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Could Mitsubishi hold the key to Seeing Machines’ refinancing?

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As Seeing Machines approaches its November 26 AGM, shareholders are becoming increasingly concerned about the lack of a longer-term refinancing agreement with Magna International.

The existing convertible loan notes, with an original principal of US$47.5m, were due to mature on October 4. An interim extension has bought the company until November 30 to negotiate a longer-term arrangement. But the clock is ticking, and the share price has come under pressure as investors wait for news.

Magna is clearly in a strong negotiating position. But there is another player whose interests could prove significant: Mitsubishi Electric Mobility Corporation, the wholly-owned automotive subsidiary of Mitsubishi Electric Corporation, which owns 19.9% of Seeing Machines.

Mitsubishi Electric Mobility invested £26.2m in Seeing Machines in December 2024, initially through a subscription for new shares at 4.09p, and subsequently increased its holding to 19.9% through purchases from existing shareholders.

This was not simply a financial investment. The two companies agreed to collaborate on automotive opportunities, including accelerating the adoption of Seeing Machines’ driver and occupant monitoring technology among Japanese manufacturers. Their relationship has since extended into commercial opportunities for Guardian, Seeing Machines’ fleet-monitoring product.

The size of the investment makes Mitsubishi Electric Mobility a significant shareholder, with an obvious interest in the company’s long-term prospects. It also gives it a potentially important perspective on any refinancing deal that could substantially dilute existing shareholders.

The dilution question

One possible outcome of the negotiations with Magna could involve some or all of the outstanding debt being converted into equity at a revised price.

The potential dilution is considerable. The original US$47.5m principal, together with accrued interest, means the amount owed could be materially higher. If the total liability were around US$63m, and converted at an illustrative price of 2.9p, it would require the issue of approximately 1.65bn new shares, based on an assumed exchange rate.

That would represent dilution of roughly 25% for existing shareholders. Mitsubishi Electric Mobility’s holding would fall from 19.9% to around 14.9%, assuming it did not participate in the issue.

There is an important qualification: the existing convertible notes have a contractual limit of 386.4m shares that can be issued on conversion. A conversion on the scale illustrated above would therefore require a renegotiation of that provision or a different financing structure. This calculation is intended to show the potential scale of dilution, not to suggest that such a conversion is currently proposed.

Would Mitsubishi Electric Mobility be comfortable with a deal that significantly diluted its shareholding? It might be prepared to accept some dilution if the alternative were to leave Seeing Machines financially constrained, but it would presumably want to protect the strategic value of its investment.

There is no public evidence that Mitsubishi Electric Mobility has a veto over the refinancing, or that it is directly involved in the discussions with Magna. Its 19.9% holding does not, by itself, establish either. Nevertheless, its presence adds another important shareholder interest to the equation.

Could a compromise be emerging?

One possible solution would be for Magna to agree to a longer extension of the existing notes, but on revised financial terms that provide it with a better return.

That might involve a higher interest rate, a more favourable conversion price for Magna or additional equity incentives, while retaining a limit on the number of shares Magna could acquire. Such an arrangement could give Seeing Machines more time to benefit from its growing automotive royalties and emerging opportunities in robotics, without imposing the full burden of an immediate repayment or a heavily dilutive conversion.

It could also suit Magna. However, Magna isn’t negotiating in a vacuum. The company has a financial interest in recovering its loan, but it also has a commercial relationship with Seeing Machines. Its technology is incorporated into a mirror-based driver and occupant monitoring system supplied by Magna to a major German car manufacturer, Volkswagen. Preserving that relationship and the supply programme is an additional consideration, quite apart from the value of the loan itself.

For Mitsubishi Electric Mobility, a solution that gives Seeing Machines the financial headroom to pursue its automotive growth and develop new markets would help protect the strategic value of its shareholding.

This is, of course, only one possible scenario. There is no indication that such a compromise is being negotiated, nor that Mitsubishi Electric Mobility has been asked to support it. But it illustrates why the interests of the three companies may not be as far apart as the current uncertainty suggests.

Seeing Machines has said it is confident its FY2026 audited results will be published before the AGM on November 26. Investors are hoping that, prior to that, the company will provide clarity on the longer-term financing arrangements.

The writer holds stock in Seeing Machines.

Seeing Machines ‘confident’ audited results will precede AGM, as Magna refinancing talks continue

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In response to my questions, Seeing Machines has confirmed that it is “confident” its FY2026 Audited Results will be available before the AGM, scheduled for 26 November 2026.

A spokesperson for Seeing Machines also stated: “They have been delayed due to continuing work on the longer-term extension and refinancing options for the existing Convertible Loan Notes with Magna International Inc.

Investors will be updated as soon as they are available.”

The company’s reassurance that the audited results will be published before the AGM is encouraging. It remains to be seen, however, whether the longer-term refinancing agreement will also be concluded by then. Given the connection between the delayed results and negotiations with Magna, investors will understandably be hoping for clarity on both fronts.

Against this backdrop, today’s share-price fall seems disproportionate to the automotive KPIs themselves, although refinancing uncertainty remains an obvious concern for investors.

The latest KPIs for the Q1 2027 financial year were encouraging, with automotive production approaching 2m units and the number of cars on the road equipped with Seeing Machines’ technology exceeding 10.2m.

In a note published today, Peter McNally, analyst at house broker Stifel, commented:

“Automotive production grew +285% y/y to 1.96m units (Q1 FY26: 0.51m). While this is -7% q/q from the record Q4 FY26 (2.11m), this is due to European new car sales falling c.15% q/q, in line with expected seasonality and therefore shows progress”.

He also drew attention to the fact that: “Cars on the road carrying SEE’s DMS are subsequently up +140% y/y to 10.2m (Q1 FY26: 4.24m).”

Guardian hardware sales were disappointing compared with the previous quarter, although they were up 188% year-on-year. Management needs to explain more clearly how its revised sales strategy is expected to address this weakness and deliver sustained growth.

Perhaps the sales-agent agreement signed with Mitsubishi Electric Automotive America will help generate stronger sales than the earlier Referral Agreement signed in 2025.

The more important question is whether the new arrangement can translate into sustained growth. I’d like to see more granular details from management on the expected contribution from Mitsubishi, the timetable for improved sales and whether the company has revised its Guardian revenue expectations.

I’d also like to know how the move to integrate Seeing Machines’ DMS directly into the ADAS systems of trucks via Tier 1 suppliers is progressing.

Still, as McNally points out: “Guardian ARR grew +13% y/y (+2% q/q) to $15.3m (Q4 FY26: $15.0m), demonstrating the importance of the recurring base while volumes are low”.

Once the refinancing arrangements are clarified and the audited results published, investors should have a much better idea of whether Seeing Machines’ operational progress is translating into sustainable financial performance and shareholder value.

I remain optimistic about the company’s long-term prospects, although the refinancing terms will be crucial.

The writer holds stock in Seeing Machines.

Questions for Seeing Machines AGM

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The bursting of the dot-com bubble in 2000 didn’t mark the end of the internet. It marked the beginning of its commercial maturation. The same is probably true of AI, notably physical AI in the form of robotics.

The rise of the robots is unstoppable; the question is which companies will provide the technology that makes them ubiquitous.

My conviction is that Seeing Machines will be one of them. Still, management first has to get its act together regarding the refinance.

At the AGM on 26 November I’d like to ask management:

  1. Why the refinancing arrangements proved so difficult to conclude, given the importance of the facility to the company’s financial position? With hindsight, were there things that could have been handled differently, and what lessons have been learned to ensure shareholders aren’t exposed to similar uncertainty in future?
  2. Given that Seeing Machines’ Physical AI Platform is designed to be hardware-agnostic, how are discussions progressing with major semiconductor and computing platform providers, such as NVIDIA and Qualcomm, about licensing or integrating SEE’s human-perception technology into their robotics ecosystems?

The author holds stock in Seeing Machines.

My Mea Culpa at the Hands of Seeing Machines

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It’s ironic that someone who prides himself on being fairly hard-headed should have made the mistake of failing to follow this advice from Benjamin Graham, arguably the greatest investor of all time.

All I can say in my own defence is that my faith in the technology of Seeing Machines has, at times, blinded me to the lack of tangible returns as a shareholder in this company. It has been a costly lesson for me, as for others.

I still believe that Seeing Machines will be taken over because of the quality of its technology. However, it is clear that successive management has not given sufficient priority to protecting shareholder value.

Even a takeover may not compensate for the opportunity cost of this mistake. It is a sobering reminder that being right about a company’s technology is not necessarily the same as being right about the investment.

I’m not about to sell out of Seeing Machines while I believe my original investment thesis remains intact. However, management must ultimately be judged on what it delivers for shareholders over the coming months.

The writer holds stock in Seeing Machines.

Colin Barnden: a guiding light

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I learnt this morning of the sad news that Colin Barnden had passed away. I thought it only right to acknowledge my debt to the quality of his Independent analysis and his research into the area of DMS in automotive. 

He was the expert in this area. Many financial analysts would acknowledge that, I’m sure. Even he once joked that his knowledge was “Inch wide and mile deep” in this area.

I myself went to him for information/analysis many times – indeed, on occasion in the past he wrote pieces on Safestocks. 

I can’t claim to have know him other than in a professional capacity as a technology analyst but his intelligence and honesty shone out every time I heard him speak or read an article he’d written. 

He himself wrote this on Safestocks back in 2019 and it’s typically honest and forthright: “My role is to make an argument but it is up to everyone to make their own individual decisions about how they think things will play out. No one has a crystal ball.”

For my part, I think he was clearly proven correct about DMS and its importance in the auto industry, and much else besides. 

He’ll be sorely missed by me and many others for the insights he regularly delivered. But that loss pales into insignificance when you consider what his untimely death means for his family.

Seeing Machines set to become a robotics play

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Seeing Machines is increasingly looking like more than an automotive technology story. Indeed, it is on the path to becoming a robotics play.

The company has successfully completed a robotics proof of concept, and CEO Paul McGlone has said he expects it to progress into product development, licensing and ultimately revenue. There is no timetable yet, but the important point is that the technology appears to have passed the first big test: it works.

So what happens next?

One possibility is particularly intriguing. Mitsubishi Electric and Sony Semiconductor Solutions are establishing Advanced Vision Solutions, a joint venture focused on AI vision, factory automation, autonomous operation and physical AI. It is due to start operating in October.

Seeing Machines has not named the customer behind its robotics POC. Still, there are some intriguing clues pointing towards Mitsubishi. SEE has an established strategic partnership with Mitsubishi Electric Mobility under which the companies have explicitly agreed to explore adjacent markets, and SEE’s February investor presentation specifically identified ‘smart factory’ as one of those opportunities.

If so, a product-development agreement with Seeing Machines around the time the JV launches would be a very interesting development.

And Ambarella adds another strand to the story.

Seeing Machines already works with Ambarella, whose CVflow processors are increasingly being used for robotics and industrial AI. There is no evidence that Ambarella is part of the Sony-Mitsubishi JV — and it doesn’t need to be.

Seeing Machines could potentially be working with different hardware partners on different physical-AI applications.

That is what makes the opportunity so interesting.

The company doesn’t need to build the robots, cameras or processors. Its potential role is the perception and human-understanding layer that allows machines to understand people and their environment.

If that technology becomes licensable across multiple robotics platforms, the current valuation — largely based on automotive growth — could look very different.

And with the refinancing risk potentially disappearing at the same time, the next few months could be unusually important for SEE shareholders.

The writer holds stock in Seeing Machines.

Seeing Machines and Ambarella: from driver monitoring to robotics?

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Is Seeing Machines putting its human-perception technology onto Ambarella’s robotics processors?

Seeing Machines has a relationship with Ambarella that is considerably more substantial than a conventional technology partnership. The two companies first announced their collaboration in January 2022, when Seeing Machines agreed to bring its driver and occupant-monitoring technology onto Ambarella’s CV2x family of CVflow AI processors. The arrangement allowed Seeing Machines’ embedded Driver Monitoring Engine (e-DME) to use Ambarella’s CVflow acceleration engine, combining SEE’s perception software with Ambarella’s edge-AI silicon.

The relationship subsequently produced a concrete, integrated solution. In 2023, Ambarella, Seeing Machines and Autobrains demonstrated a single-SoC system combining forward-facing ADAS, driver monitoring and occupant monitoring. 

Crucially, Ambarella described its CVflow platform as an “open” AI-processing architecture that allowed both Seeing Machines and Autobrains to port their software stacks onto its silicon. 

This matters because Ambarella has subsequently expanded well beyond automotive. Its latest CVflow portfolio is explicitly targeted at industrial robotics and physical AI, with its CV7 SoC supporting applications including robots, drones, ADAS and DMS. Ambarella says its common CVflow architecture and SDK allow perception software and AI models to move across generations of its silicon with relatively little redevelopment. 

At precisely the same time, Seeing Machines is attempting to make a similar transition. Its new Physical AI platform and Perception Map technology are designed to give machines a real-time understanding of people, objects and their spatial relationships. The company has already announced a robotics proof-of-concept with a global industrial technology company focused on factory automation and human-robot interaction.

There is currently no public evidence that the new Seeing Machines robotics platform is running on Ambarella CV7 or that the unnamed robotics customer is using Ambarella silicon. It would therefore be premature to claim that SEE’s robotics technology is already part of Ambarella’s robotics offering.

But the possibility is compelling.

Ambarella is positioning CVflow as the low-power perception engine for Physical AI: cameras and sensors feed into its chips, which process the environment in real time for autonomous machines and robots.

Seeing Machines, meanwhile, is developing the specialist software required to understand the human within that environment — where they are, what they are doing and potentially what they are about to do.

The automotive relationship therefore provides an intriguing precedent. If SEE’s human-perception technology can be ported from Ambarella’s automotive chips to its latest robotics processors, the companies could potentially offer a powerful combination: Ambarella providing the edge-AI compute and Seeing Machines providing the human-perception intelligence.

That would move SEE’s opportunity well beyond driver monitoring and into the rapidly developing market for embodied or Physical AI.

Conclusion

When SEE demonstrates that its perception stack can be ported, the opportunity could extend well beyond Ambarella. Other chipmakers — from NVIDIA and Qualcomm to NXP and Renesas — are all competing to provide the computing platforms that will power the next generation of robots. 

If SEE can provide the specialist human-perception layer that sits on top of those platforms, chipmakers could have a strong incentive to incorporate or support its technology rather than develop equivalent capabilities themselves.

And that could fundamentally change the economics of the opportunity. Instead of Seeing Machines having to win every robot manufacturer individually, its technology could potentially become part of the reference platforms offered by the chipmakers themselves — giving robot manufacturers access to SEE’s human-perception capabilities as part of the underlying AI platform. 

For a company that has spent decades developing technology that enables machines to understand humans, that could open a market far larger than driver monitoring. Even a modest software or IP fee per robot could become significant if SEE’s technology were deployed across millions of machines.

The potential market

Goldman Sachs estimates that the humanoid robot market could reach about $38bn by 2035, with a more bullish scenario reaching $154bn. Annual humanoid shipments could rise from more than 250,000 in 2030 to 1.4 million by 2035.

Humanoids, however, are only part of the opportunity relevant to SEE. Its Physical AI platform is aimed at industrial automation, robotics and human-machine interaction, rather than humanoid robots alone. If SEE can establish its technology as a portable human-perception layer across multiple chip platforms, even a relatively small slice of this emerging market could become meaningful.

The question for management at Seeing Machines is therefore: “Is the new Physical AI/Perception Map platform processor-agnostic, and has it been ported to Ambarella CVflow — particularly CV7 — as part of the current robotics POC?”

The writer holds stock in Seeing Machines.

Positive broker comments on SEE’s latest $5m win

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Following the announcement of a new Driver & Occupant Monitoring system programme win for Seeing Machines, Stifel and Shore Capital have issued very positive flash notes. Both reiterated their ‘BUY’ recommendations.

Peter McNally, analyst at house broker Stifel, focused on the fact that the latest contract with an initial value of $5m is its third auto contract in the past two months, bringing the total value won over this time to $47m.

Personally, I expect the value of these contracts to eventually transpire to be 2-3 times the initial amount, given the benefits of incumbency.

Indeed, in his note Alasdair Young at Shore Capital stated: “Perhaps most importantly, we note that programme awards have historically expanded beyond their initial estimated value as vehicles and platforms are added over time. As such, we continue to view disclosed lifetime revenue estimates as conservative indicators of longer-term opportunity.”

McNally also pointed out: “Today’s order is another rear-view mirror integration. Increasingly, this location appears to be an easy to implement solution and offers an efficient path to scale deployment across multiple vehicle platforms with little or no further development and customisation.”

He also expects the acceleration in auto to continue, stating: “We expect August’s Q4 KPI update (to June) to show significant q/q growth in OEM production as OEMs approach 100% fitment in Europe.”

Shore Capital’s Young is similarly bullish: “As outlined in our recent initiation, our target price of 9.5p (c.111% upside) is underpinned by a regulatory-driven inflection to high-margin royalty revenues, with scope for both earnings upgrades and multiple expansion as OEM volumes ramp. In our view, the current valuation does not yet reflect the step-change in growth, margins and cash generation now emerging. We continue to view the upcoming refinancing and the Q4 KPI update expected in mid-August as the next major catalysts for the shares.”

The writer holds stock in Seeing Machines.

Seeing Machines on track for profitability in Q3 and Q4 states Stifel

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In a note issued today, following Seeing Machines unaudited H1 results, house broker Stifel maintained expectations for the full year alongside its cash forecasts. 

Stifel analyst Peter McNally noted that H126 revenue was down 7.5% compared to the prior year period due to a decline in NRE revenue as “royalties ramp into GSR”.

“Operating losses (cash/adjusted EBITDA) have reduced c.24% to a range of $13.2-13.7m with cost reductions implemented last year having a positive effect. The company has a big second half ahead but should benefit from rising high margin Royalty revenue and a further ramp in Aftermarket which is expected to exceed 6k units in the current quarter. The company reached its goal of cash flow run-rate breakeven for the month of December, and we expect profitability in Q326 and Q426 ahead of the July regulatory deadline,” McNally explained.

He added: “Cash dropped to $3.4m at period end partially due to a $5.0m inventory build in working capital and $1.0m in deferred consideration but benefits from the $14.1m accelerated payment, post period.”

Pointing out: “Despite a 46% y/y increase in H126 royalty units, the royalty units ASP has remained above $9 ($9.01) declining by only 5% y/y and over H225 which is encouraging to see as large programmes launch and ramp ahead of GSR, as we saw in the recent KPIs.” This appears to be well above its main competitor Smart Eye, which declines to release this information.

Crucially, McNally stated (before this morning’s fall in price to around 3.2p): “We think investors should make the most of the current weakness. We maintain our target price at 10.5p. Buy.”

The writer holds stock in Seeing Machines.