BirdDog Technology Limited (BDT) Earnings Call Transcript & Summary

Welcome to the RaaS Research Group Stock Take Webinar, where we'll dive deep into the analysis of a promising ASX stock. Today, we're focusing our attention on BirdDog Technology, ASX code BDT, the global leader in broadcast quality software-enabled video solutions. RaaS Research Group's detailed analysis presented by Senior Analyst, Graeme Carson, will cover all the main themes, financial models and potential pitfalls any scrupulous investor should consider before making an investment decision. This presentation will then be followed by BirdDog Technology's CEO, Dan Miall; and CFO, Barry Calnon, providing a detailed presentation. Both will also join Graeme after their presentation to participate in a moderated Q&A session where you as attendees will have the opportunity to submit questions directly to management. [Operator Instructions] Thank you for joining us. And without further ado, let's get started. Please join me in welcoming RaaS Research Group Senior Analyst, Graeme Carson. As I said, Graeme has recently produced research on the company, which can be found on the RaaS Research Group website. Graeme, over to you.

Thank you, David, and thanks for hosting today. So as David pointed out, we released our initiation of coverage report on BirdDog a couple of weeks ago. I'm going to take you through some of the items we found while investigating the company and the outcomes from forecasting and modeling it. So if we can just move on to the agenda, I'll explain how we're going to go about this. I'll talk for 10 or 15 minutes from our perspective. And so we'll firstly, just do a bit of an overview and then do a bit of a common sense check as to the company overall. Does BirdDog actually make sense to us from an investment perspective? We see it as a bit of a turnaround story. So we'll be going through in a bit more detail what we think is driving that turnaround and how management are executing on their strategy. Then we'll dive into some of the more specifics financially, our position and our forecast. So looking out to fiscal year '27, beyond that, we'll value the business using a DCF approach predominantly, but then look at some other metrics and a common sense check against the listed peer group as well before discussing some of the sensitivities around the outlook and what potential catalysts we can foresee coming up that might drive share price one way or another. So let's dive into the overview firstly. As you can see in the box on the top right there, code BDT, the share price here at $0.074 was done a couple of days ago. So as per usual with some micro caps at the moment, it's bouncing around. It's a tiny bit lower than that now. So these numbers are slightly out of date, but not materially at all. The market cap sits around $10.5 million or $11 million at the moment. Net cash on the balance sheet was $16.5 million as at 30 June, and I'll explain that in a minute, which actually gives this business a negative enterprise value, which is the first thing that jumps off the page actually when you start to do the numbers. Effectively, you are paying less than the actual cash on the balance sheet for this whole business. So that looks attractive as a headline. So let's figure out whether the business makes sense or not. So move to the bullet points on the left there. The business actually is a proven business. It has had success historically quite materially with traction domestically and offshore with its suite of sort of audiovisual products. So around 70% of the revenue actually is through the sale of BirdDog's suite of cameras. And I'm sure the company will take you through the specifics of the cameras. I'll [indiscernible] that. But this business was doing $38-odd million of revenue a couple of years ago. That's dropped over the last couple of years for reasons we'll go into. But it is a proven business. And then it's got other products around that as well, converters and other ancillary products and tech solutions for similar end-user markets. Sales are actually dominated by North America, where around about 60% of the current sales and from our perspective, our forecast sales are expected to be generated. As there's a lot of micro caps, this is -- this was IPO-ed a few -- 2 or 3 years ago and it's gone through that journey of a founder-led IPO that has since had to go through a bit of an evolutionary period, probably to find its feet and then to, I guess, reposition the business now for what we think is a reasonably good outlook going forward. So among the things that the management team have had to address and Dan and Barry, the 2 people who will be speaking are 2 of the founders effectively. But they have had some supply challenges. Obviously, post-COVID was the first one. They also had an issue with the contract manufacturer last year that really impacted the FY '24 numbers. Those have all now been addressed. The business is clean. It's reestablished. It's diversified its supply base. Through the downturn, it's also rightsized the business by pulling out some costs. Again, I'm sure Barry, the CFO, will go through that in more detail. But it also invested heavily through that period in new products and while still protecting its cash balance, it hasn't raised any money since IPO-ing. So we see it as pretty commendable given the challenges that have been faced from both the macro and company-specific level, what these guys have managed to achieve and position now. So what's they've done is that's allowed them now to -- through the R&D spend over the last 2 years, be at that point where they're releasing a whole new range of products and services, in this case, led by a new range of what they're calling next-gen cameras. We think that will result in materially improved sales and, in fact, profitability. And these cameras have only just been released in the last few months, and we're already seeing good sales growth and the company has actually been EBITDA positive as far as we can understand over the last 3 or 4 months, which it hasn't done since FY '22. That's also complemented by a strong balance sheet. And as we said, the cash balance was $16 million at the year-end. It's dropped a little bit for some specific reasons that are actually positive. Generally speaking, it's got no debt. And with its profitability forecast, we're actually paying a single-digit PE at the moment of around sort of 7 to 7.5x. So the turnaround itself, let's have a look at what we think are the specifics driving that turnaround. FY '24, we think will prove to be the low point in this company's evolution. If you look at the chart on the bottom right there, on that side you can see that, that's revenue by category. It's got 2 historical years in FY '23 and FY '24 and 3 forecast years. You can see that the 5 main categories there are Converters, Cameras, Audiovisual, Remedi and Software. The gray bar being Cameras, you can see how dominant that is in terms of the percentage of group sales and the forecast growth. But that will be complemented as far as we can see by Audiovisual new product releases and some expansion in Remedi, which is the company's first industry-specific solution, in this case, targeted at the hospital health industry. So what's going to drive the turnaround, new product releases? The Camera range has been released beginning in May, just gone, and they're sort of incrementally releasing new cameras across the balance of this calendar year. They've so far released 5 new models or next-gen ranges, and there's at least one more to come. Now generally, these cameras have about a 4- to 5-year life cycle. So this should be the start of a good period where the R&D that's been spent over the last few years will begin to pay off commercially. And the early signs of that are positive, as we said, the best period that the company has experienced for a couple of years. That will be, we think, complemented by release of some other products in the Converters and AV range. And as I've touched on, even if the sales demand is there, you have to make sure you can deliver product and that has been one of the challenges the company has faced. Those risks to our belief have now been mitigated. They have increased their control over the design and manufacture. These cameras are contract manufactured. The smarts are in the software solutions that BirdDog have created, which is a proprietary technology. And then all the hardware, lenses and everything like that have been used various componentry that have been designed by BirdDog in this case. That used to be done through one contract manufacturer where BirdDog didn't have the same amount of control. They have now, just as of the last 6 months, locked in 3 separate contract manufacturers in various geographic regions in Asia. So we think that we'll mitigate some of those risks. And again, we think this will return to profitability. Given the supply chain side of things and the contract manufacturer side of things has changed so much. It's actually resulted in margins in the Camera range actually doubling from BirdDog's perspective. So when you look at the revenue growth, the margin expansion and the rightsized cost base, we think the acceleration back to profitability will be pretty swift and reasonably material. So what does it look like from a financial position and forecast on the next slide. You can see the table of our forecast down there, again, 2 historical, 3 forecast years. The topline revenue, you can see it really dipped in FY '24, where actually there was no -- the camera supply wasn't available from the previous manufacturer due to litigation. So we see that as a bit of an outlying year resulting in a serious loss for the business, some of which was due to a fixed cost base and lower revenue, but some of which were one-off items, all of which is detailed in the report. In short, from the FY '24 base, we forecast revenue to grow at a compound rate of about 25% out to FY '27, $35.9 million. Again, not unrealistic given where the business has been in the past. So we don't see it as overly aggressive. And if you look at the EBITDA line in there, the operating earnings of the business go from loss-making to profit-making this year and then accelerating over the next 2 years. We also expect the business to be bottom-line profitable at the NPAT line there and that's actually enhanced at the EPS line by the fact that the company has executed a buyback or 2 buybacks over the last 18 months. Most recently, another ex-founder was bought out, representing around about 16% of shares on issue. So obviously, there's a cash balance downturn on that, but it's very accretive from an earnings perspective. Again, no debt cash flow point in the current quarter. Now that's basically due to that buyback and also the fact that there was a litigation settlement and finalization with the previous contract manufacturer at a cost that had to be paid by BirdDog, but that's been done in this quarter and that matter has now been finalized, which we think is materially positive. So all our forecasts are organic. The business is obviously in a position comfortably to fund it. In fact, it's growth optionality, we think, for other initiatives if they see fit given the cash flow positivity and the cash balance of the business. So how do we actually value this? The formal valuation where we have reached is $0.27 per share. Again, keep in mind, this is trading somewhere between $0.065 and $0.075 per share. All the metrics we've used are in that table there, I won't go through those in detail. It's explained in the report. But some of the other key metrics that we don't use for formal valuation, but it is certainly interesting, and we think certainly support the valuation story. If you look at the PE ratio on this business, it's what's now below 8x in the current year. And due to the growth in '26 and '27 that we forecast, you're paying very low single-digit PEs for a business that has got an NTA, net tangible assets, of about $0.136 per share, which now is around about -- the share price is about a 50% discount to that NTA, and that NTA is basically cash plus inventory. And then the actual just cash alone equates to $0.083. So that's an 11% to 15% discount that you're paying at the moment on that. And again, a negative enterprise value, which is very unusual, particularly for a business that is, as we said, profitable and will become cash generative almost from this day forward. Now then we look at the peer group. The peer group in the Australian listed market is reasonably limited in terms of genuine like-for-like comparisons. The most relevant business is Atomos. Atomos has faced problems probably more material than what BirdDog has, and it's been recapitalized and relisted quite recently. It's got a market cap as of around $40 million, which is a lot more than in BirdDog's. It's got slightly higher revenue, but not much and it's probably similar EBITDA profile, actually a little bit weaker depending on what they delivered this year. You can see -- look at the rest of the businesses, slightly different in profile, some of them work in the same end-market, but most of the hardware-and-software combined sales businesses. Now some of them are a lot bigger. And if you look at the pricing of them, if you calculate the EV revenue multiple and the EV to EBITDA multiples on the right-hand side of that table, you can see that, that universe of stocks is trading at 3.5x revenue and 20x 1 year forward EBITDA. Now we're not suggesting that BirdDog should trade on those multiples due to the other businesses, in many cases, are larger, more established. But given that the metrics in BirdDog are in a turnaround phase and this year's growth from there, we thought we'd apply those metrics just to see what the valuation came out like on BirdDog. You can't do a direct comparison at the moment because it's got a negative EV, but if we just put those metrics in to BirdDog and if you put it -- placed it on 3.5x revenue, that would be an EV of $93 million on the low point in cash, which is $0.66 per share, obviously, pretty aggressive. EBITDA of 20x on current year numbers, which is early in the turnaround. Again, that puts it at $0.29 a share. So from what we can see, pretty favorable from a valuation perspective. So what can go right and wrong, the key sensitivities of potential catalysts on the next slide. When we talk about upside case and downside case here, we are talking about it relative to our current forecast. So where do you think they can deliver ahead or where will they miss on our forecast? So the upside case, if the Next-Gen Camera range gets material traction, we don't think we've been overly aggressive in our forecast. Obviously, that will drive revenue growth further and that will flow through to what has become a pretty good rightsized cost base at the operating level. Also, another potential upside is the rollout of new solutions, and we call out Remedi here. That's the medical solution that I spoke of earlier. We haven't been aggressive in our numbers on that. And I note that management appears to be increasingly confident about the pipeline and traction we're getting there. So we think that's an area of upside surprise if BirdDog can deliver and the guys I'm sure to talk about that a bit more. Obviously, they've also got a big cash balance there that they don't need for the operating business. So how do they -- what do they do with that? Does it become an acquisition story? Does it become a more aggressive rollout story? We don't know, but we think it gives them optionality for other growth initiatives. Downside case, obviously, the Camera sales fall short of next-gen [indiscernible] or if we get a big ongoing level of material weakness at the macro level, the sales level, be it geopolitical or regional specific. And again, that can flow into supply chain issues, any outlying events there, given things like semiconductor chips and the like and other components is pivotal for this sort of business. The catalysts that we think might drive the price in the coming months would include the upcoming 4C, which will be, I guess, the end of October and then the AGM. And that will give us a very clear line of sight on what the early traction has been like on these Next-Gen Camera ranges and it will hopefully also show that the business is returning to profitability. I don't know if the management will give any outlook statements for FY '25. But if they do, I think that will give people confidence if they're positive. And then I think there's an obvious re-rate story here as well as a catalyst as some of these things play out. When you've got a business with a negative enterprise value, it doesn't take much to materially move the dial off that we think is a pretty low base. So that is our synopsis on BirdDog. As I said, the report was released a couple of weeks ago and is available for everybody if they want to go into a bit more detail.

Thanks, Graeme. A great analysis and really setting the scene for the company presentation. Remember, as Graeme has mentioned, a copy of the recently released research on BirdDog can be found on the RaaS Research Group website. I urge everyone to have a read and get an understanding of the view that Graeme has taken on the upside and the downside and analyze the risks and potential opportunities. So without further ado, I'd now like to introduce BirdDog Technology's CEO, Dan Miall; and CFO, Barry Calnon, who will run through a formal presentation on the company, its outlook and its plans from here. Welcome, Dan and Barry.

Thanks very much, Alex, and also thank you very much, Graeme, as well. So I'm Dan on the -- I think I'm on the left-hand side, depending on whether the screens are reversed, and Barry Calnon here is our CFO. So we really appreciate the work that's being done here by RaaS to look at what the business is and where we've been, but also where we're going. And I think before we get started into some of the more technical parts of the business, it's worthwhile spending just a little bit of time explaining who we are and the problems that we're trying to solve. So BirdDog has been around for a few years now. We're actually about 8 years old, and we've been listed for coming up to 3 years. During that period, effectively, what we've been on a mission to do is change the way AV installations and uses have done around the world. I'm sure everyone on this call has seen a sporting event where there's a production truck at the back with a sea of cables coming out the back of it or you've had some AV installations in board meetings with cables flying at the back of TVs and things. We're there to fix that. Everything that we do converts that kind of specific infrastructure that you normally need to spend a huge amount of money on into commoditized infrastructure, which is your regular computer networks. But without any compromise, we're making sure the image quality stays as high as possible, in fact, TV quality, and we're making sure the convenience of that is as easy as possible. It means that you can leverage your IT departments or increasing knowledge around computer networks to get the best out of any AV installation. So if we just move to the next slide, I'll talk a little bit about some of the markets that we work in. Now as Graeme mentioned, around about 70% of our business is around cameras. Now these cameras, I guess, looks, suspiciously like a security camera, but they're very different inside. Our cameras are all designed to be broadcast quality, really high-quality pictures, and they're used by a whole bunch of different people for various applications from broadcasters right through to sporting events to corporate events to education and even how does it worship. There's a huge market that we have where people use these products. But where they really shine is the fact that they are robotic cameras. The PTZ part of things means that they can be remotely controlled to pan, tilt and zoom in and out. It means that you don't need a camera operator on every camera, and you can get some great video shots where you can move the camera around and make sure people are really focused in. And that creates a much more engaging video content. So rather than having just a static web camera, you can have something that's far more dynamic that looks like television. And that's really the attractiveness we have is the easy way of installing and maintaining these products on a regular computer network and the fact that you can have a really creative and high-quality video that comes through there. So cameras are really our entry point. And what we've described along the way is that we see ourselves as a glass-to-glass company. And by that, I mean, we make the cameras themselves. They've got glass on the front, which takes the real-world pictures into the computer network. And then we go the whole way through a video production right through to the end-user, which might be someone viewing that either in the same location or it could be somewhere over the Internet, and they're viewing it through the glass on their monitor. And something that really sets us apart is that we actually make an entire solution. It's a pretty big world out there, and we all know there's some big names that make cameras, but we make very innovative cameras that have some specific technology that we've built and some application use cases that can't be beaten by the competitors. But we also are the only company that makes a true solution for people. We're not in the world of just selling a single box. We're actually solving people's problems for video production. So with that, we've got a number of different products that make that through from our cameras that I've spoken about through to hardware converters that can convert video from your computers and various other sources to software. And then also increasingly popular is our cloud- or remote-based connectivity as well. And I'll go through some of the use cases of that a little bit later. Proudly, we're an Australian company. We're based here in Melbourne in Collingwood born and bred, but we actually sell most of our products and most of our revenue is attributed outside of Australia. And for us, that's great. It gives us an element of insulation for various different countries having potential challenges. And we'll get into some of the challenges we've had ourselves over the last 12 months. But having a global access to market means that we really can get scale. And we've seen that, and we've really gone toe-to-toe with some of the largest companies in the world in this media and AV space. What's really important to us is making sure that we do things differently. We're not about making products that are just the same as everybody else. We build our own IP. All of our products are specifically ours. We don't take another person or another company's technology and just put our label on them. BirdDog cameras and especially our new-generation cameras are very much from the ground-up designed by us. So speaking of our new-generation products, we have been through quite a transformation. And look, it's been an interesting year, but I personally and actually, I'm speaking for the whole team here, have come out of this far more energized than maybe we would have expected. We've built this next generation of cameras that are now starting to ship. We've changed the way we actually launch these products so that we're announcing them on the day they're available, which is something that's really unique in the industry and it has allowed us to really capitalize on the excitement of these new products. So we're only part of the way through in the release of these new products. We've seen industry recognition. And I'm also proud to announce that we actually just won an Australian design award for our products as well. So not only from a technical point of view, but also from a design point of view, we're really going against the best in terms of what we're able to deliver. Some of those awards we've won industry peers where they've seen the new technology we've been able to build into these products and can see the change that can make in applications and live production. So we're really excited about where we're heading. And that's really underpinned what we think is our growth story as we move forward. You can see here that we've had 5 of our 7 Next-Generation Cameras launched over the last few months. We actually have some more products as well up our sleeve that aren't just cameras. To be very clear, we're not just a camera company. We're very aware that we have a fairly significant part of our revenue stream coming from cameras. So we're making sure that we're delivering that first. So moving on to the next slide. What makes us different? Like I mentioned earlier, we can all name the various Japanese companies, let's say, that make cameras. Why does an Australian company go toe-to-toe and actually beat these guys? Firstly, we're much faster at delivering innovative solutions. These other companies can produce a camera, but they very much have a formulaic approach to that. We have an innovative approach to that, which is very much about the use case. Given the fact that our products are used in a brand-new way, that gives us a very much a first-mover advantage that we're making sure we continue to leverage. One thing that's an absolute tenet of all of our products is the high-quality nature of the pictures. There's cameras out there, as I'm sure you've all seen, web cameras that are highly disappointing in terms of the picture quality you get out of them. We use broadcast quality sensors and in fact, exclusively, the sensor inside is Sony sensors, which means that we can guarantee the picture quality. I mentioned about these cameras being robotic, so they can be robotically moved around. What we don't want it to look like is that it's robotic. It needs to be very smooth, and it needs to look very natural, and that's something we've really excelled in, especially in our latest generation products. Some of the technology we leverage is a format called NDI, and that stands for network device interface. And we were the very first company in the world to apply this technology to a hardware device, to cameras and converters. And that's really what was a catalyst for us moving forward. Now we've continued to develop our capabilities in this NDI space as well as other formats as well, which makes us an absolute leader and very much a repository of knowledge for this capability. And that means that we can produce products that, frankly, no other company can. So let's move to the next slide. Some of the other things that are really important is making sure that we're applicable not only to early adopters or new tech wizards. All of our cameras offer the ability to work in an existing workflow. So if we've got companies even maybe in your meeting space where you've got a camera that you're not very happy with, you don't need to rip out your existing system wholesale. You can use our cameras as a stock gap and then in the future, leverage this new network technology that we've applied. And there's no other camera manufacturer out there that has the level of connectivity we have. It means that we can work in any application and that's very much deliberate from our point of view. We want to make sure that we're not pigeonholing ourselves into a single workflow or a single application. And that's where it's really exciting to see the different places that these cameras get applied or our products get applied. As I mentioned, everywhere from education, government to Tier 1 broadcast right through to sporting events and corporate events, there's a huge amount of applications. And every day, I'm really pleased to see where it pops up again. And in the background, it's a bit of a buzzword these days with AI or AI capabilities in various products. We've really leveraged that in our latest generation of products as well. So we can have these cameras effectively drive themselves that are able to identify people and move around and follow them, making sure they've got the best shot. And we also have our industry-leading control software, which makes it very easy when you've got more than one camera to make them all look exactly the same and perfect, something that's really quite unique and hard to do for a lot of other companies. So if we can move forward to the next slide, we'll get into a little bit more about the markets that we go into. I've mentioned a few of these names before. But something to really underscore is that we are a global company. Our path to market is through distribution. As Graeme mentioned, a substantial amount of that is to North America. It is the home of television after all. So we certainly see some great success in the U.S., and we see a great opportunity moving forward over there as well. In terms of the actual verticals that we play in or that we sell into, probably Heartland is the professional video space and that's everything from people making special interest videos to broadcasters, to sports, anyone that's doing effectively a content that they want to share with viewers. So professional video is actually something that's really been quite lucrative for us in the past. Broadcasters, I've mentioned, we've got some of the largest sporting codes in the U.S. that use our cameras on a game-by-game basis. Again, that's really exciting. And we also see some really interesting applications like for rocket launches and all sorts of other things. But something maybe less exciting, but certainly very -- gives us a great opportunity to grow is things like corporate videos, earnings calls, conferences, training, that kind of thing. Areas that we're expanding into is manufacturing and security. These are actually really quite large opportunities that we're seeing here. In manufacturing, the fact that we can use our high-quality cameras to detect if there's been some challenges or changes or issues in manufacturing processes, we've proven that we're actually in order of magnitude more accurate in terms of the quality that we can deliver, which means with the help of additional software, we can identify problems much faster. That's really important in manufacturing, especially in things like medical manufacturing. So if we move forward, the strategic sort of vision or direction we've got as a company is really to start -- it's, I guess, in some ways, a land and expand. We've got our core technology that's been proven and we're able to sell that into many different places. What we then need to want to do is expand out our core market. I mentioned that the live production is something that's effectively our core market. We're very much moving it more into that AV space. And this is where that workflow or connected solution I was talking about earlier comes in. It's really important that we don't just sell a camera. It's that we sell the software and converters and everything that works together. And something, again, that's really unique for us is we have a control platform that is exactly the same across all of our products. And that's really attractive for system integrators around the world. It allows us to sell larger systems at scale. So as we move towards that, it's then making a global connectivity, which we've been working quite hard over the last few years on, our cloud-based solution. All of this is to say that we've got a great set of connectivity and a great set of products that are unique in various different markets. But the growth story for us is twofold. One is we've had a challenging year. So in some ways, a return to growth of last year is something obviously very much of a priority. But that's not the end goal. The growth is really about going far further than that. We see there's a great opportunity as we go into various other markets. Now to do that, we've had to invest in R&D. We're not a trading company. We're a manufacturer and an R&D company as well. And this is something that's really important, and Barry will talk a bit more about that in the figures and what we've been doing over the last 12 or even 18 months. We've dug deep on our innovation and delivering these products. And again, as Graeme mentioned earlier, we've got a great runway now. We've got a unique position where we're a relatively young company, but we've got a brand-new set of technology that's going to see us through for many years. So the return on investment in that R&D is something that's really only just starting. So moving to the next slide. This is something that I think is really -- for us has been very much a focus in showing how we can apply our technology into a very specific industry place. We've got a product, which is called BirdDog Cloud, and it allows us to send video anywhere on the planet at the lowest possible latency. That means it's the fastest way of getting video around. Now as we looked at that, there's a medical opportunity here, which is for doctors, for surgeons, for other people who are involved in clinical environments that need to talk to each other, not only in a Zoom or Teams type way, but far more interactively to be able to see what's happening on other machines or to really be like they're actually in an operating theater. We developed this Remedi software, which effectively wraps up that technology that we've already built into a user interface that's highly understandable for these professionals. Now we've been talking about this for a little while. But over the last quarter, we're now starting to see the development shift into commercialization in a meaningful way. And as the headline there says, we've got sales momentum that's building, the pipeline is growing. Pleasingly, that pipeline is really very much focused on the APAC region. So we know in terms of medical space is a much larger market out there. In North America and Europe, we've been working and have achieved certification levels for those markets. But in order to prove that and get some reference sites, we've been really focusing on the commercial side of things in APAC. And we're seeing that really start to turn into a pipeline that shows us there's a meaningful business available there. So Remedi is something that we're really gaining increasing confidence in what the opportunity might look like there. And as we start to book this revenue and build out that pipeline, we'll be able to prove that to you, our shareholders. So moving forward to the next slide. Much like we had our BirdDog, our Remedi solution that we've been talking about, the software side of things for us really is important. We've got these cameras and converters and software that we sell that we can continue to sell on an ongoing basis, which will drive our baseline revenue. We're returning to profitability, and we expect to grow from there. But the annuity revenue is something that we're really focused on. Remedi, which I spoke about in the previous slide, is an annuity-based sale. We also have an opportunity in the far more creative space, which is feature films and video production, episodic television. Using that same underlying technology, we've been able to embed that technology into the leading editing systems that are out there. And it allows people that are making Hollywood blockbusters or making the latest episodic television to be able to communicate with each other, much the same demands that we have within Remedi, but in a different application. It means that a director or a producer can be anywhere in the world, and they're able to interact and see what they need to see to make sure that show, that film, whatever that campaign is, is exactly what they'd expect. It's something that's truly unique. And I was really pleased -- I haven't mentioned this yet in this call, but last week, we had an industry show over in Amsterdam called IBC. And I was really pleased to see this solution was actually on display in one of those companies' booths, which was the Avid booth. So they are showcasing this solution as a really great option for their application, which is used in some of the largest Hollywood blockbuster films. So moving to the next slide. I might actually let Barry have a bit of a say here as well. So it's not just me talking the whole time. So Barry, please.

Sure. Thanks, Dan. And thanks again, David and Graeme, for hosting us. A summary of '24, it was, frankly, and I talked to our webinar last month, it was an awful year. However, we remain really well capitalized. $12.3 million, that hasn't -- that's exactly the same as it was at the end of August, in fact, at the end of July, the end of August and at the end of September on Monday. That is north of $12 million in cash. Why is it $12 million when it was $16.4 million at 30 June? We had a $5 million outlay in the month of July. So Graeme touched on the selective share buyback, which was AUD 1.577. We did the settlement that really made our Fin '24 awful. We settled that litigation with our former contract -- camera contract manufacturer. That cost us -- it depends how you look at it. It was a cost of USD 1.6 million, but that USD 1.6 million equating to AUD 2.4 million was, in fact, buying inventory at cost in order to -- and that will return and has already returned $400,000 into our cash in the month of August because we are selling that inventory. And the third element of that $5 million of cash outlay in the very month of July was the $1 million that we spent on legal fees and caught up on those accruals that we'd appropriately accrued at June. So going forward, outside of those 3 elements that I talked about at the end of August with our Fin '24 results, we continue to be well capitalized, and that $12 million is $12 million at the end of September. In terms of revenue, yes, it was down 36%. Graeme again touched on this from 28% to 18%. That was primarily because we had that stop supply situation with our former camera contract manufacturer for the first 9 months, while we also developed and there was an inventory depletion through July '23 through to March and even into April of 2024 before whilst Dan and the development team and the engineers were working on the next generation of cameras. So that's why I described and we described Fin '24 as awful, but we have dealt with the litigation, we have dealt with the selective share buyback and we have dealt with the fees, the legal fees that come with the litigation. Off the back of that, in Fin '24, we pushed our overheads down by $3 million, almost exclusively. From a headcount perspective, we went from 48 to 32, which was very close to being skin and bones in terms of our headcount, but we are now rebounding and let's call it, getting more productivity out of our 32 and 33 heads without cutting into the fabric of the business. It was a really intensive organizational restructure that occurred literally from December of 2023 all the way through to June of 2024. Again, that is done. One of the great things -- one of the positives that has come out of the litigation was certainly the diversification of our manufacturing supply, both with the geographical diversification and the number. We've gone from 1 to 3, and we're actually looking at a fourth. That has brought elevated margins. And I will talk about June, July, August and even September in a minute, but they are -- the margins that we are getting from our current contract -- camera contract manufacturers and what has been embedded in the months of June, July, August and September are literally double our historical margins. So we're very pleased about that. Dan and Graeme have touched briefly on Remedi and Cloud. So I won't go too much into that, but there is -- there are annual recurring revenue opportunities there. And in terms of our Board, we are very lean, but we are very strong in both governance and structure. And we've also just finished our strategy -- our Annual Strategy Day that occurred recently. If we push on the numbers for Fin '24 to Fin '23 are stark, but I've explained most of that, particularly the revenue downturn, the one-offs that we incurred in terms of impairment losses. Most of those have been through either the legal and professional fees or the non-cash impairments from the litigation that was confined and consigned to Fin '24. Again, we have dealt with that. Whilst it was a really challenging year to have a net margin reduction of 1.1% between 21.4% and 20.3% Fin '23 to Fin '24 in a really challenging macroeconomic environment, notwithstanding our litigation challenges that we have now solved, we were relatively pleased about that. I've talked about the $3 million of OpEx that was done in Fin '24 and is embedded inside the Fin '25 P&L. On top of that, we are moving premises next month, which will mean another $20,000 a month in savings in real cold hard cash savings. In terms of R&D, we did double down on that during Fin '24. We thought that was really important. One, whilst we were dealing with the former contract manufacturer and derisking the business going forward by deploying 3 camera contract manufacturers during Fin '24, we had to -- and we saw it as compulsory to ensure that we accelerated the Next-Generation Camera portfolio by spending another 50% of our Fin '23 development or R&D spend and got it to 5.5%. That will start to taper off. And I think Graeme -- sorry, I know, Graeme, that that's in your forecast for not Fin '25, but Fin '26, but taper off slowly, not -- we're cutting that at all. I have talked about the cash outflows and the cash balance. So we might flip to the next slide, which really talks about us. We have now entered Fin '25. We're nearly at the end of the quarter. I've talked about the contract manufacturers and the geographical diversification, which opens up direct non-proposal GSA accreditation. We've dealt with the settlement of the litigation, and we've executed the selective share buyback. So we are done with -- we have consigned the history, the challenges of Fin '24. Two of those 3 challenges were actually consigned in the month of July, but we've set that up through that last quarter of the June '24 quarter, which brings us on to products, Dan.

Yes. Thanks, Barry. And hopefully, that explains a bit more detail of what's been going on. We've got up here at the top, BirdDog 2.0, and I really have been pushing this quite strongly across our internal team, but also externally as well. And this is really landing well. We very much are the next generation of what we were. I think out of any challenging time, you've got to either -- you've got to lean into it and come out stronger, and I truly believe we have. As I mentioned right at the start, the entire team is far more energized than we've ever been. We're very much excited about where we're heading. In terms of the new product launches, I mentioned that at the start. And look, this is the engine room of the company. At the end of the day, if you break it down, we make products and we sell products. And that's kind of at a very simple level, that's what we need to get right. Over the last little while, we've been focusing on making those products and that's led us to some really encouraging numbers as we've been moving through. So we're starting to see those products come to market in a new way, like I mentioned at the start. We've been announcing these products and shipping them immediately. We're not trying to make noise just to get people excited. We're actually delivering products that are able to be used immediately. And the important thing with that is the feedback we're getting for those products being used has been fabulous. The quality that we've been seeing has been really high in terms of the actual yield and what we're seeing with acceptance of people. We're not getting any products back in terms of either faulty or not particularly liked. So we're getting a very good reception for these. Now as we move from delivering these products into market, it's really important that we don't get laser-focused on just building products because that's only half the business. If we make products and don't sell them, that doesn't help anybody. We've got great products. As I mentioned, we've been winning some awards. We've been seeing a lot of recognition. So now as we move into the next quarter, as these products are starting to be embedded in our global distribution channels, the focus now is on the other side of the business is to ensure that the pull-through and that the demand for these products really goes well. And that's been really a laser focus for me as we're moving into this next quarter is to make sure that as a business, we don't move ourselves into just being an R&D company because that's to support the success of the business, not the only outcome of the business. The next-generation products are showing really good uptake, as I said. What we need to do now is ensure that, that doubles down, that we're taking market share from any competitors that might be out there and going into these new markets. So for myself and the entire commercial team, we're very much focused on that as we move forward. So BirdDog 2.0 has had its first level of delivery, which is bringing those products to market. Part 2 of that is commercializing that to its full extent. So we've already seen some early success, which is a dramatic turnaround from an EBIT level in terms of the cost of the business versus the revenue. That's aided by the enhanced margins that we have. Now what we want to do is enhance that entirely or grow that entirely in terms of moving that the commercial growth moving forward. So moving on to the next slide. Continuing on with this BirdDog 2.0, these legacy challenges and I'm conscious that I've been talking quite positively this whole time. Barry did mention we've had an awful year, and I did do that in our last webinar as well. We had a really challenging year last year, but those challenges are very much solved and they're very much behind us. What we did manage to do, which is really exciting, is whilst those challenges, we were lining ourselves up for where we are now. So Barry mentioned earlier, we've had 3 consecutive months of EBITDA positive. Look, it's not incredibly high in black, but it is black, which is something that we're very excited about, considering where we've come from. And that's a very stark and very quick turnaround that we've seen there. So I think, Graeme, you mentioned earlier that it is somewhat of a turnaround story. Certainly, at that EBITDA level, we've seen very much a turnaround that was almost like a light switch going off when we had these new products launch into market. I'm really pleased with the team's efforts in terms of the margin. That really makes everything about this business so much more easy in terms of getting there and moving towards success, having doubled the margins with these products that are holding. We're seeing that not only with selling into the distributors to begin with, but also with reorders and continuing on. We're not having to discount to move those products. I mentioned very briefly, we had a trade show last week. This is one of the 2 major trade shows in the video production or broadcast industry. It's called IBC, which is International Broadcasting Convention. We were there, and it was the first time globally that we were able to show our new lineup and it very much landed positively with all of our partners and also our customers. Some of the meetings that we had, which in some ways were challenging because there were some questions asked about what we've been doing over the last year, how come we haven't seen these new products sooner. But as we explained that story of we're actually delivering these right now. They're available as soon as we've announced them. It very much landed and resonated with all of our partners, but also our end-users. So we're very excited about what that means, and we're living and breathing that moving forward. I mentioned briefly before, Remedi, which is our medical solution, is now building that momentum. We've got the pipeline built. We're seeing that now start to turn into commercial outcomes as well. With this quarter that we're in now, we're looking at meeting our targets for that, which are modest at this stage, but we're seeing that growth trajectory start to move forward. So moving on to the next slide. Looking at us from our priorities and outlook, where do we see things going? And we're getting towards the end. And hopefully, there's some questions that we can answer for you as well. I think for us, our key priorities are consolidating what we've been doing and then growing from there. We're not looking to explode out at this stage into 10 different other markets. We know we've got a core business that's profitable -- that can be profitable and can grow. We need to get the market share back that we've, frankly, let go over the last 6 or 12 months with the various supply chain issues. So there's some great stories there in terms of winning that market share back, which we're very confident on and we're very focused on. As we get beyond that, we're then moving into these new generation products being far -- being very attractive into other markets as we move into the AV side of things, and we're also seeing great opportunities in the medical side as well. We're very laser-focused on results. Like I mentioned earlier, the last period has been about making sure we've got the products that we can sell. As we move forward, it's about making sure that we sell those to the best of our capabilities in every geography, making sure that we're winning back market share, we're taking market share away from competitors and then expanding into these other verticals as well. That annuity piece is something that's very important to us. It's taken a little bit of a pause over the last little while on our BirdDog Cloud where we've been getting these new generation products out. The great news is these new products are built to be leveraged by our cloud-based solution. So as we move forward, we're looking at very much rolling into our core product sales, that annuity part of things as well. So as we move forward, we see the cash side of things. We have got a strong cash position. There's no debt, and we're looking at being EBITDA positive. So from that point of view, we're very much looking at what we can do beyond this. So as we build these new products, as we move into new markets, there's certainly some opportunities of how we can use that funding. And of course, there's other opportunities around M&A activities and things as well that we'll look at. But we're making sure that we build the fundamentals of this business to be as strong as possible before we go there. So moving on to the next slide, which I think, if I remember, is the summary, there we go. So in summary, I guess what I opened up with is what we're looking -- what we're trying to achieve as a company is a solution for various customers that use video in their requirements. So that's anything from a live video production, a broadcaster, a sports production, anyone that wants to get their message sent out. We're very much global-centric, an Australian company at heart. But as we mentioned, 60% of our business is in the U.S. and the world is really our market. That cloud-based opportunity where we're seeing Remedi start to come in as well as our post-production workflows in the creative space is something we're really focusing on to build out that annuity side of things. Innovation is the key to our survival and our success, and that's what we've really proven over the last 6 months with the new products we've been delivering. They are genuinely innovative in the features that they have, the forms, the functions, the quality, the performance. We have great partnerships around the world, everywhere from Zoom certification with our cameras right through to working with these companies like I mentioned, Avid at IBC, we're showing our solution embedded directly into their products. As mentioned again, we've got a strong balance sheet. We see that being stabilized now. And as we move forward, we're looking to move into growth again. The last couple of months have been really encouraging to see the performance that we've had, and we're looking to build on that from here as we move into the more commercialization side of things with BirdDog 2.0. So I guess to summarize, we've had a really challenging time. We're not shying away from that, but we also have dug deep and we've got these new products out that are really landing in an encouraging way. We're now looking forward to how we can capitalize that as best as possible. So I think with that, that closes out our presentation. So I'd like to hand back to David to move on to the next steps.

Thanks, gents. Thanks for an insightful presentation. Clearly, it has been a tough year, but come out the other side of it stronger and more focused as the results are showing.

We now will move to the Q&A session. We've got a lot of questions to get through. [Operator Instructions] But we'll jump straight into it. A couple of good questions to kick us off. Firstly, how has the September quarter shaped up in terms of new camera sales?

Do you want to talk about? Okay. No problems at all. So in terms of the September quarter, we're really encouraged. Like I mentioned, we -- in June, we started to see these new cameras ship in. But through July and through to September, we've seen that continue. So the products are very much being accepted in the market in terms of getting not only that first sell-in, that's an easy one, but also seeing repeat sales come through. So the sales of the cameras really are hitting the mark, which we're excited about.

And a question here on margins. You did touch on you are seeing stronger margins coming out of the camera products. Are they maintainable?

Yes. So pleasingly, what we've seen through the months of June, July, August and September, David, and the audience is, number one, we are double our historical margins, and there was a slide that I talked about 20.3%. So we're in the 40s in terms of net margins. That's great. That has been evidenced through the months of June, July, August and given the September ends in 3.5 trading days, the same. So yes, very pleasingly, beating the budgeted margins each month, July, August and September. So we now consider them embedded. But of course, it's always a watch.

There's a question here in terms of demand. You did touch a little bit on demand that you're currently seeing, but also what you expect to see. What can you give -- what can you tell the audience in terms of demand going forward for Next-Gen Camera reorders?

That's a good question. So as I've sort of mentioned a couple of times, getting the first order is the easy one. We can fill the market in terms of getting inventory available around the world. What we're really focusing on now is building that demand from the other side. So we've seen encouraging demand so far. But as far as I'm concerned, we're about taking that market share from other people and building that further. So for us, the focus absolutely is making sure that we don't only work with the encouraging signs we've got now, but increase that substantially more by building through that market demand. That's awareness campaigns. It's about working with our end-users as well as our channel to build through as much of that as possible. But we're certainly seeing early signs are looking really great.

You touched on, obviously, the negative aspect of a supply crunch in the last 12 months and the litigation that you've just cleared up. There's a question here from the audience. How do you overcome a supply issue going forward?

So moving forward from here, I guess what we've done is embed some safety nets in the business. We haven't gone from a crisis to lining ourselves up for another one. We've learned a bunch of lessons from this. Last year was a year that we don't want to repeat. So we have a number of suppliers now that are in place. Not one of them is the only supplier for all of our products, of course. So whilst if we had a crisis that happened again with a particular supplier, we might have a single product line that's affected, we're not going to have our entire product line affected. So from that point of view, we've very deliberately given ourselves a level of protection there. Pleasingly, actually, the way we've engaged with these new suppliers means that we don't see that as being too much of a risk moving forward. But absolutely, we're very much prepared for it.

Another question here on margins. What is the expected sales mix between the higher priced and the original products? And are these more expensive cameras holding a higher margin? Or do you see a similar margin across the board?

So our products really are quite even across the board in terms of the margins that we get. So clearly, if we could sell many more of the higher-value ones, that's great because the bankable dollars for each one of those is great. As you mentioned at the very start or Graeme might have, there's some macroeconomic issues around the world that we all are aware of. So the lower-end products or the lower-cost products are quite attractive in a number of markets, and we're seeing the volume come through with that. So from our point of view, having that mix of an underlying volume play with the lower-value products, but having these higher-value ones that are actually seeing that margin still hold up is actually a really great place to be. We're seeing even as we push higher with some of the products coming out a bit later on, that same margin structure is really being replicated.

And maybe just to supplement that, no next-generation product that has been released in the last 4 months or the next ever is sub-40% net margin, full stop.

In terms of customers, I know you've got a broad mix. Are they more price-sensitive or feature-sensitive? And who are your main competitors on both of these aspects?

So the answer is yes to that. There's -- depending on the customers. As I mentioned earlier, we've got a pretty broad set of customers. So at the lower end, it's price sensitivity. So we've deliberately made our products that fit into a price point that emotionally works well for that sensitive price market, but having features that stand out over and above. As you move up the value chain, though, as our higher-end products, it's far more feature-based. The price becomes less relevant, and actually, it's about the output, the functions, the technical specifications. So it's a tale of 2 stories really. At the lower-end of our products, very much it's a price play. At the high-end of our products, it's not about pricing it to a point where someone's going to buy it over and to mention competitors over a Sony or Panasonic or a Canon. Price doesn't matter so much as performance.

And sort of following that line, is -- do you maintain margins across growth? Or is there a difference in the margin strategy?

No, the margins are maintained across both. We've approached the design of our products on the ground-up to make sure that's supported.

And in terms of the addressable market, do you have a good handle on the size of the market? And do you have an idea of what model will drive sales sort of across the board? You're not pinning all your hopes on one product, but do you see one that's going to stand out across others?

Look, I think there's a number of different markets that we play into. In terms of the model of going to market, we operate exclusively at the moment on a distribution model. That gives us reach into many different areas. That doesn't necessarily work for everything that we sell though. Talking about Remedi, our medical solution, for example, that's a much more hands-on direct play. So depending on where we're going with products, there is opportunities for us to have a different path-to-market and approach. We've got some products that are going to be more attractive to an influencer or a more scaled-out approach. And so with that, we'll need to talk with them directly. So I guess the way that we go to market is kind of twofold. We need to talk to our distributors and our path-to-market and make sure they're supporting us and have the products in the right place. But we also need to make sure that we're dragging through demand from the end consumer. And depending on the products, that will either go via the channel or that will go via direct with us with that medical example.

Just sort of honing in on Remedi, just while we're talking about it, what do you think the actual potential for Remedi is? And what is the sales strategy? Like you said, it is a hands-on largely sales strategy, but how do you see the sales strategy rolling out for that product?

So Remedi is -- it's a really interesting path that we've got on with this. So we certainly see as an opportunity, as I mentioned, we're really seeing this pipeline build at pace now. And that's predominantly focused in the APAC region. We have certainly got our eyes on different areas as well. We're in discussions with various parties in North America as well as over in the U.K., which extends into Europe. What we need to be mindful of is as we build this out, that we don't end up with an army of people that are supporting this. So I think there's a hybrid approach where we have very much -- certainly at the beginning of this, we need to be very close in making sure these installations are successful. They become reference sites and allow us to really amplify that out through the industry. As we grow, having a set of key partners, not necessarily distributors, but technology partners that can help us deploy these around the world. It gives us kind of a hybrid approach where we're not effectively relying commercially on another distributor to representatives, but we do have assistance in various geographies to allow us to scale up.