Can microcap companies deliver large-cap style returns? The team at SaverOne 2014 Ltd. (NasdaqCM: SVRE) thinks so, from their creating and marketing a product they expect will significantly reduce mobile phone use while driving. The technology is indeed worthy of a long look, especially in how it can detect and locate a driver’s cell phone radio frequency (RF) signal and, in an instant, disable virtually all non-emergency functions. Actually, it can shut that down as well. However, according to Soulstring Media, the goal of SVRE technology isn’t to limit mobile communications altogether but rather to curb texting while driving, which includes general messaging and posting to social media channels.
SaverOne technology has the power to do that. Its flagship In-Cabin Driver Distraction Prevention Solution (DDPS), branded as the SaverOne system, can identify when a cell phone is in the vicinity of the driver’s seat and, with the addition of the SaverOne App, block access to distracting apps and social media channels without disrupting necessary apps like navigation, emergency signals, and hands-free phone calls. SaverOne’s DDPS was designed with other compelling features.
Foremost, the system automatically engages when a phone (with the app installed) is near the driver, not the passengers. That difference is a significant advantage over potential competing products. And by the SaverOne solution only focusing on limiting phone functionality to cell phone signals around the driver’s seat and no one else’s, its differentiation could make it the best-in-class option for consumer vehicles.
AI-Empowered Functionality
From a functionality perspective, SVRE’s solution uses sensors and AI algorithms to identify and detect the position of a mobile phone in a vehicle. That find is made easy by its installation partners placing a concealed “Phone Location Unit” in the vehicle, typically under the dashboard. That sensor can determine a phone’s location based on the relative strength of the phone’s RF signal. Still, a driver entering the vehicle with a cell phone needs to have the SaverOne app installed and open. If the app is not enabled, an alarm will be triggered that can only be silenced by removing the phone from the driver’s area or downloading and activating the mobile app if the phone is to remain in the vicinity of the driver. From there, things get super easy.
After the app is installed on a driver’s phone and activated, the system blocks all applications while the vehicle moves except calls, navigation, music apps, and other hands-free or non-distracting apps. A corporate fleet manager could elect to “safelist” specific apps (for example, a delivery company could add its internal delivery app to the approved list). For private vehicles, the list of allowed apps can be modified by a third party, such as a parent or an insurance company that might offer incentives for compliance. Its product and technology put SVRE in an excellent market at the right time.
Remember, billions of cars are on the roads daily. And with antonymous driving still years away, that puts billions of drivers behind the wheel, which allows SaverOne, with its in-market product, to focus strategic efforts on exploiting a massive targeted opportunity. That mission is in progress. SaverOne is already deploying its flagship product to the commercial market, specifically targeting revenue generation from those companies putting commercial vehicles, buses, and employee-driven vehicles on the road. That effort is to help those clients mitigate their liability associated with distracted driving. And since SaverOne’s launch in 2019, plenty are signing up.
SaverOne Order Book Continues To Increase
The company announced securing roughly 4,300 systems ordered, with about 3,000 of them already installed. SaverOne also launched a second generation of the distracted driver protection solution in Q4/2022 that targets earning business from the larger global auto market. In 2023, it scored another milestone with its first international sales. Those sales are leading the drive to expedite best practice distribution, installation, and marketing strategies to further penetrate global markets. Those efficiencies are needed sooner than later to serve a current ramp in demand.
Last month, SaverOne reported initial orders of 90 new installations of its in-cabin Driver Distraction Prevention Solution (DDPS), primarily on school buses. While the number is small, after evaluating the value of keeping drivers focused on the road, the company believes the initial placement can lead to more significant orders from that client and potential clients that provide similar services. Groundwork completed supports meeting that potential. Also in October, SaverOne signed a distribution agreement with GVZ Company, based in Milan. GVZ specializes in distributing automotive components and solutions and has significant experience offering products that comply with European and Italian automotive safety regulations. GVZ will market, sell, install, and provide local support for SaverOne’s DDPS products in the region.
By all measures, SVRE is timely to its opportunity. Despite safety improvements added to vehicles in the U.S. over the past two decades, including things like front-end collision warnings, lane departure warnings, and backup cameras, roughly 43,000 people died in traffic accidents last year, surprisingly, 30% more than in 2013. Of course, there’s no one cause for the rise, and the more than 16% increase in the driving population can undoubtedly contribute to the rise.
But one stat does stand out: smartphone ownership has surged from roughly 56% of the American population owning one to approximately 85% as of 2022. Excluding the very young and the oldest generations from this calculation leads to a revised estimate showing that nearly ALL drivers in the U.S. own a smartphone. With that comes distracted driving from smartphone use. Adding keyboard use to other distractions, like eating and adjusting controls, the roads can be considered less safe than a decade ago.
The Issue Of Driver Distraction Opens A Massive Market
Still, the issue isn’t entirely under the radar. Progress toward making cars safer and more distraction-free includes the advent of hands-free technology to reduce the use of the handset. However, while that alleviates issues related to in-car conversation, it does little to curb the explosive use of social media, where texting is the primary tool to communicate a message. While companies like Apple and Android offer means to mitigate distraction for drivers in moving vehicles, they typically require opting-in, which for many drivers, especially younger ones, is a deal breaker, leaving significant phone use while operating a vehicle in its wake. Only when legislation makes the penalties of getting caught using the phone keypad when driving more costly, expecting a decrease in occurrence is unlikely.
That doesn’t mean companies like SaverOne won’t continue trying to limit the practice despite a period of status quo. In fact, SVRE is already advancing an ambitious initiative from developing an OEM solution that could be integrated into a new vehicle and then offered to the purchaser. Some manufacturers are already on board.
So far, SaverOne has announced a deal with at least one OEM partnership, major truck manufacturer Iveco, which the company believes will begin integrating SaverOne’s products in 2024. Although expected revenues from the deal have yet to be disclosed, like its deal with the bus company, this agreement can lead to more fixed integrations with other companies. And that could lead to a continuation of revenue growth.
SaverOne Growth Curve Is Steepening
In the first half of 2023, SVRE reported a significant increase in year-over-year revenues, reaching roughly $400k, resulting from the approximately 3,000 units installed through August 29, 2023. That number is also up appreciably from 1,750 installed units in March 2023.
Those increases show that this microcap company is earning sales traction. While the numbers are not yet in the millions, that milestone is a target in play for 2024 based on the pace of deals made and interest from large fleet vehicle operators. As of June 30, the company has about $5 million in cash on hand, enough to expedite securing new deals through 2024, noting the company spends about $500,000 per month on operations. While SVRE may need to tap the capital markets at some point, the need could be offset by accretive deal flow and strengthening margins.
Supporting the proposition that SVRE can weather potential dilutive financing is an announced deal with Electra Afikim, an Israeli-based public transportation company expected to install the SaverOne System in its bus fleet, currently at 1,200 vehicles. That deal is SVRE’s largest to date. But it’s far from the only contributing value driver. The company recently announced an expansion of its pilot projects outside of Israel with an additional pilot project on buses in the Gulf region, a second pilot project in the U.S., and its first pilot in Europe. That’s not all.
SVRE entered into a memorandum of understanding with leading medium/heavy truck manufacturer IVECO to integrate its solution within IVECO trucks. With IVECO producing about 150,000 trucks annually, this deal can accelerate SVRE’s growth. The side letter announced in June 2023 reaffirms the companies’ intention to co-develop the OEM solution, with initial integration expected to begin before the year’s end and followed by a full rollout in inclusion in 2024.
Notably, at an estimated retail price between $300 and $500, the SaverOne is not cost-prohibitive. Even after factoring in aftermarket install cost to place the sensor inside the vehicle’s dashboard, there is ample opportunity to score significant interest, especially from parents of young drivers. Thus, except for some emerging competitors that lack some of SVRE’s product advantages, the runway to an all-out, unimpeded effort to penetrate the market looks clear in 2024.
SaverOne Turing Ambition Into Revenues
And to turn ambition into sales, SVRE has a management team proven to deliver shareholder value. The CEO has held leadership roles in several companies, the COO and Co-founder spent over two decades at Motorola, last serving as Senior Manager of Program Management and Business Operations, and its Vice President of R&D served as the VP of R&D for Micronet Ltd. and as CTO of the automotive division before taking on the role of Senior Manager at Motorola.
That team should be able to quickly leverage SaverOne intrinsic strengths to capitalize on revenue-generating opportunities from a market size of billions, which can yield as many dollars over the long-term mission SVRE has embarked on. The critical thing to remember when appraising SVRE on its merits is that it targets a problem that will likely never go away. And those trying to target the parts instead of the whole may find their competitive standing shrinking as those companies fully dedicated to solving the driving distraction quagmire, like SaverOne, earn more significant market share and become substantially more robust to leverage leadership positions.
So far, all signs point toward SaverOne growing into a leadership role. And if it continues to execute its plan to become a recognized global provider in its space, the impressive growth seen since 2019 may be the precursor to more of the same. Actually, more likely than not, performance will be better.
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