Beonic Limited (BEO) Earnings Call Transcript & Summary

Greetings and welcome to the Skyfii Limited webinar. It is now my pleasure to introduce your host, Wayne Arthur, Chief Executive Officer. Thank you, sir. You may begin.

Thank you. Good morning, good afternoon. I appreciate everybody joining today. My name is Wayne Arthur. I'm the CEO of Skyfii Limited. And we are a originally Australian-headquartered, Australian-founded, but now U.S.-based software and services company. And I'm going to take you through today some of the slides that relate to firstly our business model and what our technology has been developed to do; importantly, financial and operational highlights; and then I'll be closing with an outlook. So first and foremost, Skyfii is a software and services business. We've at our core developed a technology product that gathers data from a broad and growing variety of data sources. We started off very much focused on data from WiFi and WiFi-based networks. And I'll talk a little bit about what the use cases are and how we collect the data and so on. But today we have broadened our data set capabilities into 15 or 20 different data sources today, generally sources that are deployed and available and inherent within physical and digital environments. We work with over 10,000 venues around the world across 11 verticals, predominantly public venues ranging from shopping centers to universities, hospitals, stadiums, airports, smart cities, restaurants, department store retail chains, grocery outlets. These are the kind of main venue types that we work with today, and we typically are selling our product to enterprise clients and customers with a portfolio of venues. Today the company with 55 staff, we have offices in 7 countries. We service 32 countries, and we service those countries mainly through partnerships that we've enabled. And I'll talk a little bit about some of our channel partnerships as well. But we're operating in a category that is called omnidata intelligence, hence the reference to the multiple data sources. So moving to Slide #3, you'll see we've tried to articulate some of the sources of data that we collect and ingest today. Importantly, one of the roles that we're playing as a single software product is we're trying to remove the barrier for customers to utilize multiple technologies in their environment. We can ingest and collect data from all of these different sources together, which means they haven't to log in to multiple platforms to actually consume the information. So I'll give you a use case. We deploy our product typically in let's say shopping center, airport department store retail chain, smart city, university. They're all very similar. There is generally a WiFi service installed, so the hardware and equipment is generally there. There is generally a people counting solution or a camera surveillance solution or something that's tracking the movements and counting traffic. So we come along and we deploy our software remotely. We don't require any hardware to be deployed. Our integration is seamless and happens in a matter of minutes. And importantly we collect, ingest, analyze and correlate those data points from those technologies together. And we visualize that data in a business intelligence tool, which is our proprietary platform. So if I move to Slide #4, it gives you a visual of what an output of some of that data could be. So typically stage 1 for customers, moving on to Slide #5, is they will first and foremost allow us to deploy over their existing infrastructure, so be that a WiFi network or a people counting solution or something like that. So we will establish baseline metrics through those technologies as to how people are moving through those environments. And one of the core use cases of our product is we help venues understand how these spaces are being utilized in real time. So how many people are coming in? Where are they migrating to? How long is it taking them to get from point A to point B or from zone X to zone Y? Which products are they consuming along the way? In an airport context for example, how long does it take them to check in, versus moving through TSA, versus getting to the curbside or getting to a check-in lounge or getting to their flight? So these are all operational insights that our technology can provide insights for. In a university context, it's more about where are students moving on campus? What precincts are being used? How many people are attending certain lectures? So it's all about attendance and precinct analysis. In grocery, it's all about occupancy in the current climate. How many people are in the store? And do we have too many people in the store? Are people practicing social distancing or not? In shopping centers, it's about understanding the impact of a tenancy change, or a new retailer being introduced, or a reorientation of a public service like a food court for example. So we look at cause and effect of those types of structural changes. So it's operational mostly in terms of the insights that our product delivers, but it also can drive marketing outcomes as well. So we have a software service that we deploy, which is typically what I'm running through today which collects, if I move to Slide #7, which collects data from a growing variety of location technologies. And then we contextualize that data output through delivering services. Typically, we can second our data scientists or our digital modeling strategists into the businesses to help them actually use the insights and apply them to actual business cases. So Phase 2 typically is we contextualize the baseline metrics with additional data sources like the weather. What is the weather doing to traffic in your stores on this day or during this week? What has a change in store layout done to store visitation, dwell time, et cetera? Do you have enough staff on hand to manage the amount of people in your store at any given moment? Those are the kinds of applications that our product delivers. So moving on then to Slide #8. It gives you again some visualization of some of the reports that our platform can deliver. A lot of our public spaces utilize our heat mapping technology to understand congestion, areas of interest, and also gives them an idea of where the drop-off points or uninhabited sections of their space are. And again in the current climate, these types of reports have become even more relevant based on the need to manage groups of people to monitor things like occupancy, and to help the public understand whether contact tracing and social distancing measures are being practiced or not inside these venues. So from a high-level perspective in terms of the company overview that I mentioned, we're servicing over 30 countries currently. We typically partner with managed services providers, technology partners such as Cisco, Hewlett Packard. We work with those 2 groups globally. We work with managed services providers like AT&T in the U.S. and Optus in Australia. And these are bigger organizations that have the sales capacity and sales forces that we sell alongside. So our product is a natural value add to the deployment of infrastructure that these companies are deploying. So that's typically how we work. We work predominantly through channel in our international markets, which is why with a small team of just over 50 people, we're able to service over 30 countries through those partnerships. We have over 900 customers today. The vast majority of those sit across those verticals that I mentioned, as a reminder, retail, so inclusive of shopping centers, airports, department store retail, restaurants. We also work predominantly in universities on campuses and in stadiums. We do a lot of work with smart cities with another 35 smart cities around the world. And also in spaces like museums, public beaches and precincts as well. Our revenue model then, I'll move on to that in a couple of minutes in more detail. But broadly our revenue model is SaaS based. So we sell a combination of 3 software products that are all sold on a monthly recurring revenue basis. Typically no less than 3-year contracts, so we do have a very long-term sticky revenue base. 60% of our revenues or just over 60% of our revenues are generated from that recurring revenue base. And I'll get on to some of the key metrics around our financials in a second, but broadly underpinned by SaaS revenues. The other 40% of our revenues are made up of the professional services that I mentioned around data science and digital marketing. And then in Australia predominantly, which is our home market -- or sorry our original market, should I say, we do offer a managed service practice around the deployment and management of certain types of infrastructure as well. So I mentioned at the beginning, we work with a broad variety of data sources. In Australia, we do actually provide a service around installation, management and support of those infrastructure points as well, so things like WiFi networks, people counting solutions, surveillance systems. We do have the capacity in Australia to actually deploy those, manage those and support those, and they do carry a decent margin for us. So that's a part of our business practice. It makes up about 20% of our total revenues. But the main revenue line that we are concerned with is the growth of our recurring revenue base, which is as I said, longer term, 3 years on average, sometimes as high as 5 years. So moving on to the financial highlights, then just to move on from some of those quick updates. Our revenue model is broken out, as I mentioned, into 3 kind of revenue lines: the recurring revenues, which I spoke about; the services revenues again, which is the data science and digital marketing; and then the nonrecurring revenues, which is typically where we have to deploy or called in to the deploy infrastructure, mostly in the Australian market today. At a high level then for the full year FY '20 to give you some idea of our revenue track record, we have for the last 4 years delivered between 50% and 70% top line revenue growth over that period year-on-year. So FY '20 was no different. We closed 44% up on FY '19. We have a 72% growth at a recurring revenue level FY '19 to FY '20. And importantly we have maintained a positive EBITDA position since financial year '18. In this year, we delivered our best EBITDA result, $2 million EBITDA position, which is 129% growth on financial year '19. The impacts of Q4 importantly were a slowing of growth from Q3 to Q4, naturally as COVID impacted a lot of the -- well, most businesses around the world really, but predominantly physical spaces. In some cases, a lot of them were pausing on and figuring out their own operations. We had about 9% of our existing customer base request a short-term temporary revenue suspension, which we were gracious enough to provide them. As I mentioned, 3- to 5-year contract terms. We lost no customers. We didn't have any customer cancellations during that period. But we did have some temporary customer revenue suspensions over the course of the last 3 months, which impacted our growth. Pleasing to say that in Q1, which is the current quarter, all of those revenues have now come out of the temporary suspension phase, will be reinstated into our revenue lines. And our pipeline importantly has also returned to a pre-COVID level essentially. In addition to the revenues, recurring revenues that we provided temporary suspensions for, we also saw a pausing of budgets from a CapEx perspective over the last 3 months. So we do carry some significant CapEx projects, again particularly in the Australian market where we do provide that managed service. We saw those budgets paused over the last 3 months. But once again, we've had several of those projects now be reinstated into the pipeline for Q1. We in fact closed 2 deals 2 weeks ago, which we announced in our quarterly, which will impact the revenues into Q1. So from our perspective, relatively minimal impact overall in the context of the world basically in terms of Q4's numbers. What we're seeing though in Q1 now and moving into financial year '21 is a return to that existing -- or sorry, preexisting momentum in terms of revenue growth and conversion. From an operational perspective and important to note that we -- as a company that provides analytics insights around movement and flow of people and objects, the relevance of our solution has been heightened over the last 3 or 4 months as either existing venues that are -- they have remained open through essential services, or venues have reopened through a different phasing. They're all adhering to various CDC guidelines. And so a lot of those guidelines pertain to occupancy of the space. They pertain to ensuring that social distancing practices are being maintained, and they also pertain to existing facilitation of contact tracing. So we launched a product toolkit which we've called Occupancy Now, which was based on our existing technology. So we didn't rebuild this. This was already existing technology. But what we did is we kind of repositioned it in the current context as being a solution for those, particularly those 3 challenges. And so visually what our dashboard does is it provides a real-time occupancy count for people within a space. That space could be an airport, supermarket. It could be a restaurant. It could be an office. It could be a conference room. It doesn't really matter. The size is kind of irrelevant. We can provide a real-time count of how many people are in there in any given environment. Importantly, it also provides an interface for people that are outside the building for example. So we do a lot of work with companies like Home Depot in the U.S. that have utilized this product, and they have a maximum threshold in terms of how many people can occupy that space. And so our tool counts traffic, counts occupancy, provides an external-facing dashboard to people that are waiting outside to help them understand how long the wait time is going to be. So that's the occupancy management component of that solution. Through the ability that we have through our technology to track devices, and I didn't really talk -- I want to talk a little bit about that. We, first and foremost, we can track any device that has WiFi switched on. So even though a device may not actually have connected to the WiFi or authenticated, as long as WiFi is turned on, which 70%, 75% of people have that turned on most of the time because they are either using a home network for WiFi connection or an office network. So as long as the WiFi is on, we can pick up the device probe. And that's completely anonymous. There's no ability to link that to a person -- to any personal data. But it is a unique identification idea that we have, which allows us to then track that device's movement in that space. And so that ability allows us to isolate where devices are in a particular building. And so if somebody contracts COVID for example, they register themselves as having contracted COVID, we can trace where that device was in what venues and what spaces. We can isolate those spaces, and then obviously you'll notify people to clean them, sanitize them. But importantly we can also notify any other devices that we saw that were in those spaces over the period, and notify them that somebody had contracted COVID, that they may want to get go and get tested themselves. So that's how we facilitate contact tracing. And that's becoming a really important use case for airports as they start to reopen now, university campuses and schools as they start to reopen, and existing venues like grocery outlets that have maintained. So our Occupancy Now is something that we've launched recently. It's been incredibly well received. We've already converted our first large multinational group in the last couple of weeks through that product launch, which only happened 12 weeks ago in terms of the launch. And we're seeing a huge influx of demand for that product, given the relevance of COVID. But importantly the technology stack retains its relevance long beyond COVID impacts, whenever they might end. And then importantly we also launched a new product line around video and outdoor spaces as we've seen a lot of demand, particularly for smart cities and municipalities that are starting to again reopen public parks and public beaches and so on. But they're looking to monitor how many cars, how many people, how many pedestrians, how many bicyclists, et cetera, that are using these spaces. And so we've developed a video analytics solution around there as well, which again is being very, very well received by the smart city vertical, particularly in the U.S. So with that, I will move on to the outlook for FY '21. So I've spoken a little bit about our business model and how we generate our revenues. I've spoken a bit about the revenue split between recurring and the other 2 revenue lines that we have, so 60% recurring. What I didn't talk about is the international to domestic split in revenue. So Australia and New Zealand made up -- makes up about 55% of our revenues. It was 65% last year and 80% the year before that. But we're starting to see the U.S. and the U.K. particularly pick up momentum in terms of customers and revenues, so about 47% international market contribution to total revenue pool as of the end of last financial year. So looking forward into FY '21, as I mentioned, we've started the year very strongly. We've already announced our first 2 contract wins, which occurred post the end of Q4, so in the last couple of weeks. So FY '21 is off to a good start. We started to see a lot of the pipeline return to sort of quarter 3 pre-COVID levels. So we want to continue to double down and invest into our marketing activities. It's definitely driving a lot of lead generation for us, particularly around our Occupancy Now and video analytics solutions. So we'll continue to double down on that. We're seeing growth in grocery, which was typically not a good or a strong vertical for us pre-COVID. So we're going to continue to drive growth into the grocery arena. We are seeing a lot of demand from corporate offices and universities as they are starting to reopen, and they'll need technology to monitor and manage occupancy and building utilization. And then we're always launching new products. We probably launched new features every 2 weeks into the platform. So that is a continued part of our R&D will be to invest into product development as things, as guidelines change and improve over the next 6 to 12 months particularly. We intend to continue to maintain a strong focus on cash management. So we don't require capital to continue to operate. We've proven that over the last 3 years in terms of a positive EBITDA position. We will continue to maintain that positive EBITDA position whilst reinvesting back into growth as we have done. We do want to see a launch of our managed services practice into the U.S. and the U.K. markets this year. It's a really key sort of component of our overall revenue mix. It drives subscriptions to the platform. It drives and underpins recurring revenue growth. And so we do want to see that launched into the U.S. and U.K. this year. And then importantly a key part of our strategy, which I haven't spoken about until now, is we have made 3 acquisitions over the past 3 years, all 1 to 2x revenue multiples, in some cases lower than that, where we have bought customers and we have migrated those customers onto our platform. We're not typically buying companies or a lot more -- the full balance sheet. We're buying assets. It's an asset purchase mainly, and we're migrating those customers onto our platform. So they do become a core part of our revenue mix, rather than we're buying companies to have various business units. And so we will continue to look at accretive acquisition opportunities that make sense where we can either expand our reach, expand our customer base or go deeper within our existing customer base. And so that remains a key part of our growth trajectory into FY '21 and FY '22, the next couple of years. So with that, thank you for your time. I'm happy to take any questions.

So I will take the first question, which is what is your revenue for 2019? What country serves most of your revenues? I'll start with those 2. So FY '19's revenues was 9.6 million in total, with about 6.2 million in recurring revenues. FY '20, which we just concluded, was 13.5 million with 8.8 million in recurring revenues. And we finished FY '20 with an annualized recurring revenue run rate of $10 million. So we're already off to a good growth rate for '21. So -- and those are the first 2 questions. In terms of what country serves most of your revenues, Australia and New Zealand is still over half of the revenues. But we've started to see that shift. As I mentioned 2 years ago, that was probably 80% to 85%. Today it's getting closer to 50-50 between Australia and New Zealand and the rest of the world. Second would be the U.S. and third would be the U.K. Our closest competitors in the public markets? Well, there are no other public market listed peers unfortunately for us to do adequate comparisons to, but there are some competitors that we do sort of benchmark ourselves against. And there've been a couple of trade sales and so on to be noted in our space. The one most prevalent competitor in the WiFi analytics space would be a company called Purple, who are a U.K.-based private company, but they just do WiFi analytics only. The other company that works again predominantly in the WiFi-only space is a company called Aislelabs, which is A-I-S-L-E labs. They're a Canadian-based company that also does just WiFi analytics only. Those companies are both of a similar size, about the same as us. Maybe slightly smaller in terms of total revenues, but again just operating in the WiFi-only space. One of our key differentiators is we're able to sit across multiple technologies in a physical space. So there are not many companies that -- no companies actually that we're aware of that does exactly that. But there are then other companies that operate in the video analytics space or the people counting space. But they're mostly hardware providers, so we do work with them. We provide and we on sell their hardware. But it requires a software product like ours to actually visualize the data. So not a hugely competitive landscape in terms of being omnidata intelligent, if that makes sense. Customer churn rate has been a question that's come up as well. So our customer churn today is really less than 2% total. So we've had a very, very low churn rate since the business was started. I believe that's obviously due to the quality of the technology, but also the revenue mix is strong. We're providing not just a good technology product that provides adequate insights, but we also help them through our data services team to actually use those insights and apply them to their business. And I believe that combination is a very strong one for us to reduce churn and to keep it as low as it has been. So the question that's come up as well is what would you say is the main inflection point investors should look for? Good question. So I guess it depends on what side of the ocean the investors are from. I believe the Australian investor market is kind of waiting for the big bang in the U.S. And so we've certainly made a lot of headway in the U.S. We've grown our revenues. We doubled our revenue in fact this year in the U.S. market based on last year's numbers. So growth has been strong. And I guess what investors might be looking for is that kind of large big brand name that we convert. I'm pleased to say that there's several of those in the pipeline at the moment. So that may be an inflection point in terms of U.S. conversion perhaps. Outside of that, we are pacing towards an annualized recurring revenue run rate of $20 million. Whether that be in the next 12 or 18 or 24 months, we're certainly on our way to those numbers at a very, very sort of predictable growth rate at the moment. And that has also been mentioned as a potential inflection point for in terms of market cap valuation and so on. Well, that concludes the questions that I can see today. I'm just going to do one more refresh to see if there's any others. Last question, are you seeking capital for the next 18 months? Look, the short answer is no, we're not. We don't require capital for our current growth trajectory. But the only caveat to that would be we are actively looking at acquisitions. And so the acquisition part of our -- as I mentioned in one of the previous questions, we're one of the only listed companies -- or sorry, we're the only listed company in our space, which means we've got the vehicle to be the industry consolidator. And that's a key part of our strategy, so we will continue to look at acquisitions. To this point, with a cash in bank position of $2.5 million and access to a working capital facility of another couple of million dollars, we don't need cash for working capital. But we do -- or potentially we might need some more capital if we were to look at a larger acquisition than we had in the past. But currently we've proven success in picking up smaller acquisitions where we can buy them for a little bit of cash and deferred payments and equity. So we protected our ability to have to dilute our shareholders any further to do that. And that still remains a key part of our strategy, so no immediate plans to raise capital now. So with that, I think that concludes the questions for today. So I'll hand back to the moderator. Thank you.

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