Beonic Limited (BEO) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the Ninth Annual General Meeting of Skyfii Limited. My name is Bob Alexander, and I'm Chair of the company. I would like to begin by acknowledging the traditional owners of the land on which we meet today, the Gadigal of the Eora Nation and pay my respects to Elders past and present. I'm advised by the Company Secretary that this meeting has been validly convened and that we have a quorum of shareholders present. It is just after 10:00 a.m. and I declare the 2023 Annual General Meeting open. On behalf of the directors, welcome to all shareholders and others with us today. I would like to introduce my fellow directors. On the far right, we have Mark David Arsen, a Non-Executive Director; and then Kirsty Rankin, also Non-Executive Director. We have our new CEO and Executive Director, Billy Tucker. Welcome, Billy. Finance Director and Company Secretary; our legal adviser, Rick Narev from Narev Advisory; and Stuart Thompson from our auditors, Hall Chadwick. All Board members are present. There's no apologies. I also take this opportunity to thank Paul Chadwick for hosting this year's AGM at their premises. Today's meeting is being held both in person and online via the Lumi platform. Online attendees can watch a live webcast of the meeting. In addition, shareholders and proxy holders have the ability to ask questions and submit votes. Voting in the room, you would have received a poll card at the registration desk. Persons entitled to vote on this poll are all shareholders, corporate representatives, attorneys of members and proxy holders who hold voting cards. Detailed on the reverse of your voting card is the resolutions being put to this poll. Relevant instructions are also printed on the reverse of your admission card. Please ensure that you print your name where indicated and sign the voting guard. If you require any assistance, please raise your hand and a representative from Boardroom, our share registry will assist you. When you have finished filing your voting card, Boardroom will collect them at the end of the discussion of all resolutions, where the Chair will announce the poll is closed, and all votes will now be collected online and in person. Please note that any unsigned voting cards will be invalid. For those online, you can submit questions at any time. To ask a question, select the messaging tab at the top of the Lumi platform. At the top of the tab, there is a section for you to type your question. Once you have finished typing, please hit the arrow symbol to send. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated. And if we receive multiple questions on one topic, amalgamate it together. Finally, due to time constraints, we may not be able to get to all questions. If this happens, we will answer them in due course after the meeting. If you are eligible to vote at this meeting on the Lumi platform, a new voting tab will appear. Selecting this tab will bring up a list of resolutions and present you with the voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You do have the ability to change your vote up until the time I declare the voting closed. Voting today will be conducted by way of a poll on all items of business. I now declare the voting open on all items of business in the room and online via Lumi. The voting tab will soon appear on Lumi. Please submit your votes at any time. I will give a warning before I move to close voting. The notice of meeting was circulated to shareholders as required by the Australian Corporations Act 2001. And unless there are any objections, I will take the notice as read. I would like to once again acknowledge management and directors who are joining the meeting today. I will first provide a brief address on Skyfiis' FY '23 highlights and strategic review. After that, I will ask John Rankin to give you some more insights into our financial operating performance in FY '23 and the outlook for FY '24 and beyond. FY '23 performance. During FY '23, Skyfii continued to grow its customer footprint. Securing over $15.8 million in total contract value via range of contracts with quality customers, such as London Heathrow Airport, JFK International Airport, the Hajj and many others. We continue to experience strong demand for our technology as evidenced by yesterday's announcement of the $5 million Abu Dhabi Airport win and evolve our solution offering to provide valuable operating efficiencies, improve people data and increase revenue opportunities to our clients. Our financial performance in FY '23 was in line with the bottom end of our guidance range, with total revenues of $23.5 million and exiting FY '23 with $17 million in annualized recurring revenues. In FY '23, we delivered approximately $1 million of cash inflow from operations. This compares to an outflow of $1.8 million in the prior year. The company also ended the financial year with a $3.8 million cash balance. Although we delivered solid performance in FY '23, we believe we can do more as a business to penetrate the large addressable market for our products. In August 2023, the Board announced a strategic review to accelerate revenue and earnings growth. We have refreshed our Board and transitioned our CEO to ensure that we have the right people, skill sets and organizational discipline to fast track the growth of Skyfii and deliver improved returns to shareholders in FY '24 and beyond. Through the strategic review that the Board undertook, we have commenced changes in our operating model to take advantage of the opportunities in our core verticals, and that is travel hubs, quick-service retail, retail and commercial property. In addition, we reviewed our internal business to reset our operating costs and achieve greater efficiencies to generate improved and sustainable cash flows in the future. We will continue to ensure we have the right people in the right regions targeting the right opportunities. We are optimistic that the combination of these initiatives will drive ARR growth in FY '24 delivering and generating earnings and sustainable cash flow for the future. The CEO transition and Board refresh. As announced in August and part of the strategic review process, the board identified the need to transition the leadership to an individual with expertise in executing business transformation. As a result, Wayne Arthur, decided to step down as CEO and as a Board member of Skyfii. After an external search, we're delighted to have secured Mr. Billy Tucker as Skyfiis' incoming CEO and Executive Director; and Billy started with us yesterday, the 13th of November. Billy displays the leadership and skills that we believe will allow Skyfii to unlock the growth potential we see in our business via the execution of our strategic initiatives and streamlining of our cost profile. Billy brings a wealth of experience to Skyfii through his successful career in leading global technology companies as well as a range of start-ups and growth-focused companies. I'm confident Billy will lead Skyfii successfully through its next phase of growth. As I said, Billy commenced on the 13th of November, replacing Tony Karp. I would like to take this opportunity to thank Tony for taking on the interim role and steering the company over the last 3 months. At a Board level, we also want to ensure the appropriate skill set, diversity of experience and corporate governance capabilities are in place to execute our strategy. We will continue to focus on board skills as required. The appointment of Mark David Arsen as a Nonexecutive Director early in FY '23 delivered a diverse background in banking, finance and sustainability. Complementing our other Non-Executive Director, Kirsty Rankin, who brings a deep skill set in data-driven marketing and scaling businesses globally. As part of streamlining our Board, John Rankin has agreed to step down as an Executive Director after 2 years. John brings a great deal of experience to our senior leadership team, and he will continue to be involved in all facets of our strategy and execution in his ongoing role as Chief Operating Officer. I was honored to be appointed as Chair in December 2022 when the company's long-term Chair, Andrew announced his retirement. On behalf of the Board and all of Skyfii, I would like to take this opportunity to once again thank Andrew for his commitment and dedication to Skyfii. I would also like to thank Sue O'Malley who stepped down as a Nonexecutive Director at the 2022 AGM for her contributions. Lastly, on behalf of the Board, I would like to thank Wayne Arthur, who stepped down as CEO in August 2023. As one of the founders of the company in 2013, Wayne has been able to launch and build an international business with tremendous opportunity ahead, with a blue chip customer base and technology able to capitalize on trends and large data sets. In the past 2 Annual General Meetings, over 25% of shareholder votes were cast against the resolution to adopt the remuneration report. The Board has listened to our shareholders, and during FY '23, engaged an external remuneration specialist to review the company's executive remuneration framework. The review included a benchmark analysis against our local and global peers as well as a review of Skyfiis' short-term and long-term incentive plan. The report is expected to be completed with a new remuneration framework finalized by the end of March 2024. With no executive share options granted to the executive team since December 2020 and the planned alignment of our remuneration structure, we will ensure that our management team remains incentivized and is rewarded in line with company performance, financial performance and in line with shareholders' interests. We have announced the rebranding to Beonic Limited, and that is one of the resolutions today. As part of the formal process of the AGM, we are seeking shareholder approval to rebrand as Beonic Limited with the ASX Code, BEO. The business is rebranding on one name and a new go-to-market positioning. We seek approval to change the listed entity name to align with this. The change reflects the company's transition from a WiFi analytics provider to a data analytics company, powered by enhanced AI and machine learning capabilities. In the presentation to follow, John Rankin will spend time taking us through the rebrand to Beonic and what it means for the company. As a Board, we remain confident that the strategic review will position Skyfii to benefit from significant growth and opportunities ahead. The company is well positioned to deliver its financial operating goals in FY '24 through delivery of operating cost savings, through our transformation initiatives, to drive free cash flow from the second half of this financial year. Continue to invest in new product development, including AI, improved conversion and increased market share through marketing and sales investments and release of our digital-first product initiatives to drive recurring revenues, growth and operating leverage to generate sustainable earnings and free cash flow in the future. I would like to thank the Board of Directors, my fellow directors, and the incredible Skyfii team for their hard work and efforts during FY '23. It's been quite a year of change, and they've been fabulous. I would also like to express my appreciation to our new and existing shareholders for their continuing support. I will now hand over to John to take you through the financial and operating performance for FY '23.

All right. Well, thank you, Bob. Thanks for the opening speech. I want to thank you all for joining us today, and welcome Billy Tucker, the newly appointed Skyfii now Beonic CEO to today's meeting. Today, I'm going to talk through the financial and operating highlights in FY '23, the vision for our products and then take some time to talk through some of the more exciting announcements we've communicated to our shareholders in recent weeks, including the rebranding of the company to Beonic and yesterday's announcement communicated a recent contract win with Abu Dhabi Airport, which I must say represents the single largest contract win in the history of the company. So today marks a significant milestone in the history of this company, being the day that we will launch our new brand, Beonic, the AI platform for places. In the resolutions, we're seeking approval from our shareholders to change our trading name from Skyfii Limited to Beonic Limited. And subject to shareholder approval, our new ticker will change to BEO.ASX. The decision to rebrand the company was an important milestone as we looked to unify our product, our services, our people and most importantly, the customer value that we deliver into our diverse customer base across the globe. The change reflects the company's transition from a WiFi analytics provider to a data analytics company, powered by enhanced AI and machine learning capabilities. The name change in our story will better communicate our products, our services to our global customer base, which has grown from a retail mall customer base to operators of some of the largest and busiest venues and transport hubs across the globe. Our mission is to transform the experiences people have within the places they visit. And we do this by developing technology solutions that turn places into intelligent spaces. And the value proposition that we deliver to our customers, both existing and new is threefold. We improved the performance of our customer spaces through the deployment of intelligent technology and data solutions that improve operational efficiency. We helped drive superior revenue growth by providing insights that inform more intelligent decision-making from our customers -- for our customers and most importantly, working with many of the largest and most visited spaces across the globe, we transform the spaces by making them more intuitive and adaptive to the needs of their visitors. So what we have built is a brand story that creates more of an action-oriented brand name that aligns the company's goals with that of our clients. Namely, we bring together the worlds of science, data and technology to allow places to respond to people. So you may ask what next? Well today, the Beonic website will go live. Our new brand name and brand positioning will be showcased across our clients, investor and end user touch points. And we'll carry forward a more simplified harmonized story that better articulates the value that we create. So I want to emphasize that this marks a new chapter for the company and will set the foundation for our success from this day forward. I'd like to thank our team and our partners for their significant contribution and efforts to get us here today. So thank you. Our product vision. So FY '23 was a busy year for our product and engineering team, delivering a series of new product features, functionality that place the company in a market-leading position. There's 4 key areas. Area number one, foundations for scale. We launched Analytics 3.0, which is a more flexible data model that provides for greater configurability and increases the scale and complexity of data sets that we can ingest into the IO platform. Excellence in core domains. We launched a comprehensive dashboard and reporting framework for our airport customers that generates real-time and actionable insights across security checkpoints, passenger check-in and curbside, improving our prediction modeling and forecasting capabilities. Unification of data sets. We increased the diversity and integrations with enterprise technology partners to provide greater flexibility and relevance in technology, selection and solution design. And finally, security and privacy by design. We made further enhancements to our ISO compliance, security maturity modeling and red teaming functionality to ensure we have a robust and evolving security posture. So looking ahead. Well, today, we integrate with a range of intelligent AI-enabled sensing technologies like LiDAR and cameras. However, we are developing improved features with IO Connect to improve the smarts and how we integrate and orchestrate data with other systems, so that IO can be the brain and leverage the capabilities with IO Insight to better integrate with other third-party systems such as BMS systems, staffing systems, car parking and point of sale to name a few. In terms of IO Insight, this is moving away from its heritage as a BI solution. We continue to scale machine learning-based applications to increase the value of the data collected in terms of how it's processed and how it creates value for our target industries. Our goal is to better productize our LiDAR and camera based solutions to automate the process of deployment, improve accuracy and scale with services more easily. At the core of any place technology analytics are great spatial reporting tools. This will include improvements in how we use maps to represent data in real time to create digital twins of real-world environments and experiences, and make it even easier for our users to understand and respond to data coming from our LiDAR and camera solutions. Utilizing AI will be further enhancing our range of predictive reporting tools that help forecast sales, queue times and help users to make more informed decisions around workforce planning. And finally, with Engage, our marketing and communications platform. You'll start to hear more about a concept of a CDP, which is a customer data platform, that helps collect and unify first-party data from multiple sources to build single view coherence, complete view of each customer. This sounds a lot like what we do today, and that's because already, we already offer much of the functionality that CDP provides. And through further enhancements to Engage, we'll provide more CDP-like functionality to provide more value to our WiFi customer base, who really rely on Skyfii to store and manage their customer data. And finally, to leverage this data properly, you need smarter content management tools. So we'll be launching Enhanced Automation Tools for content creation, and campaign targets steps for sending marketing communication, Buyer Engage. Moving on to the FY '23 highlights. The business delivered a number of notable financial highlights in FY '23. In line with guidance, the company delivered a positive operating EBITDA in the second half. Our receipts from customers grew a healthy 15% when compared to the prior year, which represents a positive swing of $4 million when compared to FY '22. This resulted in a positive cash inflow of $1 million from operating activities across the financial year. The company executed on its plan to reduce operating expenditure with a reduction of $2.4 million, representing a 7% reduction on the prior year. Our business development teams delivered $15.8 million in new contract wins. As Bob discussed earlier, across the period, which included material contract wins with London Heathrow Airport and JFK, which I'll talk about shortly. And finally, recurring revenues of $15.9 million delivered a 9% uplift on the prior year. So if we consider our performance across the last 6 years, growth in recurring revenues on an annual compound basis averages out at 32%. The growth of recurring revenues is the foundation for the business to deliver sustainable growth for the balance of FY '24 and into FY '25. In FY '23, new contract wins in the airport vertical featured heavily, and I wanted to make note of two major contract wins in the year. Firstly, London Heathrow, an existing customer, who has committed to an upgrade and expansion of our passenger flow and queue management Solutions. This includes the expansions across three main checkpoints at the airport. The JFK Airport Terminal 4, where the airport committed to a large-scale expansion to provide passenger flow and queue management solutions across key checkpoints in the terminal. Whilst both deals represent great wins for the company, there remains significant growth potential for further expansion across both airports. So moving to the announcement the company made yesterday. I'm really pleased to announce that following a competitive tender process, Skyfii secured a $5 million contract win with Abu Dhabi Airport Terminal A, which really represents the single largest contract win for the company and is a testament to the growth potential available in airport vertical. Terminal A represents one of the most significant infrastructure projects in the UAE region in the last 10 years. And on the first of November, the airport opened the doors to the new terminal, which has a capacity for 45 million passengers annually. So on completion, the airport will benefit from Skyfii's market-leading passenger flow and queue management solution, managing all major checkpoints across the terminal, both departing and arriving asked. So if we consider the growth potential across our core verticals, the opportunity is vast. But take, for example, the airport vertical, Skyfii has positioned itself as a market leader in passenger flow and queue management solutions. We have proven that our market-leading airport solutions are critical to ensuring the operational health of airports. Our market evaluation suggests there remains a significant opportunity for continued growth. And since the acquisition of CrowdVision, the company has experienced almost 100% growth in revenues generated in the airport sector, and we hold a very robust pipeline of opportunities that will underpin our future growth. In a similar vein, the retail property sector represents a significant growth opportunity for the company. The company holds a long-standing history of selling into this vertical, and we hold a market-leading product and service offering that differentiates us from our competitors. Whilst our average deal size on an ARR basis is lower than, say, perhaps an airport, the heavy concentration of property ownership and large enterprise, private and publicly owned companies means that the scale to contract with these blue chip property groups is significant. And with over 122,000 identified retail malls across our operating regions, we believe the addressable market is significant. So in summary, there remains a lot of growth potential with new customer acquisition. But I'd also like to point out that there remains a significant growth potential within our existing customer base. On a rolling 12-month basis, the qualified sales pipeline for the company remains strong at $27 million. And if we consider the origin and vertical mix of the sales pipeline, 2/3 of the sales pipeline is originating from our international operations and 50% of the pipeline is made up of deals in the airport sector. In Q1, we successfully converted $6.6 million in new contract wins with Abu Dhabi featuring heavily in this result. So moving on to the outlook. Well, firstly, we cannot underestimate the positive momentum the business carries forward with the launch of our new brand, Beonic. The company continues to focus on delivering high margin, high growth from our core verticals, both from within our existing customer base as well as new customer acquisition. The company benefits from a strong qualified sales pipeline of $27 million, which will drive revenue growth into the financial year. And after a very strong year of new product development and innovation in FY '23, we remain focused on building on our AR capabilities to further extend our market-leading position. As Beonic, our marketing investment will remain focused on driving higher quality leads and conversion rates to increase market share and drive ARR growth. The company remains on a path to deliver operating leverage delivered via the scaling of teams in our centers of excellence in both Manila and Portugal. And to close, the company is targeting to be cash flow positive in the second half of FY '24, accelerated ARR growth in '25 with operating leverage to generate earnings growth and sustainable free cash flow. With that, I'd like to thank you for your time today and for your ongoing support of Skyfii. And I'll now hand you back to our Chairman to present the resolutions.

Thank you, John. I will now move to the voting on resolutions. As I move through the resolutions, if you have any questions, please direct these to the subject matter of the resolution. The 2023 annual financial statements for noting, there's no resolution, Skyfiis' financial statements for the year to 30 June 2023 and the reports of the directors and auditors therein have been posted or electronically distributed to members. I'll now table those documents and note that a resolution is not required. As I mentioned earlier, our auditors are available to answer any questions shareholders may have. We have Stuart in the room for that. Are there any questions in relation to the accounts or the reports? No questions. Thank you. Resolution 1 is the remuneration report. The Corporations Act 2001 requires that a resolution be put to the members to adopt the remuneration report as disclosed in the annual report. The vote on this resolution is advisory only and nonbinding. The resolution gives the members the opportunity to ask questions or make comments concerning the remuneration report during the meeting. Are there any questions in relation to the remuneration report? No questions. Whilst I'm prevented by changes to the Corporations Act 2001, including any votes cast on this resolution by any director or a member of the company's key management personnel or their related parties, I'm allowed and will be casting any undirected proxies by all other parties in favor of the resolution as is permitted and was notified to shareholders in the notice of meeting and proxy form. I propose the resolution. Is there any discussion or questions? No questions. Thank you. The proxies received for Resolution 1 are on the screen and as follows. I put the resolution. As I mentioned earlier, these are all being done through a poll, so the results and the will be announced after the meeting. Resolution 2, the reelection of a Director, Ms. Kirsty Rankin. Resolution 2 deals with the proposed reelection of Ms. Kirsty Rankin as a Director of Skyfii. I highly recommend to shareholders that they support this resolution. The proxies received for Resolution 2 are on the screen as follows. I put the resolution. Resolution 3 is the change of company name, Beonic Limited. Resolution 3 deals with the proposed change of the company name to Beonic Limited. John has talked through the change and the rationale. I highly recommend to shareholders that they support this resolution. Is there any discussion or questions? The proxies received for Resolution 3 are on the screen as follows. No questions? Okay. That concludes the business of the meeting. Thank you all for your attendance. We will now be taking questions from shareholders and members. Any questions from those present? No. Do we have any questions from online? Nothing? Okay. Well, thank you very much, everyone. That concludes the meeting. Thank you for your attendance and we appreciate the support for the company. Thank you. The meeting is now closed.