IMINT Image Intelligence

Research note


Imint: Sharp, Fujitsu and Q1 preview

Imint will publish their Q1 report on Tuesday the 22nd of May. We expect net sales around SEK 7.5m and costs to be somewhat in line with the previous quarter, resulting in EBIT expectations of SEK -0.5m. Since our last update, Imint has announced new agreements where we find today’s news regarding the updated agreement with Sharp particularly interesting.

Today Imint announced that Sharp has decided to extend their agreement, giving the client right to use more features from the Vidhance platform. Imint is not able to leave any further details about the updated agreement and which features it actually includes, but we find it reasonable to assume that it regards live auto zoom. Sharp will thereby be the third client that has an agreement including more features than video stabilization.

We have repeatedly stated that we believe that new features, such as live auto zoom and auto curate, are crucial to Imint’s revenue growth within the coming years. Hence, we find today’s news very positive. Sharp accounted for approximately 9% of Imint’s revenues during FY2017 and is clearly an important client although the company is not expected to sell phones in the same volumes as Huawei or Xiaomi. 

Fujitsu has also announced that the company’s latest smartphone model Arrows Be F-04K incorporates live auto zoom by marketing the Vidhance brand and the live auto zoom on the model’s product specification. We find the recent news promising as we believe that Imint will be able to charge higher royalties per sold phone for features such as live auto zoom compared to the video stabilization. The clients’ marketing of live auto zoom could further be helpful in Imint’s process of getting more clients to extend their usage of Vidhance products.

Regarding the upcoming Q1-report, we expect Imint to report net sales about SEK 7.5 in Q1’18, primarily consisting of revenues arising from sales of Huawei and Vivo phones, which also is expected to be bolstered by some contributions from Xiaomi. We expect costs to be in line with the Q4 figures, which would result in reported EBITDA of SEK 1.5m given that capitalized development costs amount to approximately SEK 3.5m. We expect D&A about SEK 2m, which thus would imply EBIT of SEK -0.5m.

Apart from the financials, we look forward to getting a general business update and the status of auto curate. We believe that it yet is too early to expect any comments regarding the development agreement signed with the undisclosed Turkish smartphone manufacturer.

Imint has announced two new agreements since our last update, which regards a license agreement with Blackshark and the development agreement with a Turkish smartphone manufacturer. Blackshark launched its first phone in April, implying that royalties arising from sold phones will not be visible in the accounts of Q1. We have further received confirmation that Vidhance is used in Xiaomi’s Mi Mix 2S (which primarily is expected to be visible in Q2/Q3 accounts) and Redmi Note 5 Pro (launched in February). BQ and Sharp have also announced that Vidhance will be used in the follow-up models of Aquaris X and Aquos R respectively.

Imint’s Q1-report will be published on Tuesday the 22nd of May, which will be followed by a webcast held at 10.00.

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