DXN Limited (DXN.AX) Earnings Call Transcript & Summary

Good morning, and welcome to DXN Limited's Q2 FY '26 Webinar. This morning has CEO, Shalini Lagrutta; and CFO, Laila Green, presenting to the presentation. [Operator Instructions] Shalini, I'll pass to you.

Thank you. Good morning, everybody. Thank you for attending the quarter two FY '26 presentation. I'm going to start by running through a few background information and position about DXN and what we do. We are -- as you can see on the deck that you see here, the slide that you see here, we have 3 divisions, just to summarize for those who may not have already understood this from our last presentation. We have 3 divisions; Modular division, which is essentially 85% of our revenue. This is as of FY '25. We have the Data Centre Operations division, which is roughly 12% as of FY '25 and the DCaaS division was a small 3% of the FY '25 revenue. Essentially, our Modular division is the largest market segment that we've got, and this is where we do everything from the design, engineering, manufacturing, the deployment to site, and this is all about prefabricating solutions, various different products and the market is always evolving when it comes to new products in this division. At the moment, we are looking at 85% of our revenue within this division, and we foresee that that's around about where it's always going to be, except the pie just gets bigger. The Data Centre division is our data centers in Darwin and Hobart, and this is 12% at the moment. And the DCaaS division, we expect that FY '26 is going to be bigger, and it's going to keep growing. And this is where we've got -- where we combine our Modular division skill sets, which is the design, engineering, manufacturing, the deployment of capital-light infrastructure ourselves at the moment, clearly on balance sheet, deploy it to our customer site. And at the moment, we're looking at -- we've already deployed one particular site for a satellite operator in Northern Territory. And that is effectively everything from prefabricating, designing, engineering, deploying, acquiring the site, ensuring that we've got adequate and correct design in the fiber infrastructure, the power and all of that from start to finish. And then thereafter, doing all of the maintenance and operations for that particular site as well. So it kind of takes all of the skill sets that we've got in the Modular division as well as the Data Centre division and brings it all together. And that's what we've just commenced in this -- in the last financial year, and we expect that market segment to grow. Part of the unique value proposition in this particular division, especially when it comes to deploying, in the satellite industry, we are very well positioned to grow this because if you look at where the market is headed, the data center industry, we are talking about multi-megawatt type builds, whereas in the satellite industry, we are talking about anything between sort of 5 to 2 megawatts, which is very much in our sweet spot. It is too small for some of the larger operators to be operationally cost efficient and effective. And for us as a company from start to finish, we can actually deploy quickly. We can respond quickly as well. And from an efficiency point of view, from an operational efficiency point of view, it is exactly what the customers look for. So we're well positioned to continue growing that market segment. Next slide. Just a little bit more on the various core offerings that we have. So if you look at this slide here, the Modular division has historically been -- the core offering has been sort of between 2 to 500 racks. So anything sort of between even it's 20 kilowatts right up to 0.5 megawatt. We're starting to see quite a lot of the larger deployments, much, much larger, 2 megawatts to 10 megawatts and even bigger than that in some of the new quadrants with hyperscale. And that's the sort of typical customer model that you've got. This is purely a turnkey business model. We build it for our customer and we hand it over, and we do everything from design engineering in-house and we deploy it to site. We hand it over to them, and that project is between 6 and 12 months depending on the size and complexity of the project. The Data Centre Operations, this is subscription and usage fee based. We won't go into too much detail on that. That's our Darwin and Tasmania data centers at the moment. These are telcos, cloud providers, enterprise, government are all hosted within these 2 data centers. Data Centre as a Service, very often satellite operators. There are market segments and these are -- we're talking about the various satellite operators, that's the democratization of the LEO satellite operators means that our smaller operators that are highly funded, typically U.S. operators exploring and going out into the world and deploying sites and earth stations that we can then own and operate and manage for them. That's our target market. And that would be a subscription based or a recurring revenue model. Whereas -- the fourth segment there is the Operation and Maintenance, and this is typically on the Modular division as well as, of course, the Data Centre division, which is subscription-based. All our customers would have this as an ongoing requirement for us. Next slide. So in terms of growth now, we have had -- today, we have a manufacturing facility in Perth. And we're doing everything we can in order to ensure that we have a second facility in Jakarta. We have announced a joint venture, which I'll talk about later. But that is the next market that we will have a manufacturing facility to cater for the local market segment. And then we also have plans on for an expansion into the rest of Asia Pacific as well with another facility. That is moving forward, but where we've got facility and manufacturing today is in Australia in Perth. We also have quite a few dots around the world, and this reflects the Modular Data Centre deployment. So within this financial year, once we've deployed quite a few of our new customers that we've contracted, that number will continue to increase once the deployment and on-site deployment is completed, we will have a number that's larger than what we've deployed to date. What -- just to sort of step back and look at why these infrastructure builds are growing exponentially. The demand for this continues to grow around the world. And it's because the number one pain point that we solve is speed-to-market. And it is not necessarily the cost of deploying brick-and-mortar or stick build, some customers call it stick build in comparison to prefabricating in a data center and deploying to site. A big part of it is speed to deployment. And secondly, a lot of it is to do with limited know-how and on-site capability of resources or availability of resources on site to work on site. So a lot of customers, more and more customers in various market segments are looking prefab, and that's a big part of why the infrastructure build continues to grow with prefab solutions. I'll just talk about the next and expand on that on the next slide. So okay. So this -- I just wanted to spend a couple of minutes on this one. It is quite important for investors to sort of understand what is actually the tailwinds in the industry. The industry, as far as myself and my team are concerned, is starting to speak quite loudly for the need for prefabrication. And I'm talking about not just the EDGE data centers or satellite operators that we currently deploy, but also the hyperscale side of things as well. The industry needs it because the number of requirements, the number of deployments, the speed of deployment in some markets are going from sort of 12 -- traditionally 12 months for brick-and-mortar deployment to now 2 to 3 years, which renders a lot of these sort of projects unviable. So there is in -- very often in markets, there is no other option other than going to prefab or if not completely prefabricating a greenfield site, what you call a brownfield site. So you might have a combination of certain parts of the data center that can be prefabricated in order to expedite the project deployment back down to the sweet spot of 12 months deployment from start to finish. And that's where a lot of our customers are coming in and saying, what can we do differently. Now it's also important to remember that because every deployment is quite different, you can't sort of sit back and say, okay, a large vendor who's got a $1 billion market cap with plenty of products sitting on the website to actually produce something at scale overnight. It doesn't work like that. It would have to be custom designed for the location, for the specific end customer requirement, whether it's Microsoft, AWS, Google, Meta, any of those clients will have very different requirements. So a lot of these sites end up being custom designed. Hence, back to the original position where we sit, which is the customization of solutions on the EDGE now is starting to -- not just around data centers at the EDGE, but also large hyperscale requirements, parts of the hyperscale requirements are now needing to be prefabricated. So that's sort of -- that's the sort of reason why the demand for data centers, the Modular Data Centre is starting to increase. And that's what we see across the world, across definitely our market segment. So what we also find is most of these customers are global customers. They are customers who actually have very similar requirements in different parts of the world. But what you can do is standardize the solution with one customer and then replicate that in different markets for that particular global Internet customer as well. And these are traditionally blue-chip customers. And what then happens is when we sit down, there is actually a know-how that we actually gain from the process, which then enables us to then go into the next phase and the next phase of expansion with them. So I think from that point of view, that's where we see the industry moving, and that's why we think we're well positioned. And the simple fact is that we have an in-house team who've done this for a long time, who've done this for smaller sites, obviously, but we're well positioned to do this at scale for these larger deployments, and that's what we're trying to leverage. Next slide. So just to sort of continue on to what it is that I've highlighted here. Traditionally, we've always operated in the EDGE market segment. So that's why today, we have quite a few deployments. So we've got cable landing stations, satellite operators who are deploying sites, Globalstar being one of them. That's an announced deal from last year. We have mining modules that we've deployed across the globe, EDGE data centers, defense government. This is one-offs, the standard deals that you've seen to date. Now what I'm talking about as well where the global market is headed and the tailwinds that we're starting to see is in quadrant 5 and 6. And this is where we are talking about builds at scale, customized builds at scale and not necessarily the entire solution is prefabricated. A lot of build is actually on-prem on-site, but there are parts of it like powertrain units, chiller rooms, pump rooms, the Hot Aisle Containment, HAC that stands for Hot Aisle Containment. These are starting to be needing to be prefabricated because the number of electricians that you need to actually build AI servers, which is really the demand of where the industry is headed, is too high and too risky for it to all happen on-site and on-prem. So everyone in the industry is stepping back and thinking how do we do this better. So DXN has actually already developed some standard designs for this for our -- for our Ventia project, and this is called the StructCore solution. And so StructCore HAC that you see there in quadrant number 5 is actually an extension of that. It is, of course, what we do in an indoor solution, but at much larger superstructure levels. That is essentially the market that we're targeting. And at the moment, we are looking at various designs that we're building out to customers. So we're actually doing and deploying design solutions out there. So that's the first step. And historically, what that means is there will be module demand on the back of that. Next slide describes in a little more detail. You have seen this in the last presentation that we did, but we wanted to sort of highlight again the various sort of customer base that you would have in each of these market segments. So most of you that I can see on the call would be very familiar with the top market segments there, so cable landing stations, mining, prefab EDGE and defense government. That is what we've always been doing and deploying for customers in the modular division. But with -- when it comes to the hyperscale prefab, we're talking about the global Internet companies as the end customer. And a lot of times, our customer, so our customer, we're part of an ecosystem of suppliers that actually supply to the end customer. And very often, you might have sort of big on-prem builders that actually pull it all together, and they are looking at various modular and prefab solutions for the stuff that we're talking about, data halls, StructCore HAC, so Hot Aisle Containment that are prefabricated and brought to site. So we have a specialization. We have a role in this space, and there are many in the ecosystem would have a role in this space. And that's where some -- a big part of our team and time and investment moving forward is looking to get into that part of the business. Next slide. This gives you a little bit more of a snapshot. You've seen most of it before. We just update a couple of new customers as we announce them. So in terms of data centers, we are looking at various applications directly. So bearing in mind that very often, the quadrant 4 and 5 that I mentioned earlier tend to not be a direct deal. We're heavily involved with global Internet companies and hyperscalers. But very often, it is carved out into the manufacturers or the on-site or on-prem builders of the world and that's how the contracts would be actually announced as it goes. Next slide. Yes. I'm going to just hand over now to Laila for the next couple of slides before then I will discuss DCaaS a little bit. Laila?

Can you hear me? Wonderful. Hi, everyone. I guess for the quarter, we -- as expected, our revenue was softer than originally or prior years, and they were impacted by the delays in a small number of contracts leading on from Q1. So we were expecting this, and it's no surprise. Our cash balance as of December '25, it was $1.7 million. Now the movement in cash for the quarter was driven by planned year-to-date capital expenditure on SDC and [ TAS ] data centers. So it's -- we needed to invest in the DC to support the operational integrity and ensure that the asset's performance. Cash was also impacted due to the milestone receipts. The projects being delayed resulted in milestones not being achieved. So the cash is just deferred. It's not lost. We do expect the cash to come in as the projects progress in second half of the year. We closed the quarter of -- sorry, December with a backlog of $14.5 million. That provides us with a real strong revenue visibility, which really reinforces the underlying strength of our contract position. And the cash receipts for the quarter was $2.2 million. Like I mentioned, the revenue for the quarter was $1.7 million. Now this was a decrease year-on-year by 63%. So again, it was predominantly driven by the delays in the progress of the existing contracts. So it's not really comparable because we are predominantly a project-driven business. Encouragingly, though, as the projects have actively resumed, we're seeing progress occurring. So the revenue will start being delivered in Q3 and Q4. Our backlog stands at like I said, $14.5 million. We will expect to deliver 65% of that revenue in FY '26. But again, it is an estimation. We do have a healthy pipeline, I should say, of 80 projects that are currently being explored. And so a lot of -- when we say 65% of our backlog will be delivered in FY '26, we do -- this is considering -- I should say, we are not considering any new contracts being closed. So we still do have 6 months left in the year that we're going to be closing contracts and a few of them are looking quite promising. DCaaS, our first site has been completed. And our recurring service fees have commenced. We received $80,000 in the quarter. Now partially -- that was driven partially by service fees as well as setup fees. We are expecting the remaining setup fee of 30% milestone to be recognized in Q3. It was purely -- it wasn't signed off by the client to be recognized in December, but all the contractual conditions have been met. We're expecting the ongoing quarterly service revenue to be approximately between $80,000 to $100,000 in the short term. Of course, this could increase as power and service increases. We have had positive feedback from our U.S.-based client. And at the moment, we're getting early indications that they are -- it's looking promising that they want us to work with them on additional sites. Our cash and revenue position. So we received $2.2 million in cash receipts. Like we mentioned in prior presentations, our revenue and cash are occasionally misaligned purely because of the projects, but we do have strong backlog, which will drive those milestones into the second half of FY '26. I'll pass back over to Shalini.

Okay. Thank you. So we announced a joint venture about a week or so ago. And this is actually with a company in Indonesia called Super Sistem, Indonesia. They're actually our customer, and we've been talking to them for quite a while. They are a subsea operator in Indonesia and currently are looking at a deployment across the Archipelago, Indonesia. So originally, the intention was for them to just buy Modular Data Centres because their end customer being U.S. global Internet company operators tend to make sure that there's a geopolitical divide. And so when you are looking at subsea operations across the globe, you tend to have options of solutions. So whether it's subsea cables that are being built, typically, it's companies like SubCom or Alcatel-Lucent that are building the undersea cables, whereas if it's the cable landing stations, it's DXN and a few other U.S. companies. That's it. That's the market, that's the vendor list that you would -- and people who have actually done it and deployed it. There are lots of companies that haven't -- are not in the market segment, but these are the sort of global options that are available to companies who are wanting to target the U.S. hyperscaler for undersea data. So what then we then worked out is while pricing-wise, we're on the ball from -- in fact, from a dollar per kilowatt deployment point of view into markets like Indonesia, it's actually higher than places like Australia or developed markets. So there were markets actually willing to pay more for high-quality infrastructure. But because of import taxes, so anything import exported out of Australia into Indonesia attracts by default 40 over percent in import taxes. It just renders the business case impossible for any viable solution that way. So this was when we decided that, frankly, if it's -- if we can't sell into our customers in Indonesia, we need to build locally with them. And it makes sense. They're not the only customers who are asking for this. There are hyperscalers, there are EDGE data center companies. There are our existing operator customers who deploy in other markets who are going into Indonesia because Indonesia is a big market for digital infrastructure over the coming decade. It makes sense for us to partner up with a friendly party who is on the right side of the geopolitical arena and attack that market together. So it was actually -- that's how that whole opportunity popped up. So what that means is essentially, with this partnership, we are -- and it's a Singapore-based joint venture, we're able to then underneath that umbrella, build a factory very similar to a factory that we've got in Indonesia. It's not capital intensive at all. It is all about just renting a space where our systems and processes, including our ability to cookie cut what we've already built in terms of design and our design know-how right from design to build is parked within that joint venture and replicated for ourselves in that part of the market. And it also meant that we kick off that opportunity together with the customer who's going to be parking a purchase order for their requirements into that joint venture. In this way, we can be very competitive for ourselves and our other markets and the usual markets that you've seen in the other deck that I've presented, so all the EDGE data center stuff. So I'm not even talking about the hyperscale. So all of the usual customers that we currently sell into, including satellite operators, EDGE data centers, cable landing station operators as well as well as mining customers all become a target market for us locally in Indonesia. And that's the, I think, the reasoning and the intent behind the joint venture. We're very excited about partnering SSI. They're young and dynamic and very similar from a cultural point of view to DXN and our team and super excited about not just delivering for the contracts that they have themselves for SSI, but -- and the joint venture, to be clear, is independent. So it will have its own sort of design team over time. It will have localization in terms of resources and delivery of product and solutions that is customized for the local market, and it will be locally driven, and it becomes an additional source of revenue for DXN and a source of revenue we would otherwise not have. That's -- I'm going to just pause there, and we can take questions later. That's a summary of what we're doing there. Can we go to the next slide? Yes. So this is the number of projects that this is across the industry. And just bearing in mind, this does not include the Indonesia project. This is purely what we've got on within our own pipeline. So this has grown significantly in the past 3 months. And the combination of opportunities with the Data Centre as a Service, which is that recurring revenue satellite customer and other customers that we're looking at. StructCore, StructCore HAC, which is the hyperscale opportunities has been growing. Satellite opportunities has been growing and so has cable landing stations, especially across the Pacific and other parts of the world where some of our customers are operating as well. Next slide. Yes. So -- now yes, we have about $14.5 million in backlog today. I think I was trying to figure out what -- where we were this time last year in terms of backlog. I think we have essentially started building the backlog, but that does not mean we do not continue to work on the closes that we've got in the pipeline. We've got a healthy pipeline, new pipeline that we're working to close. But yes, in terms of what we're speaking about with backlog, the estimate is that 65% should be converted in the second half. So we've got a big second half, definitely. But we are also definitely actively looking at closing out some of the major deals we've got in our pipeline. But I think further than that, if you sort of look at big picture, the Data Centre as a Service offering improves our revenue profile and diversifies it. It gives us recurring revenue. It actually leverages our existing core competency on both sides of the business. So that's one part of the business that I feel continuing to grow that is going to give us a lot more stability in the peaks and troughs that we see in revenue profiles in the future. And that's why I'm laser-sharp focused on making sure that we continue growing the DCaaS business no matter what. And I think one of the things that I have to say in terms of looking at our revenue profile over the last few years, we think that if you look at our pipeline globally, while our customers may be located in Singapore or Australia or any of the OECD countries, our deployments are -- decision-making may be here, but a lot of the deployments are in places like Southeast Asia. So where we actually deploy is in these parts of the world. And so using and leveraging partners, signing joint ventures with friendly customers who are on the same ecosystem and the same side of the geopolitical arena as us is beneficial for us. And it means that our end customers who need these type of ecosystems out there compared to what's out there in the world as an alternative is needed. So we are being asked to look at all these different partnerships so that we can actually scale into these markets. And as we -- and because we are actually talking to a lot of these hyperscalers looking at innovation and looking at how do we actually modularize hyperscale data centers all the time, we have to always keep our eye on innovation. And that means that -- and we've got a great team for that, absolutely great team. And that is what -- that is experience we've brought to the table and enabling that infrastructure with innovation is really important as we go into the next phase. So a big part of what I'm trying to do is make sure that our team who have the core competency, who have the credibility to have these conversations in order for us to scale, and that's really important that we continue to keep the right people on the team because these are the conversations that we have an opportunity to have, which we otherwise would not have. So in sort of summary there, Mel, before I hand back over to you and questions, I'm extremely bullish. And while recognizing the market is tumultuous and the share price goes all over the place, we are -- the eye is on the ball as far as I and the Board is concerned. We are doing what we can to find alternative options out there. So -- and that includes, like I said, with the joint venture, we will have alternative sources of funding for joint ventures that we are going to be -- we are looking at in order to make sure that we continue focusing on delivering what we've got in our pipeline and in terms of revenue conversion from sales to revenue. But at the same time, the reason why we're all doing this is to ensure that we are able to scale in a very, very clear opportunity that's out there for us with much, much larger customers.

Thanks, Shalini. Well, we might start with some financial questions. The first one is in regards to staff payments and specifically bonuses. Could you just talk to what drove the costs up when revenue was seemingly on a full year run rate basis is looking like at this stage, $12 million down on PCP. What triggered the bonuses and what KPIs were hit to pay out those bonuses? You're just on mute, sorry Laila.

The bonuses that were paid in the first half of FY '26 actually relate to KPIs for FY '25. So it was the revenue bonuses for the sales team as well as the KPIs for our growth to the executive team as well. So they actually relate to FY '25, not FY '26.

Thanks, Laila. Shalini you just touched on this in your closing statements in terms of alternate funding options. But we've got a question that says, given the current share price, what is the Board thinking regarding the low cash position and the trade-off between raising money at this level versus not doing so and whether that hampers your growth ability and prospects. Could you just reiterate some of those closing statements you made?

Sure. Yes. So this time last year, we looked at the company, I would say, around March last year, we looked at where we are. And we looked and we said, no matter what we do, the digital infrastructure space is raising. Every one of our customers as well as competitors are raising hundreds of millions of dollars around digital infrastructure deployments, growth, whether or not it's a PowerPoint vec that they've got versus deployments. There is a lot of money in the industry. And it became very obvious to us that we have to diversify our sources of revenue, predominantly also because a lot of our customer deployments are in Southeast Asia. So we are looking at various options, which is why we went ahead and set up a holding company in Singapore, which we also set up customer contract entities where we can actually sign international contracts with our existing customers, not necessarily different customers, but with our existing customers in these parts of the world, where -- which enables us then to capitalize that entities, those entities offshore with investment, whether it's joint venture like we've actually done for SSI. And what that means is then we can go into various funds that are out there, and there's plenty of them, whether it's the export finance, Australian AIFFB, the National Reconstruction Fund, there is plenty of money out there for digital infrastructure. There's plenty of money out there for manufacturing, Australian manufacturing internationally. That is the sort of reason that's why we decided that we've got to at least set the structure up and work towards it. And we did that open -- with open eyes close to a year ago. And there are multiple streams of that. And I think that is the key for the Board. If we were to just focus on the first four market segments that I presented, and we continue delivering on that and educate the market on raising capital on the four market segments, we will stay within our lane, and we will not have any issues in terms of cash, revenue, we will -- we manage customer profile with upfront payments. We make sure that the project is cash flow positive at all times, and we stay within that. But we can't grow. And in this industry, growth is everything, adaptation and making sure that we're out there innovating and going after where the market is headed, which is quadrant 5 and 6 is a big part of our job. There is no reason -- absolutely no reason for us not to be winning in that space other than being able to fund ourselves. So because of that, we are looking at various options, and we will continue to keep the market appraised on that.

Thanks, Shalini. I guess just continuing on from that, we've had a few questions on the JV. So maybe that's the right segue. So with the JV, what would be the timing of the factory opening in Jakarta?

Yes. So we are looking at crystallizing the MOU into an order as soon as possible would be the time frame that we're looking at. Now whether or not that turns into any revenue, I think that will be the next question, I really can't say because we have to make sure that we've got the factory up and running. And that means some basic investment in terms of -- on both parties in terms of a headcount or two as well as a lease option for a site, which -- all of which we have in our minds in terms of where the location is and so on. So in the meantime, we've got the -- we've got Austrade, hugely supportive of this project. So there's a delegation next week to Indonesia, and we're getting quite a bit of attention for what we're trying to achieve there, including intros to other customers and so on. In terms of timing, at this time, I don't have a time frame that I can actually share on what date we're going to be opening the factory. But from our perspective, the purpose of doing it this way, it enables us to leverage the customers' purchase order for down payment for us to kick things off and that reduces the need for massive investment upfront and then sort of wait for the first deal, bringing on salespeople. So we've done the sale. So the way we're doing it is we've done the sale. We get that all locked in. We get the money, we build. That's the sequence.

Thanks, Shalini. And just on from that, you discussed what brought about the JV. We've had a question also on the estimated pipeline. I think you had indicated around USD 7 million for the first 3 years. Is there anything else you would like to add in terms of that estimated pipeline?

Sure. So USD 7 million would be effectively the absolute need for the BTI cable, which is the Super Sistem requirement, which is a funded cable with customer requirements. So that's everywhere from landing stations into places like Batam and other parts of the Indonesian Archipelago, including Jakarta and so on. So that would be what that covers effectively. We've not considered other customers. So other customers include some of our existing global Internet companies that we obviously are delighted with there. And it also includes data center companies who are looking at -- there's been plenty of announcements around Jakarta hyperscale build in the last even 1 month, and we're targeting them all directly. And a lot of these clients, we don't need a sales force over there to actually attack the market, these customer target markets. They are existing clients who are global and the same ones we're chasing everywhere else will be present locally as well.

Thanks, Shalini. Laila, we just had a follow-up question on the staff bonuses. If you could just clarify -- we've been asked, given it was a cash payment, wouldn't have this been captured in the P&L last year? Can you just provide some more clarity on what this investor is missing?

It was captured in the P&L last year. It was accrued and the cash payment happened in FY '26. So you've got the P&L and cash occurring at different times. So it was recorded in the P&L for FY '25, but it was physically paid in FY '26.

Thanks, Laila. So if we can just talk to the backlog and some of the project delays. Does the delay and backlog impact your capacity to bring in new projects this year? And have you got the staff capabilities to complete both the existing and new work?

The backlog doesn't impact us in regards to winning additional contracts. We ramp up and using third-party labor to build our modules. So as we get more orders in, we will bring in more resources. The team is quite good in scheduling and making sure that we can get the modules out through the facility. And sorry, what was the second part of the question?

It disappeared off my screen. Have you got the staff capabilities to complete both existing and new work?

Yes. Like I said, we ramp up and downgrade the amount of resources that we require based on the projects that are active. So we definitely can. It doesn't hinder our ability to win new work.

Thanks. And just following on from that, based on your current revenue or project time lines, will you require external funding? Or can it be funded from cash flow from operations?

So these projects, we contract our milestone payments to -- as best we can to ensure that each project runs cash flow positive and funds itself. So for the business as usual, we shouldn't be requiring any funding. It's growth that requires consideration as to what we do. If it's BAU and we keep doing what we're doing, the projects will fund themselves.

And when you say BAU, you mean the four each market segments are self-funding projects? Correct?

Yes.

In terms of the sales team, the new headcount, have they -- I mean we highlighted that last quarter. Have they delivered what you had hoped so far since joining? Are there any bottlenecks to that sales team? Maybe that's a question for you, Shalini.

Sure. Yes, we've got a great team for sure. Whether -- I mean, we're talking about a couple of months of time so far. So -- but in terms of pipeline, in terms of going after markets that we otherwise do not have capacity for, especially satellite. So despite ourselves, we have one earth station satellite opportunities. And that's the market segment that we wanted to grow and the new headcount was for expanding into that segment. And that's starting to show some results both in DCaaS, Data Centre as a Service as well as Modular Data Centres. So there is some growth there. So we're starting to see despite just a couple of months of having people on. But the other thing -- the other market, of course, is government, and that's where we've got -- I'm talking about domestic government. So we actually do quite a bit of deployments already for export. So whether it's the U.S. offshore deployments or projects funded through DFAT, East Micronesia, Timor-Leste, a lot of the Pacific deployments, a lot of the multiple cables that are being built across the Pacific are very much Australian government supported as well. That -- we have a lot of that covered as it is, but where I think we have some capacity constraints is trying to enter or crack into places like Canberra. That requires a lot of lobbying and focused people. Now whether or not that market is sort of significant enough for us to put a lot of time and effort, I think we'll take that opportunistically. We're getting a lot more traction now indirectly. That would be one market that we shouldn't take our eye off the ball. But by and large, if you look at some of the pipeline that's coming through, where the growth opportunity for us is really if we crack into one of the 5 or 6 -- number 5 or 6 quadrant, all it takes is just one and then they all come. That for me is much larger than any other opportunity. And so that requires everyone, the Board, DXN executives, the DXN engineering team currently to be involved. So it's not a single salesperson thing. It is across the company.

Thanks, Shalini. James from [indiscernible] has a question. The subsea segment seems to be a very slow-moving segment in terms of its evolution from a low base and a revenue contribution. Is it realistic to still think that it could be a meaningful contributor in the near term? Or is it more of a longer-term revenue vertical?

Yes. So the subsea segment takes a long time for it to go from concept, inception, for the cables to come in, for the consortium parties to actually sign contracts and ensure that they've got capacity for the build for them to get cable ships and lock cable ships in before deployment. Our -- there is one major customer in that market segment at the moment, and they have probably cornered 70% of the market, and that's our focus, and that will continue to be our focus. I think that a lot of the hard work is in the pre-setting up of the consortiums are behind us now. So I would see definitely that is a big contribution to the short term moving forward. Cable landing stations are definitely -- we're always sort of looking at our pipeline and going, what are the ones that we -- once we're getting into sort of 50%, 60% stage of the pipeline, we always win them and cable landing stations are exactly that. So I think that you're right that from the time we actually see something in the pipeline, that we've quoted for, for instance to the time that it actually closes, there is a time gap. And then after that, the actual deployment is very often, it is not actually the build, the build is fine. When it goes to site, the actual site acquisition and the various issues that we have. But I don't quite agree that, that market segment is small. I think all of the announcements you would have seen and PTC is one event where all the subsea operators get together and we actually see and hear the plans for the next 10 years with what's imminent over the next year and 2 years, there is plenty of that. The announcements are actually increasing exponentially of new cables coming in, and that's purely driven by AI workloads. So the bigger the data centers, the more number of data centers in each market that is being announced, the more the domestic infrastructure fiber needs to be built. So Telstra InfraCo is building a lot. You have plenty of other cable local operators that are being building domestic cable as well. But all that needs to be underpinned by international capacity and subsea and also having them build resilience and diversified locations. And that's why the subsea industry is just very hot at the moment because of that.

Thanks, Shalini. We've just got a few questions on growth prospects here. So would you say the market cap of DXN is hindering your growth as your -- as DXN appears small compared to peers? Or what is DXN's particular strength in this space? Would it be better to be acquired by a larger player?

It's a bit of a loaded question, but yes, I think, look, I -- the simple answer is definitely, I think that market cap hinders opportunities. But we're not letting that stop us. We have opportunities to scale through joint venture partnerships and that's exactly what we're doing, and that's how we're going to be doing it initially. Whether or not we're better off listed or private, I think that's a very long conversation. There are various very successful companies who are with a market cap that I think we should be at, who've done it. So there's no reason why we can't. But at the same time, there are plenty of competition that we've got in the industry, not quite in our market segment yet, but more sort of on the other side of the geopolitical arena, like, for example, EPG, they announced raising $100 million yesterday. They deal with -- and we've known that they're going to do that for a while. They are actually a Chinese modular manufacturer. They have actually deployed to DayOne, which is a very large data center company, again, Chinese in Asia Pacific. They would be an example of where we should be being able to raise that level of infrastructure investment into that part of the world for our customers. And our customers are looking at -- desperately looking at solutions where that can be innovated because you can't sort of -- there's no way they can buy from the Chinese. We know that. This is the geopolitical storm that's happening in the world. And this is very well openly spoken about in every event that I've ever attended, in every forum I've ever attended. And so it is important as DXN in where we are and the opportunities we have to actually cater to that market and to focus and find a way to enter and find solutions for that market. So whether or not we're going to do this through the -- I mean, not at the moment with where we are with the market, definitely. That's not a capital raise is going to be highly dilutive. That's not an option. But what we have as an option is partnership, infrastructure partners who are interested in partnering us, providing a balance sheet that customers look at and go right, okay, that's how we're going to do the significant deals. That's the focus of me and my team.

Thanks, Shalini. We might leave it there. If anyone has any additional questions, my details are at the bottom of the announcement. Feel free to e-mail me, and I'll aim to get back to you as soon as possible. Shalini, I might pass to you for closing statements.

Thanks, Mel. Thank you, everybody, for listening in. Thank you for all the questions, and I appreciate the continued interest in the company. From my point of view, I was actually in PTC at an event last week, and I've actually never seen the industry where it is in terms of growth and in terms of excitement and bullishness. And it is ironic that we have been -- I have been personally in the Modular Data Centre industry, specifically when it was on the fringes of business, and it's on the fringes of deployments out there. But all of a sudden, we're the flavor in town, at least in the global markets we are. And it is interesting that the number of companies, the number of very large international operators that are looking to continue to invest in prefabricated Modular Data Centres. It just shows that what we believe is -- has always -- was always going to happen is happening. And all the demand that we know is coming is definitely there because you start seeing some of the very big names starting to invest in prefabrication and prefabricated Modular Data Centres. That's it. Mel, thank you.