Vice President & General Manager Fleet, Rail and Off-Road at Seeing Machines, told Safestocks: “As you know, we have undertaken various trials, using the mining tech, for rail. Through these trials, we have learnt more about the way an engineer operates in a locomotive cabin (for example, they get up and move around), so there are specific things that will change within the product, but the core product technology will not change. This is a fine-tuning, so we do expect to have sales by end of the financial year.”
Seeing Machines will derive revenues in two ways from these sales:
- From a royalty on hardware sales;
- An agreed fee for services (tech support and monitoring).
In addition, as part of the new agreement both parties have an agreed overall minimum revenue target for each year, which Progress Rail needs to deliver on to retain exclusivity.
Angelatos declined to reveal the level of royalties but it is expected to be well in excess of the mid-teens percentage it receives from Caterpillar in mining vehicles. Confidentiality agreements similarly prevented him disclosing the minimum revenue targets each year, although he did state: “This is a 5-year agreement. By year 5, we expect that this deal would be returning in excess of US$6m per year.”
Fatigue is a contributing factor in over 20% of rail incidents, according to research from the Rail Safety and Standards Board in the UK. Given that there are 200,000 freight and passenger trains worldwide, Seeing Machines has first mover advantage in a potentially huge market.
The writer holds stock in Seeing Machines.