IPO Watch: Acusensus to debut on the ASX in 2023 with road safety AI

Unnecessary deaths on our roads have impacted many Australian lives, pushing related government bodies to seek more effective ways to improve road safety. For road safety technology company Acusensus, there is no better time than now for investors to gain equity exposure to their road safety solutions.

Founded in early 2018 by Alexander Jannink, Acusensus aims to improve road safety around the world by providing Artificial Intelligence (AI) powered traffic solutions to drive behavioural change on the roads. If applied correctly, this tech can reduce instances of unlawful driving, and subsequently the number of deaths and serious injuries that result from it. Since inception, Acusensus has raised approximately $18.8 million from equity investors, predominantly in Australia, to fund its technology development and growth. Included in their seed investors is Indian electronics giant, Ador Powertron. 

The Company is seeking to raise approximately $20 million by issuing approximately 5 million Shares at an issue price of $4.00 per Share. The Offer is fully underwritten by Lead Manager, Bell Potter, and funds raised will be used to bolster their research and development efforts. Acusensus is also looking to invest in expanding current solutions on offer, increase the geographical reach of the Company’s sales including new markets (UK, Europe, and America), and to fund capital expenditure under the contracts that the Company is securing.

Upon listing, Shares among existing major shareholders (Ador Powertron and Jannink & Associates) will be diluted from 20.45% and 16.55% prelisting to 15.41% and 12.93% at listing respectively. All existing Shareholders will be restricted from dealing in Shares under voluntary escrow agreements, staggered for release after the Acusensus’s FY23 and FY24 results. The Company’s free float will be 20.02%.

Mortality from motor vehicle accidents is the leading cause of death among young men aged 15–24 in Australia. Road deaths also account for the second largest proportion of total injury deaths. Talking about global context, road traffic crashes cost most countries 3% of their gross domestic product (GDP), therefore the need to reduce this significant burden of road traffic deaths is the single biggest driver of demand for traffic infringement expenditure and demand for specific solutions to the problem.

Meanwhile, driver distraction has only recently become an area of focus for road safety agencies. The most common sources of driver distraction include mobile phone use, speeding, and eyes off the road whilst engaging in non-driving cognitive tasks such as adjusting radio volume. A growing sector, total revenues generated in the global traffic enforcement solutions market are estimated at $4.56 billion in 2021, growing at a compound annual growth rate (CAGR) of 10.7% to reach an expected $7.57b in 2026. Mobile phone enforcement solutions is an emerging sub-sector, with an estimated opportunity of $1.76b per annum. 

The core of Acusensus technology, its Heads-Up solution, rolled into the market as a solution that addresses driver distraction. It can take clear high-resolution photographs through the windshield of each vehicle that passes to detect illegal mobile phone use by using real-time AI systems. Over time, the Heads-Up solution has been expanded to also provide detection and enforcement of speeding vehicles, seatbelt non-compliance, automatic number plate-based enforcement (such as for the detection of unregistered vehicles) and detection of vehicles that are being driven in closed lanes of freeways. 

It is expected that being first to market globally with mobile phone and seatbelt enforcement contracts will help Acusensus gain market share early and management anticipates that this will reinforce its advantage as a preferred technology partner for enforcement authorities.

Acusensus currently has a number of material contracts and tender opportunities with government departments in Australia, as well as a contract for data collection in the USA and India. This includes two long-term contracts with Transport for NSW and one long-term contract with the Department of Transport and Main Roads in Queensland. These contracts represented approximately 96% of the Company’s revenue of $28.6m in FY22 and are expected to make up 95% of the projected $36.9m revenue in FY23. 

Government customers are important to Acusensus’ existing operations and to any future opportunities that it may enter into. The downside is, the multi-year contracts that Acusensus has with government entities may be terminated by the government counterparty for convenience and on short notice due to sudden changes in government policies, laws, and taxes. Legislative change is required in most markets to permit the use of technology for enforcement of offenses, such as the use of mobile phones while driving.

Prior to the IPO, Acusensus’ financials fluctuated. After incurring a $1.2m loss in FY20 and $3.6m loss in FY21, the Company successfully posted a profit of $1.4m in FY22. However, it is forecasted that the Company will have to incur another $1.7m loss in FY23, mainly due to heightened wages and administration expenses. This can be tied back to the Company’s international expansion plans and increase in business scale.  

Acusensus is expected to commence trading on the ASX on 12 January 2023 under the indicative ticker ACE.