Etherstack plc (ESK) Earnings Call Transcript & Summary

Good morning or good evening. This is Peter Stephens, Chairman of Etherstack. Welcome to the 2024 AGM. Today is the 18th of June 2025. We're going to initially look at the resolutions, which have been put to the meeting, and the position on them. Please, could you put out that slide? Right. As you can see here -- well, I hope you can see, there were 8 resolutions, all of which have been approved to receive and adopt the accounts of the company for the year ended 31st of December 2024. And this has been -- we've received sufficient votes to approve that. But equally, if any of the 4 attendees would like to say anything at the end of these resolutions, when I have listed, gone through them, please could you say so. Resolution 2, authority to appoint auditors and set remuneration, approved. Resolution 3, authority to allot shares, approved. Resolution 4, to reelect Paul Barnes as Director, approved. Resolution 5, to elect Dave Deacon as a Director, approved. Resolution 6, 2024 buyback authority, approved. Resolution 7, authority of 7.1A mandate. Resolution 8, statutory pre-emption rights. So all those have been approved. Could I just be putting a pitch of what of our 4 attendees, have they voted on those, please? No, no is their answer.

Peter, all of the resolutions are approved. At this point, there are no questions in the Q&A tool connected to any of the resolutions.

Yes. Well, in that case, after a very short amount of time, we've actually covered the formal elements of the meeting. And now may I now turn to our Chief Executive, David Deacon, Founder and Chief Executive, to take through the substance of the material we would like to put to shareholders now? Thank you, David Deacon.

Thank you very much, Peter. Welcome. I really appreciate your attending today. We're going to go through a fairly short presentation today for just covering off the historical 2024 highlights and business activities. We have recently made 2 trading updates to the market in regards to how 2024 -- 2025 is currently panning out in a very positive way at the moment. We're going to look particularly at the activities that cover 2024. And as we are only 2 weeks away from the end of the period, we'll refrain from making any further commentary on the first half until after the half closes on the 30th of June. Okay. For those shareholders or potential shareholders who are unfamiliar with the shape of our business, the business is really -- has 3 quite distinct businesses within it. One is our traditional digital and mobile radio business that provides very strong recurring revenues and high-margin equipment sales to mission-critical applications such as resources, electric utilities and public safeties, organizations, that are typically followed by a 10- to 15-year support tail. This can very much be considered infrastructure-related business, even though it's a technology infrastructure solution. Our defense waveforms and technology licensing business is an R&D-intensive business that involves cutting-edge research in wireless for products that may often not be fielded by any manufacturer in the world for another 5 or 10 years. And we generate licensing revenues from that and technology contracts from that business. The new emerging business and shining star within the company at the moment is certainly our mission -- cellular mission-critical push-to-talk business, where we've had some excellent wins to date with Samsung internationally, Nokia, AT&T and Telstra. And that business, we believe, is going to provide fairly significant growth to the business overall and also providing additional Communications as a Service revenues commencing this year as well as next year. Notwithstanding a fairly mediocre net profit after tax loss or net loss after tax last year, as we said in the accompanying material to the full year results when they were released earlier this year, we don't believe it really told the full story of 2024. And we encourage people to take a look at the cash receipts that we had received versus the revenue that was posted. We provided material at that point in time to explain to shareholders that cash and revenues can be sometimes disconnected from each other, in so much that separate to our recurring support revenues and smaller project revenues, our larger project revenues, if particular milestones fall on the particular wrong side of a boundary, you can quite -- have quite unexpected impacts positively or negatively within a particular period. Some of the key highlights I want to draw your attention to was that one of our KPIs is our recurring support and royalty revenue, which continued to grow healthily to USD 2.345 million. We've already provided a trading update this year indicating fairly substantial growth in that KPI, that management believes will occur in 2025 and 2026. We've continued to do strategic business internationally and domestically with very established global brands and Fortune 500 companies as well as key participants in the Australian and Japanese markets. We did not slow down our research and development spend during 2024, investing another further $2.6 million in R&D going forward. The company is expanding, not contracting, despite the anemic revenue number for 2024. And it was the seventh consecutive year of positive operating cash for the business. Looking forward -- okay, 1 second, so as mentioned, we'll be growing the recurring support and Communications as a Service revenue base. In 2025, we've already had 2 further mine site deployments of our communications equipment with Rio Tinto, Pilbara iron ore activities. And we note that the particular environment at the moment in terms of we're well exposed to infrastructure and government spending in the current period of time. AT&T, our major client, we delivered to our solution for the interworking function to AT&T FirstNet last year and established first live customers with their end customer base. And we have received further 7-figure orders from AT&T so far this year in 2025. Last year saw the establishment of our technology in the Southport Exchange in Queensland for Telstra's 5G Public Safety Experience Center. This public safety solution of our new technology has been showcased by Telstra to all the state and federal public safety agencies in Australia throughout last year, and it has been extended into this year as the interest is so high, certainly demonstrating to Australian public safety agencies the capabilities of these new technologies as they come through. We've also been developing new manufactured products for, in particular, the North American market. And we received our first FCC specifications for public safety repeaters that are manufactured in Australia and exported to the U.S. market. And we've posted to date in excess of USD 1 million of orders of that new product line in the last 12 months since that has been put out. I mentioned the continued recurring revenue growth and spending year-on-year -- R&D spending year-on-year. The realization of the Communications as a Service investment over the last several years. This involves building data centers in North America, building out systems operation and network operations teams. So capital investment that we have put into this new product line and services expansion, and we're excited to see that that's starting to provide receipts and cash into the business in the current 2025. This was the management expectations of our growth in recurring revenue support and Communications as a Services revenues for 2025 and 2026 that we have previously recently put out to the market. For historical purposes, we -- the results, which were already put out at the beginning of the year, I just listed here again, in terms of the income statement for 2024, where we obviously made our first loss in some years and also the implications of that on the balance sheet. You'll see that, certainly, from an income perspective and a balance sheet perspective that we are keeping the business running very tightly. But there's certainly no contraction in the business at the moment, only going forward with the growth as we continue to go. This is here for people who are not familiar with what we're doing inside the business, inside the different areas and just explaining what our key strategic initiatives are for the different parts of the businesses that we occupy. That brings my presentation to an end for the day. And as I said before, we are only a couple of weeks away from the end of the period, so we'll be making further commentary post the end of the period. Are there any other -- are there any questions?

David, at this point, there are no questions asked in the Q&A tool. We might just allow another minute or so for any of the attendees to jump into that tool and ask any questions. If there are none, then we can draw the meeting to a close.

Okay. And I certainly encourage any shareholder who wishes to reach out to the company to ask any question they do, please do not hesitate to e-mail us on our Investor Relations e-mail.

That e-mail address is on the -- all of the ASX announcements, including the one that was done this evening, which has these presentation slides as part of the announcement.

Okay. David, is -- are there any other questions? Otherwise...

David, there are no further questions in the Q&A tool. So I think we can draw the meeting to a close.

Okay. Thank you very much, everyone.

Thank you all.