Mobilicom Limited (MOB) Earnings Call Transcript & Summary

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Summer Investment Conference 2025. The next presenting company is Mobilicom Ltd. [Operator Instructions] I'd now like to turn the conference over to today's host, Oren Elkayam, Chief Executive Officer of Mobilicom Ltd. Sir, the floor is yours.

Hello, and thank you very much for all the audience and for the opportunity to present Mobilicom. Mobilicom is a company that is traded on the NASDAQ. Our ticker is MOB, and we have another ticker MOBBW for traded warrants. And I would like to start with a short introduction of the company. So in Mobilicom, we are designing, developing and selling cybersecurity and end-to-end solution from drones and robotics. What that means that we are providing the critical systems and solutions for drones or robotics manufacturers. We are not doing our own drone. We are doing the elements that are going inside those drones or robots that you see. So, we are providing the cybersecurity, the software and the hardware elements that are the heart and soul of those drones. Those are the elements that enable them to operate, enable them to safeguard themselves, enable them to communicate and so forth. And we are unique in the market by the fact that we are providing the cybersecurity and have a comprehensive cybersecurity approach to this market that is only an initial stage and that we are providing a one-stop shop of critical systems and solutions, both hardware and software and cyber to the drone providers. It's a multinational company with operation in the United States, in Israel and in Australia. We have numerous customers that are already working with us in 18 countries and patents that are already claimed and granted and additional technology that is created on constantly. We are looking on the market of drones and robots. This is -- and we are focusing mainly on the small size angle of this market, which are elements under 250 pounds, still big, anything between the mini, the small, and medium size of those drones. The interesting portion of this market that is that we are targeting both the Defense and Commercial market segment, the Professional market. We don't do consumer, we don't do recreation. Only those that need our unique IP and know-how within our products that will create differentiation, and therefore, we can claim high gross margin for our solutions. The important part of this market that is scaling, and we are just now in the beginning of this market evolution is the fact that small-sized drones robots are tend to be replaced very fast, because they are damaged very fast. And therefore, every 3, 4 years, you have to replace your entire fleet, which makes it a very lucrative market that the space of replacement is very high. And therefore, there is recurring business even in the hardware business in addition to the software and cyber, which is completely software SaaS approach. And therefore, it's a very interesting market to be at. The market is ramping up significantly, and we are already covering the important segments of this market. As the market will grow and the OEMs, manufacturers that we are working with will sell more, we will grow with them and increase our market share as well as the volume of our sales. One of the important factors about Mobilicom is the fact that we are an end-to-end provider. If you are looking on any drone in the market or robot, you will see that there is many hundreds of pieces inside, but only 9 or 8 of those systems are the important elements that cater for 80% of the drone or robot value, and we focus on those. So, you can see in the diagram in front of you, the critical systems that any drones or robot must have in order to serve and perform the mission. The red sections are already elements that Mobilicom provides. So, what is clear from that is Mobilicom as an end-to-end provider of critical -- several critical software, cyber and hardware pieces is already able to support multiple elements to the manufacturer and by that, have significant value of the entire system. So, we are not in the business of selling additional drone to additional -- to some market application. We are in the business of selling the critical systems to all drones robotic manufacturers. And by that, we are unique. And that set us apart, because we don't care about the logo on the drone as long as they are using 1, 2, 3, 4 of our systems inside, and we are getting the majority of the revenue from their sales. If you would like to compare it, we are very similar to the car industry when as the market became more and more mature, the car manufacturers are producing the brand and solution, but they are all buying from the large providers like Continental or Bosch that are selling to all car manufacturers. So in some sense, Mobilicom is the Bosch or Continental for the small drones robot manufacturers. The advantages of working with an end-to-end provider like ours versus others is the fact that we can enhance performance as our systems were designed to work perfectly with each other. So the performance of the system is much better. We can bundle the solutions together. It's cheaper for us to bundle, it's cheaper for the end customers to use our solution, and that's an advantage as the market is scaling. We can enhance the security and cyber of the solutions, which are becoming critical factors going forward, because we cover all the aspects and provide the entire solution. And therefore, working with an end-to-end provider has really great advantages on the market. If we are looking on the next slide, we can see how the elements of Mobilicom is providing are actually working together in a typical deployment of drones or robots. We can see in the center a diagram that shows multiple drones in the sky on the right and left side being piloted by teams on the ground, sharing information with mobile teams on the scene, and they are being monitored and supervised by headquarter in the region, which is a typical operational scenario. It doesn't matter if it's an energy company, utility company or surveillance or defense operation. Let's see where Mobilicom solutions are actually playing. So we have the SkyHopper Datalink family of products. Those are the elements incorporated on the drones and robots that are sharing the video and data to the controls of the operator on the ground and to the users that would like to get live feed of the information. We have MESH Networking solutions. Those elements enable to interconnect multiple drones and robots to a fleet or swarm operation, because as the market will become more mature, operation will not be one-to-one, but many of those elements communicating between them and perform the mission together. And that's the solution that will enable that. We have the ground control stations. Those are consoles, okay? Those consoles are providing the software and hardware and joysticks and others to receive the information, but also control the information in live. And we have a set of multiple products in this field. And now we are coming to our software and cyber solutions. So we have the ICE which stands for Immunity Cybersecurity Encryption Software, which is a software that's enhancing the radio to overcome the challenges that we see today in the field and definitely in the battlefield of operation under jamming, interception and electronic warfare, and we are unique in that. And last but not least, our great capability in the platform security, where we are the first in the world to provide cybersecurity for safety, security of the entire platforms, and we'll discuss that later on, much like the cyber revolution happened in other fields, banking or areas of healthcare or Industry 4.0, robotics, drones and autonomous platform will have the same thing. And we are unique in that because we are first to implement that. So we can see that Mobilicom's solutions and platforms are currently covering the different operational scenario and players in such deployment. The company is designed to concentrate on and focus on the critical challenges that the industry is solving and by that enable the growth of the industry and then the growth and footprint of Mobilicom. First and foremost is the cybersecurity threat that we see that is evolving and growing. It's not -- it's an obvious thing as deployments are starting, cybersecurity is ramping up and there are more and more solutions are needed. We are unique with a comprehensive suite of solution based on the U.S. standardization activity that we have been part of, that is the first solution in the market that provides active and continuous cyber detection, monitoring and prevention of incidents and vulnerabilities. And as those platforms become more and more autonomous and operating by themselves, the fact that they are now not secured at all is critical. And as the problems are starting to occur, standardizations and requirements will enforce that as well as we anticipate that also the elements of insurance companies for coverage. And therefore, everybody will be mandatory to use those, and we are first with solution in the market, and that's clear a challenge that we are solving. The business and the entire market is showing scalability. Everybody is learning from the Israeli operation and the Ukrainian operation that are scaling the numbers of usage of drones dramatically. Ukrainians is already using 2.4 million drones a year. And that means that the scalability requires change in the pricing, and we are enabling such solution, but also maintaining high gross margin. There is other standardization and complex thing that we have achieved with our BLUE UAS unique certification for the U.S. DoD, one of few players that have that worldwide; the NDAA, which is according to the government in the United States, the trusted cyber and so forth. Thanks to the fact that we are now part of a very close number of providers that is certified for U.S. and for NATO. And we are being used by a great number of companies. You can see on the right side, some of Mobilicom customers today. We can see large companies like Airbus, the biggest aviation company in the world that chose Mobilicom and integrated for one of their platforms, which is important. We see Teledyne FLIR, one of the huge conglomerates in the United States and one of the biggest players worldwide also in this field and providers to the DoD, and they are a New York Stock Exchange company, of course. ST Engineering, one of the biggest conglomerates in Asia Pacific, all the three biggest players in Israel, the U.S. DoD and the Ministry of Defense of Israel are some of our partners and customers. With the next slide, we can understand the market -- the go-to-market strategy of Mobilicom. It's built on the idea of design win, which means that in the first phases, we are working with partners that would like to use Mobilicom as their solution of choice for the next robot or drone. And then there is the commercialization phase done by the partners and customers themselves without Mobilicom involvement. And as they are growing, we are growing with them automatically. So in Phase 1, we are being introduced to these customers and working with them and convince them to choose us as a partner. Phase 2 is the engineering work with them, supplying the software, the cyber, the hardware pieces that are the heart and soul of their solution. And then this is the work that has to be done that takes many months, sometimes 6 months, sometimes 9 months, sometimes 12 months depends on the solution. And then in Phase 3 is when they are doing the certification in the market, either by FAA for commercial application or by the DoD for government applications. Only after they are certified, they can go forward to commercialization. But once they are certified, changing one of the building blocks that Mobilicom is providing will require them to go back to Stage 2 and do the integration all over again and do the certification all over again, which is seldom something that they choose to do. Therefore, it's a sticky business model that guarantee in the commercialization phase, a long period of revenue for many years, because it's actually solutions that are certified. In Phase 4, the customers are feeding the market and going to different programs and units and deploying in order to educate the market and build their audience and customers. Phase 5 is when they are experiencing high growth and mass production. And as they are producing in volume, we are producing in volume with them in order to fulfill their needs. And this is the revenue ramp-up, significant stage. And Phase 6 is unique to Mobilicom alone, because we are able to cross-sell the cyber and software on top of the hardware elements we sold earlier and by that double or triple the revenue from each customer per year or to cross to another platform by the same manufacturer. Those are the advantages that only end-to-end provider that have array of solutions that can come one on top of the other can do and others that bring one piece of the game unable to do. I would like to spend the next few minutes on some of the examples of Tier 1 real case studies that are right now growing with us. And I would like to use this customers. The first one is an American large corporate. We mentioned their name. They are one of the top 3 players in the United States selling to government as well as to commercial. I think that they are #1 in numbers, but it doesn't matter. They are huge. They chose Mobilicom after they carefully tested a few other solutions, and we won based on performance in the field, size and price. Then we've done engineering process for the new innovation that took them almost 2 years because it was the first thing, and we expect that others will go faster and they will do faster. Here, we got several purchase order, each month, small size, just showing engineering continuity. Then we move to the next phase when they certify it with the U.S. DoD, and then they were able to see the market in Phase 4. And in Phase 4, we will see the sequence of purchase orders starting from late 2023. Each one of them enabled them to deploy additional units and additional units and additional units in the United States. And by that, we show a scale of dramatic pipeline of programs that they have chased. And every quarter, we are getting a purchase order, which is for a few hundreds of thousands of dollars that shows continuity and work. The important part is that now they're entering 5th Phase, which remember, this is the scalability, their scalability with our scalability. And why we believe that that's the case is, this is because they are running after six programs of record. Program of record is a term under the U.S. government of a long-term dedicated budget under the Pentagon or the DoD for many years, usually 5 or 10 years that can be extended again and again that cannot be changed and dedicated for a program in large-scale manufacturing deployment, support, maintenance and so forth. So that's why it's a holy grail that everybody is looking for. They are already chasing six of those. Two of them are coming right now to the final decisions. They've been in the short list, and they have high likelihood of winning those. They will make announcement based on DoD decision in the coming months. And therefore, as they are shifting to that, that will guarantee many years of production and deployment. And remember, those drones are onetime used drones or short-term used drones. So you have to replace them again and again and again. This is important as well because they have already established and built a production site in Tennessee to fulfill their deployment and mass production, which means that they mean and believe that they can win volume and they are scaling in their activity. I would like to mention that if, let's take some numbers and small numbers, let's assume that they are doing only 5,000 units a year of this thing, which is very small. It is translated for Mobilicom to $15 million to $20 million in revenue. And it's based on one product into one platform. If we have more platforms and more products, that will double or triple. And we intend to expand with them on those additional capabilities. And that shows that just one program with one of those customers can scale us dramatically in revenue and ramp up from there, and this is in Phase 5. And we have good reasons to believe that they have high likelihood that in the coming months, they will be announced as winners to one of those programs and maybe a few, and that will completely change the game. And that's one of the growth that we anticipate. We have another case study with an Israeli Tier 1 player that is providing much like the American one, is a great provider selling worldwide. This is a giant company in Loitering kamikaze drones that are exploding in the end, replaceable immediately, onetime use. They are one of the biggest vendors in the world U.nder their family of spike solutions, they already sold $10 billion of solutions in different large midsize. We are incorporated into their new mini solution, and then we pass all the process with them. We've done here two subsystems of Mobilicom, the communication elements to a system and the controller. So we have higher value within the subsystem. They've done initial penetration into European market, which is one of their biggest market. They are selling to 30 -- I think, 30 or 32 of the NATO countries, which is a lot, and 40 states around the world. We have sequence of purchase orders for initial production to seed the market, and there is an expectation that they will scale again with the win and the investment in Europe to high number of installations. And like they succeeded in the additional product in this family, we expect them to scale with this product. And as they are winning, we will scale with them in the coming months. Let's move to the next. So we understand how some case studies of existing customers already moving to scalability, which any one of those wins in one of the programs can dramatically change Mobilicom, and we anticipate some of those things could happen in the coming months. Let's understand about another milestone that Mobilicom has achieved, which is called BLUE UAS. BLUE UAS is the certification done by the U.S. DoD in order to enable safe drones and robots to be used under the government for federal use cases, for defense use cases, and so forth. It's expected to increase into commercial applications as well because they don't want solutions coming from China or using subcomponents from China to be used in the United States because of the security issues that it's related to. To be a BLUE UAS certification and platform, you have to use subsystems by U.S., that are BLUE UAS framework, and that's the idea. And what happened is that Mobilicom, after a thorough work over the last 2 years, have filed and multiple products of Mobilicom were accepted just recently to the BLUE UAS framework, which means that we are part of a small amount of vendors that are able to produce elements that are going to the U.S. government and are on the trusted recommended list of the U.S. DoD. It can be seen, the list is public, just put BLUE UAS framework and in the subsegment of networking, communication sort, you will see multiple products by Mobilicom. There is only five vendors worldwide that are selling into that. So the market will be divided in one way or another between those five vendors, which means that we can expect scalability and new business. Why it will change the Mobilicom map and growth is because this recent win will allow us to access multiple programs and be recommended and used by Tier 1 players in the United States that want to be BLUE or required and mandated to be BLUE. And then it will open the door for large-scale activity with additional vendors. And the fact that we are providing combat-proven use solution with great advantages and affordable pricing and very small size put us as a very unique candidate, especially with our cybersecurity features. So, that's a big milestone that is going to increase the usage of Mobilicom and accelerate growth. A few figures about the market itself, which is expanding. We see that the market is expanding rapidly. And we see the requirements are building up. Any of the recent events, if it's from the Ukrainian use cases that are huge numbers of exceeding 2 million drones a year. So you understand that the 5,000 a year that I mentioned earlier is a very small number. You can see use cases, obviously, with the events of the Israeli deployment and Middle East conflict, large usage of drones and autonomous platform, U.S. preparing for sanctions and supporting Taiwan with special budgets or closing the gap with China with massive budgets being allocated and programs. All of that is pushing forward this market in Europe, the United States and elsewhere. And the cybersecurity effects and the issues are all showing that Mobilicom solutions are right in the middle for that. If we are looking on the next evolution of the company and why Mobilicom will scale and how they will scale, it will be built on three tiers of growth, three pillars of growth. First is existing customers that we are working with on the last few years, okay, that are going to scale dramatically because they are getting to the programs of record win. As they are going to mass production, we will win with them. And we anticipate that some of them will happen in the near future. That's the first growth that can bring the company to cash flow positive and very successful growth. The next thing is based on the recent win of becoming a BLUE UAS approved shortlisted companies that are on the recommended list of the DoD, and that will open the door for additional fast-track sales and partnership with Tier 1 players. And the next one is our innovation, mainly on the cybersecurity and autonomous platforms based on NVIDIA AI and Qualcomm AI machines, which we are unique at. We are the first to market with solution, and that will bring by itself additional growth to the company. So we have three engines of vectors of growth. Each one of them separately is transforming the company. All of them together in a sequence will accelerate the company to new heights. We are building this position by a sequence of releases that was published. But if you connect the dots, you understand all the achievements that we've done. We can see some of those members that are experienced members in our team that are working on that. Financially, the company has 7.5 ADR shares traded on the NASDAQ, very limited amount. We have warrants that are in the money and additional warrants list traded. Altogether, they can represent $16 million. We have, according to the recent report that we issued $8 million for the end of last quarter. So we are very -- have strong cash position. We are consuming around $300,000 a month, which is very little. So the company is already on the verge of cash flow positive and any new programs will completely transfer the company. We have no bank loans, no loan -- no debt, no convertibles, no credit lines. So we understand, the situation as a clean company. I would like to skip to some comparables, and this is a few companies that we -- that are pure play, either hardware or software that exists on the NASDAQ. Most of the companies out there are doing drones, which is not Mobilicom case. We are much like two of the others like UMAC, Unusual Machine and Palladyne. One is doing just hardware, small, simple hardware, really around $50, $60 per piece. We are doing elements that are highly IP oriented with thousands of dollars per piece. And Palladyne, which is doing an amazing AI autonomy capability software, and we are doing equivalent cybersecurity software for the same AI machines. And you can say that Mobilicom has assets that UMAC, Usual Machine, and Palladyne, similar assets that both of them has. And therefore, that's where pure-play list of companies that we can compare ourselves with. If you are looking on their parameters, which are from the end of May, obviously, now it's much higher for all of us, but the metrics is the same. But any parameter, we have a very good position because our multipliers of EV to revenue is an amazing situation. They are above 30. We are around 1.5. We have the certification. We have low burn rate. We have cash to EV, which is a significant position, no debt and so forth. And so if you compare, you can say that our assets is very similar to the assets of the combined two businesses. It's only market recognition that should translate to that. And with additional few wins that are going to happen as we believe, soon we will get there significantly. We have limited time for Q&A. So I'll try to answer some of your questions.

So, one of the question is how we differentiate Mobilicom's cybersecurity communication system from other small drones communication players? So there are a few communication players in the market that are providing -- I mean, one of the systems that we are providing is communication. We have other elements. Cyber wise, we are uniquely a company that only us provide cybersecurity for those markets. Yes, they are having some communication great companies that are doing nice. We are the last one that joined of the five, in the United States that joined the BLUE UAS. And we all believe that it will open the door for scalability, because of our cybersecurity advantages on top of the communication. Timeline for revenue. So timeline for revenue, as I mentioned, we anticipate that with the win of some of our Tier 1 players, and I've shown some case studies of specific companies that's supposed to get their wins in the coming months. And as they will transform to mass production, we will transform to mass production and scale with them. So, we believe it's a short-term thing in addition to additional revenue that will come from the cybersecurity and additional revenue that will come from -- and growth in market share because of the BLUE UAS certification that we just recently won. But just the existing customers we have will scale in the short term. One of the questions is the, most of the purchase orders that we received are for pilot and testing and not for production. So, as I explained in the go-to-market, in the first Phases 1 to 3, the purchase orders are small because they are building the engineering, much like if you are chosen as a provider for Ford new car and you're providing the engine for the car. In the initial stages of engineering and testing and validation, they are not buying volume. But if they are starting to produce first production batches and then ramp up to mass production, the volume is created. So you know that we are the vendors of choice for those players. You know that they are most likely to win the programs of record, because they are one of the biggest players worldwide and in the United States. So we believe that with that statistics and the fact that they are winning on other fronts, they have good position to win, if not all the programs, some of the programs. And we just need one of the program to happen. And we believe -- it should be happening in the coming months, the first ones in 2025 and scale in 2026, but the first signs are there. For the moment, you will see that the first POs that we will get on a quarterly basis is not hundreds of thousands. It's 1 million, 1.5 million, 2 million. That means it's already happened. This is the sign. You've seen that. That means that it's already happened. And on top of that, we will have acceleration with the BLUE UAS and the fact that we have succeeded with the cybersecurity being first in the world. So, someone asked about Palladyne software and UMAC. Can we interoperate with them? Yes, definitely, we can interoperate with them, and we can work with them. We are not competing. We've been -- we are able to cooperate and that will scale the Mobilicom share, market share and growth. I think that the time is running up, and I think that we have to conclude. But thank you very much for being there and listening to our lecture. And if you would like to have more questions, my information is available, and we'll be happy to provide more info.

Thank you. That concludes Mobilicom Ltd.'s presentation. You may now disconnect.