Spacetalk Limited (SPA) Earnings Call Transcript & Summary

All right. Let's kick it off. Good morning, and welcome, everyone, to the Space Talk Fourth Quarter 2022 Financial and Business Update Briefing. For your information, please note that as soon as I actually hit the button, this meeting will be recorded. It will be posted on -- excuse me, my apologies, just trying to work out how to record. It will be posted on our YouTube video channel in due course. Please allow me to find the record button. Okay, so you'll have just received the notice about the recording. Present today from Space Talk are CEO, Mark Fortunatow; and CFO, Jerry Puro. I'm also here, this Dimitri from Investor Relations. The format for today will be Mark presenting the results and associated information, and then we'll open up for Q&A. The presentation deck is the one that was released to the market on Monday. Many of you will be aware that the company will be holding an extraordinary general meeting on Thursday, the 1st of September. This meeting has been called by a group of shareholders to consider 2 resolutions put forward by them. Please note, that today's briefing is to do with the fourth quarter results only, and we won't be responding questions relating to the AGM on this call. We would refer you to the notice of meeting that was issued last week. For transparency, I will, however advise, that some of the shareholders who called for this meeting are on this call today. We need to have a hard close of this meeting at 5:10 Adelaide time or 10:25 Eastern Time. So if we do not get to your question or if you'd like to ask something offline, please reach out to me. We are also happy to take questions on those. If you would like to ask a question, can you please indicate via the chat system. You can either flag that you would like to ask a question, or you can take your question in, and I will read it out on your behalf. Questions will be taken in the order they arrive. We have a large number in attendance on this call, so we need to limit the number of questions to 2 per person. But if time permits, you can have a second bite. If we don't make it to your question, can you please contact me, and I will endeavor to get you a reply. Just allowing one more person to join the meeting, and then we will kick it off. So thank you all for your patience. Mark, over to you.

Good morning all. Thank you very much for joining us to review our Q4 and full year results. The results are very strong. We're very pleased to report good progress with the company. And off we go. So next slide, please, Dimitri. So the quarter was a very good month for the company. We grew revenues on a period-on-period basis by over 40%, 40.9% to be exact. We hit an overall group revenue record of just over $20 million for the year. Everything is going in the right direction, and very pleasingly, we saw tremendous growth in our wearables business on a PCP basis, 52%. The ongoing app revenue also grew considerably throughout the year, and we're very, very pleased with that progress as well. This will be an important metric for the company moving forward, as we slightly change our business model, revenue model, which I'll be talking about a bit later. Next slide, please, Dimitri. Right, and for the year, we've hit a record of $20.7 million. We're very pleased to cross that $20 million threshold, which represents a 37.1% period-on-period growth for the year. On the left side, we've been growing our -- on the left panel, we've been growing now on a compounding rate of 31%, which is a very pleasing result. We shouldn't forget that it was only 5 years ago or thereabouts, that the company's revenues were just over $2 million. So we've seen tremendous growth. There's tremendous progress in the company over the last 4 or 5 years. However, this category, this very exciting category that's growing very quickly, and we're leading as a company, is still very much in its infancy and it's a great deal of opportunity and growth remaining for the company. On a rolling basis, things are going fine. You can see some seasonal fluctuations there in the various quarters. The company has one major sales period in terms of a sell-out basis, which is the period between Black Friday and the Boxing Day. We see a significant increase in sellout on that during that period, and we see a corresponding improvement in selling slightly before that period and moving into midway through Q2, which is the December quarter. As I mentioned before, the wearables business is going very strongly at 52%. These are fantastic numbers, and I think you should be all very proud of the company, because it's just going so well, and we are the market leaders in the world. Next slide, please, Dimitri. Now, our Wearables revenue for the quarter, eventually grew by 52%. You can see the various metrics there, I won't step you through all of them individually. But I'd just like to bring your attention to the app revenue, and this is a very important metric for the company as we move forward, because we'll be -- as we indicated in our commentary on Monday with the results, that we're focusing the business model around yield and ongoing revenues and recurring revenues moving forward, rather than viewing the opportunity as a land grab, to engage with as many distribution partners as possible. So the company is very focused on moving forward on gross profit margins, on growing our recurring revenue, and that will be supplemented as well with the release of JumpySIM, not just in the U.S., but in Australia as well. This is a very exciting development for the company and will significantly strengthen the company's overall business performance and profitability. And the marketing expenditures grew quite a bit throughout the quarter, coming in at $0.5 million for the quarter. Next slide please Dimitri. So our wearables revenue grew for the year by 44%, an outstanding result for the company. The device revenue was $14.9 million and the remaining being the app revenue, recurring revenues and an absolute term that was $3.4 million, or on a recurring basis, $3.8 million. Again, very, very good growth metrics, 41% the device sales, the app revenue is 55%, on a recurring basis, 41%. And our marketing expenses, we maintained under that, about 40%, and that's really because we -- as we're learning the business and we're understanding deeply -- more deeper, I should say, what works, what doesn't, we're able to use our marketing expenditure in a more effective way, which delivers better returns for the company. We're also being able to engage our distribution partners more effectively, to contribute to the marketing expenditure. It's very easy to waste a lot of money in marketing. In other words, to spend money that doesn't necessarily deliver returns. So we're being very vigilant in that regard. I'm very pleased to inform you all, that we have a new sales and marketing manager, Mark Moloney, who's one of the veterans of this wearables business. Just by way of -- quickly his background, so Mark Moloney founded the -- and ran the JB Hi-Fi wearables category amongst some other categories that he ran, he was General Manager. So he is a pioneer of the industry way back when, and we're absolutely delighted to have Mark join the company and to speed out our sales and marketing efforts, not just in Australia and New Zealand, but globally. Next slide, please, Dimitri. So if I'd just like to bring your attention to a few things. So in the past, we've been very focused on positioning the brand as an aspirational brand, centered around children's and family safety, communication and quality. Nothing has changed in that regard, but we're adding 2 new components to our brand values, which is development, children's development and wellness. And why I'm bringing this up, because later this quarter, and in time for the Black Friday, Christmas selling -- seasonal selling period, we'll be releasing a very, very exciting software upgrade that supports this direction of children's development or learning opportunities and wellness. I can't say too much more about that, other than to tell you that the distribution partners that we've shared this with are overwhelmingly excited. It's a brand-new unique direction for the brand and to support our families and the existing customers. It will be available on all existing adventure watches as well. It won't be available on the original Kids smart watch as an upgrade. It's a super exciting development, and I'm so proud of the company for building this. We've got teams working on this around the clock almost, finishing yourself, and it's a very, very exciting, new direction and a unique differentiator for the company and the brand. Next slide, please, Dimitri. So moving forward, what is the company focused on? So clearly, we're working in a different environment now, where capital markets have changed, and the cost of capital is significantly higher than what it has been. So what the company has done, is that we've reviewed all of our operating expenses and regrettably, and unfortunately, we have reduced our headcount by about 15%, and we've rejigged a number of things in our business plan, which were actually always in the business plan anyway, but we've moved them forward, to really optimize the business model and to generate a greater level of gross profit, using less working capital. However, we still will be continuing introducing new hardware devices and software. So for next year, we have a new device program. I can't tell you too much more than that, but it is on its way. It's relatively well developed. There's still quite a bit to go, and we're just working at the optimal times to release those new devices, and we have a very exciting software upgrade coming out very soon, which I've mentioned before, but there'll be ongoing enhancements and developments in this very exciting new direction that we're working on. In terms of distribution, we will not be opening new distribution just for the sake of a land grab anymore. We're working very closely now with new distribution partners. We announced 2 this week, Verkkokauppa in the Nordics and Best Buy, mentioned previously. We're working very closely with these accounts and other accounts that are banked up before that -- that, we can disclose at this stage. To really make sure that we get there, not just a total commitment in buying, but also real skin in the game, to make sure that the launches succeed, right from day 1 and also generate good margin for the company on an ongoing basis. So these distribution partners are in existing territories that we operate in, of course, the U.S. We've got more coming on there, and we have a lot happening in Europe. We've actually signed with a new distributor there that's very, very large, one of the largest distributors in the world. And there's a lot of things happening there, that we'll be able to announce in due course with new accounts, new territories, new countries. I'm not sure if you're all aware, but we've already translated -- have our product available in about 8 different countries, predominantly the European countries. So we're very well set there to a position, to really a tech advantage of these new relationships and to grow the business, not just faster, but also to -- looking at these margins and make sure that the yield of return investment improves. Also a very exciting development during the quarter was the -- is JumpySIM. Now we've got that up and running now in the U.S., and it will be launched later this year, in time for Black Friday in Australia. This is a very, very important development for the company. Currently, we don't capture the value as a company from net mobile network services that need to be provided with every device sale, that is Spacetalk Watch. But now with JumpySIM we do. So Jumpy becomes bundled in the box, so that the customer when they buy a watch, they can pull out the JumpySIM activated. So we pick up that revenue, we pick up additional margin, and in Australia, the JumpySIM will come bundled with the app. So we'll be moving -- well, obviously, we will be no longer -- in no circumstances, having to pay the Apple or Google 30% tax or margin, I should say, for managing the payments. We'll be collecting 100% of the revenue and booking that as gross profit. And also, currently we have one app that will support more than one device. So the thresholds are 2 devices, then 5 devices. So we'll be actually picking an app fee for every device that's connected to the network, mobile network, and of course, the ongoing SIM and mobile network services as well. So this is a very significant development for the company. We've just started in the U.S. We've indicated that we've got about 50, or approaching 50 customers connected already in the first few weeks of operation, which is a good result. And -- but we're just working out our attachment rates and how that pans out. It's a little bit early to really extrapolate out how that business will grow, but the early signs are certainly very encouraging. And that's really -- so we can pick up this additional ongoing revenue, which will then enable us to be more creative in reducing the initial upfront costs for families to buy devices to their kids. Our typical customer is not a wealthy or affluent family. It's actually -- it's a family that typically lives in the outer suburbs, and as we're finding this around the world. In the outer suburbs typically in the new subdivision, in the new home. So these are the battles out there and especially with a potential recession coming up and other macroeconomic factors, we understand that price and affordability will become more of a concern for our customers. So we're actively working on that to be -- to help our customers and to continue growing our business into next year, and in this new macroeconomic climate. Next slide, please, Dimitri. So our distribution is really impressive. It has grown considerably over the last year. You can see some very big names there. They're all up and running to various degrees of success. And by that, I mean, we have a number of distribution partners that are really doing well. And others are still learning, and getting their heads around how to sell effectively Spacetalk, and to get to the same sellout rates, either by community or by number of stores as their peers are. So we're doing things like -- we're benchmarking and sharing on a confidential basis -- without naming names. The sellout rates on a per store basis and other key metrics with distribution partners so they can benchmark themselves and see how they're traveling in relation to their competitors and peers. And this is working very well, and it's something that we've been working on for all of this calendar year, in fact. Next slide, please, Dimitri. So this is the branding for Jumpy. This is a very valuable and excellent extension to the business. We've deliberately given it its own brand, and that's because with Jumpy, we're actually building a database and a customer base of families and kids, so that when they actually grow out of their Spacetalk watch, which is typically when a child that enters secondary school, we're there to sell them a SIM service, and you never know potentially, down to track a mobile phone, because we have it as a customer. And we can actually -- we have enough data on the customer that we were able to track their age. So as they approach the age of where they'd be transitioning from a Spacetalk watch to a smartphone, we will be there to track, to actually potentially sell them up to a smartphone on other network services. So this is a terrific development for the company. I just want to congratulate the team who rolled this out so quickly. In the U.S., we're working with AT&T through an intermediatory. And in Australia, it's through Telstra -- directly with Telstra. Next slide, please, Dimitri. So just to give you an update on the key deliverables that we've been working on as a company, enhanced corporate governance. I'm very pleased, thrilled, in fact, to have 2 world-class new directors onto the company. Georg Chmiel, as our Non-Executive Chairman. Georg has a stellar career and skills in technology companies, with a bias towards real estate niche. Georg is very skilled in technology companies, in the capital markets. His background is financials -- as the CFO. He's run -- he's been Managing Director of LJ Hooker. So we're absolutely thrilled to have a world-class Chairman join the company. And also Mike Rann. Mike Rann has a very high profile in Australia, as a community leader. Mark joined the company to lead way to the company, and give it more gravitas and awareness, primarily in Australia and the New Zealand markets, but he is based in London and Europe. So he'll be assisting us with all the various complex negotiations and other things that we're involved with there, to grow our business. Growing our business in Europe is complex. It takes longer. Many different languages and cultures and the processes that we need to be aware of, and the work -- to navigate through, which are very different to Australia and the U.S. So we're thrilled to have both Georg or Georg, I should say, and Mike Rann join the company. So we expanded our distribution. There's a lot of -- our company is very transparent in the type of distribution we -- the nature of the agreements that we put in place with distribution partners, unlike other companies. So we are very clear that when we -- if we launch online, whether it's a marketplace or it's a branded store. Now marketplaces means that the supplier, for example, Spacetalk just list their product on the marketplace, and it's fulfilled by us, as compared to a branded store, which we have in place with Best Buy and others and Amazon, in fact, as well, where those retailers are actually buying inventory from us and resell it, and they're responsible for sales. So they invested in it, they've got skin in the game, and they are a lot more focused in achieving the sellout targets, than what a marketplace agreement would be. Verkkokauppa is an interesting account. They don't have a lot of stores. I think it's about 8, but they are megastores. They are enormous stores, and they are the leading consumer electronics retail in that part of the world. As I mentioned before, JumpySIM, very important development for the company. It is going to have a great deal of shareholder value and stickiness and to the customers and a whole range of other benefits. We've been working improving our operating costs and efficiencies. I mentioned before that regrettably, we've had to reduce our headcount by about 15%, which translates to about 11 to 12 people. But we don't plan on doing any more reductions in headcount moving forward. And in terms of how we manage the company's capital requirements moving forward. We're actually holding a great deal of inventory at the moment, and we're building up to support the companies through the Christmas this coming season. For example, we reported that our cash balance, we used about $4.9 million of cash in the 6 months from December 31. Half of those funds went into additional inventory. Another component of about $700,000 went into supporting our U.S. operations, which, quite frankly, are a bit of a burden on the company at the moment, but that's the territory that helps the greatest promise and opportunity for the company. So we're committed to it, and we're showing -- certainly delivering a good progress there and the rest was the cash burn of about $1.5 million. So what we're doing is that, moving forward is that we'll be converting the inventory into working capital, which there's quite a bit to come in there, in terms of capital and cash and we're reducing our -- we've reduced our operating expenses, primarily through way of reduced headcount, but at the same time, continuing to develop new devices and software. So we believe that's the right setting, how this all plays out. I'm sorry, I should add also that, we also have the effect of JumpySIM revenue and main profits coming into the equation as well. How that all will play out, we still need a bit more time to pass by, because when you have a look at take-up rates and conversion rates and so forth with Jumpy, and the effect of some of these new initiatives we're doing with our software upgrades. But they're all very positive things that will support the company's capital requirements, and if it all works out, it will be a wonderful outcome. As I mentioned before, just finally wrapping things up, the product development is continuing. That has not been slowed down, as is our software development. We have an excellent team of software engineers now and I think we've got the best team we ever had. And so it's a very exciting time. The company, I think as shareholders and investors should be very proud of the company's progress. We are definitely the #1 aspirational brand in the world, that is clear. Everybody is telling us. In terms of sales, we're right up there, but we are the brand that everybody wants to buy and own. We've improved our distribution considerably, and the future is really fantastic. Our estimates are that globally, outside of China, global sales in terms of units are probably around 600,000 or 700,000 units, and is spread amongst a number of suppliers. So we're right up there, in terms of having that share. Our -- to the best of our intelligence and depending on who you speak to, we're being told that we have between 60% and 80% market share in Australia and New Zealand, and that is growing in Europe and the U.S. as we speak. However, this market really is very much in its infancy. When you look at it in a market of opportunity of 70 million of kids between the ages 5 and 10, and sales are only at $600,000 or $700,000. You can see the opportunity is absolutely fantastic for the company, and to be in the #1 spot is a real credit to the team and with the support of our shareholders. I think that's it for me. Thank you very much. I look forward to taking questions from you.

Thanks, Mark. Thank you all for your patience. If you have any questions, can you please signal by the chat system. I don't know if you have to put your hand up on Zoom, but if there are any questions, please put your hand up, and we'll attempt to answer. Okay. We have Stephen Deeley. So Stephen, just bear with me, I have to find you on the list. Here we go, Stephen. Please, if you can keep your question to 1 or 2.

Yes. Can you guys hear me all right?

Yes, we can Steve. Go ahead.

Yes. Thanks. Really interesting update, Mark. Just wanted to touch base on the JumpySIM, given that's a new piece for all of us as investors, and particularly the working capital. So I presume if a subscriber comes on board, like looking at the website they can pay upfront for, say, 12 months. So would we then get access to that cash to reinvest it, or is that going to the AT&T, or who actually gets to hold that cash and use that?

Okay. Great question, Stephen. Thank you. And it's different situations in different countries at the moment. Dimitri, can I ask you to answer that question, because you're right on the top of all the detailing?

Hi Stephen, basically, if you take a multi-period plan, for example, 12 months, we get -- in the U.S., we get the net proceeds upfront. So it will be the $180 less the costs, that will come in straight away. For accounting purposes, obviously, they will have to be bled in month by month, but the cash comes in straight away. In Australia, economically, it will be the same, except there won't be a net inflow. It will be -- we'll get the gross revenue in, but we'll then have to pay our supplier, whereas in the U.S., we just get the net inflow. But in all cases, anybody -- the cash flow benefit of multiperiod plans, we get straight away. Back on you Stephen, just one moment, please. While I am doing that, there's another question that's come in from Chris Cameron. If I can just draw this out to you, Mark, when does the company expect to be cash flow positive?

Okay. Thanks Chris, for your questions. So look, we're working towards that direction. We're accelerating our progress to doing that. And as I mentioned, we're doing that by, unfortunately -- by way of some headcount reductions, by improving our business model in terms of having a lot more attention on return investment with retailers and distribution, partners and introducing new revenue streams and profit streams by way of Jumpy and new app developments. So Chris, we don't have -- we need more time for these initiatives to play out to see the level of contribution that these new initiatives are making to our working capital requirements. And just to give by way of example, at the moment, we're seeing very high attachment rates in the U.S. with Jumpy. We're not sure if this high attachment rate is sustainable. They're not. But if they do continue at this level, the point to cash flow neutrality or positiveness will move forward. But look, we see it happening. There's a number of things that are playing out to get to that point. But if all goes well, and we're quietly confident it will, it will be some point in next calendar year.

Stephen is dealing with his follow-up question, I'm just unmuting him.

I think perhaps if I can just say that the important thing is, Chris, is that we actually have a very large holdings of inventory that's pretty much all paid for. So as we'll be converting that inventory into cash and working capital, so we're hoping all of these factors will converge, to the point where we get to cash flow neutral as quickly as we possibly can.

Stephen, you are back.

Yes. Yes. Cool. I was just going to also ask in terms of the margins on JumpySIM. I think the U.S. pricing is about $18 a month and you're saying $6 gross profit. So looks like the gross margin might drag down a little bit -- the group. In terms of overheads, does it take anything in terms of overheads for an incremental customer, or does that $6 of gross profit kind of drop to the bottom line.

Dimitri, would you mind answering that question?

Sure. Stephen, there was some very modest establishment costs in the U.S., but the marginal costs going forward is essentially the cost of the SIM card, and the packaging that it will go in. There is an exercise going on at the moment to rework our inventory, to put the cards in the existing inventory stock. But that will wash out very soon. It's a very modest price, very modest cost on that. And then it will -- for future U.S. non-telco channel inventory will come with the card included. Amazon inventory is currently being reworked. It hasn't shown up on the Amazon listing, because it hasn't fully bled through. But once all the non-JumpySIM inventory on Amazon is washed through, the Amazon listing will be updated. And in due course, once all the inventories are reworked, all our U.S. product will include the JumpySIM. So the -- you estimated, I think it was about $6. I think we reported a figure of $3 to $5, I can't remember the specific one. You have to -- the average -- you have to bury that amount across the duration of the plans, because the...

History...

We are charging a little bit less for longer duration, because we're trying to incentivize longer-term commitments.

Yes, and you get the working capital benefit as well. Okay, that's perfect. Very exciting development with JumpySIM.

Stephen, there's actually more that investors need to be aware of. So we're seeing very, very strong and enthusiastic support from telcos, because unlike all of their existing MVNO partners, they're all fighting amongst themselves for the same customer. Whereas Spacetalk is bringing a whole new customer demographic and set into the pie. So we're growing their addressable market considerably because currently nobody is selling SIM cards or central mobile network services to 5 to 10-year-old kids. So we're actually growing the opportunity, and we're getting very, very strong support from the operators and -- so it's a very exciting development, very positive development for the company. We've deliberately set it up as a brand that's unique and different to Spacetalk, to give us a whole range of other opportunities down the track, as I mentioned before, potentially, selling phones to kids and a whole range of other network devices and services that require mobile network services.

Yes. Got it. You're at the top of the funnel, which...

Top of the funnel and hopefully, we'll keep these customers as they transition a 10-year old to a 12-year-old smartphone and beyond that...

Mark, just a quick follow-up from Chris Cameron also, will the venture O2 will be launched without a capital raising?

Look, I mean, it's a difficult question to answer, Chris. But look, all I can say is, what I mentioned before that we've done a lot of things to improve the business model and the capital requirements of the business, you never know what happens. I mean those are -- the initial feedback that we're getting from operators about venture O2, if we call that, we even may end up calling it that, is very, very positive, very enthusiastic. There are lots of ways that we're considering of launching that product. So for example, we -- our devices with the venture -- both devices currently are operated grade devices. So what that means is that, when they're actually -- they're designed to pass all of the operator certifications around the world to be sold by operators, and that comes with considerable engineering and cost overhead, but also just the time it takes to pass all those certifications, which I think is about 15 months. So we are just going through the process of what the feature -- final feature set with, let's call it, venture O2, will be. If we -- and whether we actually end up triggering the need to go through a whole recertification process, or we can introduce the new functionality that we're seeking to introduce without triggering all the new certification, in a very expensive lengthy process. So look, we are very conscious of our working capital requirements. The Board is very focused on this and let's just see how it plays now.

Mark, a question from Lachlan Wood. Of the 11 to 12 staff let go, can you break down how many was from sales staff versus G&A? I'm assuming G&A is general and administration. Can you provide some more detail on letting go, the Head of Sales in America?

Okay. Well, first of all, the areas where we reduced staff were in areas of sales and marketing. And yes, they were the main areas. Unfortunately, the person that we let -- the executive that we had to let go in the U.S., he was not involved with sales at all. He was really involved with a lot of element of operations. And those operations are largely established now. We have quite a good distribution and logistics network established in the U.S. now, a very effective response time to customer service and repairs, and we have -- enjoy actually a very high level of customer satisfaction and reviews with our U.S. -- actually everywhere, but in the U.S. So we don't -- the sales and marketing initiatives have always been managed from Australia into the U.S., and it will continue to be the case. So we actually haven't changed any of the personnel in that regard to the U.S. market. Exactly what they were prior to the restructure to the reduction in headcount to where we are now.

Mark, we have a question from Adrian Bunter, please forgive me if I mispronounced your surname. Mark, are you able to indicate what kind of revenue and therefore, margin uplift the company will get from the removal of the 30% Apple store -- Apple App store cut. I believe this relates to the Australian...

Okay. Thanks, Adrian, for your question there. So actually, I might just ask Jarred Puro, our CFO, to respond to that. Jarred, are you okay with this?

Yes, I am trying to reach Jarred.

Yes, we don't want to obviously give guidance around what our future financial forecast will be. So I can't really answer that one at this stage.

But what we can say, Adrian, is that for those -- in Australia, for those customers that purchase the bundle or activate the bundled JumpySIM, we will not be incurring the 30% fee to Apple or Google. And we'll be selling 2 lots of app fees rather than the one, if that makes sense. So let me just take you through that again. So let's say we have a family that buys 2 watches. In the past, let's say, they get there -- they buy those 2 watches from JB HiFi, they would go out and buy 2 SIM cards, and they would enter 1 subscription, at $5.99 per month, which will then support the 2 devices. But with Jumpy, they would be getting 2 SIM cards -- and with each SIM card, there's the app fee of $5.99, without the 30% tax or a fee for Apple and Google.

Okay. A follow-up question from Lachlan Wood. And again, I'm just reading. Also for sales, can you go into more detail on the Australian operations, given it's the mature market and whether consumer confidence is causing sales to slow?

Sorry, I just missed that last bit?

I'll read it again. For sales, can you go into more detail on the Australian operations, given it's the mature market and where the consumer confidence is causing sales to slow?

Yes, thank you. It's a good question. So depending on who -- on where the information comes from, but we've been told by many people that are not connected to each other, and these are incredible mobile operators and large retailers that in Australia, we have between 60% and 80% market share. Now -- we have seen some softness in sales at different times of the year. We saw some softness early this calendar year, when the various COVID outbreaks were happening and some of the lockdowns were coming back. However, the business is more -- is affected to a greater extent by the level of skill and promotional activity that the retailers are able to execute. Now I'll give you an example of what I mean by that. We launched with Big W initially, and sales were relatively modest, but by improving the operations there and working with their staff and managers, we saw a tremendous uplift in sales. In fact, record-breaking results. So -- and that has -- that initiative had a much greater effect on the overall sales and sell out all of our devices, then the seasonal high level factors, macroeconomic factors on the business. Now whether that will remain or not moving forward, we don't know. Nobody knows if there's -- the recession will actually eventuate or not. But we do know that our customers, they consider purchasing a Spacetalk watch for about 3 weeks before they buy. They investigate either online or do their research. They typically access our website about 30 times for the buyer, over a 3-week period. And then they actually end up buying either online or they go into a store, as their final proof or given their final level of comfort, that -- what they're considering buying is real, maybe they like to speak to a shop assistant before they actually buy. So it's a considered purchase, it's -- relatively speaking, it's still quite an expensive purchase. To what extent the consumer sentiment will translate into software sales for Spacetalk we don't know yet. But as a company, we are doing a number of things to actually reduce that upfront hurdle of $349 or whatever the case may be, to make it more affordable for the mainstream market. So look, as a company, we are very, very focused and working as fast as we possibly can to capture the mainstream mass market for the device -- for the category. We have a much better understanding of the various different price points, and the various different features and benefits at different price points. And you'll see the outcomes of those learnings filter into the market later this year, and certainly over the course of next calendar year. It's a very exciting time for the company.

Mark, we have a question from Michael Yang. So he is putting up his hand, so I have to mute, permit me. Michael? Sorry, Michael, your microphone doesn't appear to be on. Can you contact me by some other means? Can you put the question in chat? Okay. A question -- while we get Michael Yang's question, a question for Peter Corso. I'll read this out. Hi Mark, congrats on the recent operating progress. On the issues of cost and capital, you have spoken about the considerable focus that you and the Board has on the management of working capital, to get to a cash neutral or positive position as soon as possible. Doesn't this start with a review of the level and mix of your remuneration? What has the board done or what is the Board intending to do a review of the competitiveness of your cash remuneration? Peter, if I may permit or interject at this point, the company undertook a benchmarking of Mark's remuneration last year, and the external independent review found that Mark's remuneration was well within parameters of companies of equivalent size. Notwithstanding the newly commissioned Nomination and Remuneration Committee, will no doubt have a look at remuneration of the executive team. Again, this is -- Peter has asked a third question, please advise that the company intends to nominate any other senior executives, as key management personnel for the purposes of the company's nominations -- excuse me, 2022 remuneration report. This is a matter for the Board to consider as part of its consideration in developing the remuneration report and information will be provided in due course by the board, and will no doubt be considered by the newly commissioned Nomination and Remuneration Committee chaired by an independent director. Michael Yang is back, so I'll ask him to unmute, and he will ask his questions shortly. Here we go.

Mark, a question from me, when would Spacetalk have a eSIM ready watch, and what's your plan for the senior watch?

Okay. Great question. So I'm not sure if...

Paul is on the line.

I'm over to -- I'll ask that question to be answered by Paul Cooper, who heads up our operations. Great question, Michael.

I'll just ask Paul to unmute. So I believe he is on the telephone, so allow a moment.

Okay. Can you hear me?

Yes, we can Paul.

Yes. Okay. So the nature of eSIM is quite complicated, and it has only been adopted by the core network operators, okay? It's not mass market ready. So for example, Telstra, Vodafone and Optus here in Australia have eSIM capabilities, but they don't have their MVNO enabled for eSIM capabilities. So it's a timing issue. eSIM offers some great benefits in terms of better waterproofing, slightly reduced -- reduction in form factor. So we can see advantages with eSIM. The problem is, is the adoption of eSIM and the broad sort of nature. So in some markets, it's quite advanced in other markets, it's not -- nowhere near as advanced as well. So it's a timing issue. We are looking at bringing a device out with eSIM and physical SIM capabilities as the next one, and then after that, we hope that, we'll be in a position to adopt eSIM fully. So I'd say it's a timing issue. I hope that answers the question?

Michael, if I can just -- thank you, Paul. Michael, if I can just add to that. Look, we're constantly evaluating and looking at different strategies, in terms of which features and functions we put into our devices. And that's governed by a whole range of things, including what -- of course, what Paul just mentioned, but also as we work with retailers and mobile operators around the world. Each mobile operator has his own requirements and own strategy moving forward. That may be eSIM, it may be a combination of Nano and eSIM or just staying with nano-SIM for the time being. So there are lots of factors that go into this decision making. And unlike software, where you can build it and distribute it and get out there very quickly, the turnaround is very quick. With hardware, it's long, from the time we lock in a feature set for a device to the time that it's ready to be sold in volume, is really about 18 months to 2 years. So these are very careful decisions -- decisions that we make very, very carefully, and they can change even at the last minute, depending on what happens from a distribution point of view.

Mark Sorry -- Michael also asked about the Life product and there have been -- and we did receive an e-mail about the Life product last night, if you can talk to that a bit, please?

Yes. So the Life product is being received by users exceptionally well, and by reviewers and by the aged care and medical industry exceptionally well. The problem with that market, and it's not just to do with our watch, but it's almost every supply into that category, is that the distribution systems, in other words, the path to getting the product to the customer, is very complex and very convoluted. There are all sorts of issues in the aged care service industry, staff shortages, one thing in the other, and there is no easy path to the customer. I never ever thought it would be so hard to sell or give away our product that effectively the government pays 100% to a customer. It's proving to be incredibly difficult. Now we are doing a lot of work with various service providers behind the scenes, that are not ready to be announced or disclosed yet, and we're working on these strategies. There is a very large opportunity there, not just for Spacetalk but for any provider of services to the aged care sector that reduces cost, it improves operating efficiencies. But there's very little traction anywhere, around the world at the moment.

Last call for questions. Last question, we've got a couple of minutes left. If anyone has a further question?

Well, look, if there are no other questions -- no questions Dimitri?

No, that's it.

All right. Well, I think we might have something from Michael Yang, was that...

Yes, Michael has put up your hand again, please permit me to unmute Michael again.

Mark, the other one just on the product side, I think you mentioned, I think, last year about you are ready for the next-generation products on our new platform. Is that still on track? Have you made a decision yet?

Sorry, whether we will have any product in the market next year or the future...

Yes, the platform -- the hardware platform you mentioned last year. So have you made a decision on that platform yet?

Yes. Well, yes, that there will be new devices coming out next year. The exact feature set on the devices we're just refining -- we're still refining.

Okay. Thank you all for your time. We appreciate you making the effort to join this morning. If you have any further questions, please feel free to contact me. I have just put in the chat system, the e-mail address, you can reach me at, or otherwise, my direct e-mail is on the bottom of most of our market announcements, so you can find my details there. Thank you all for your time, and hope you have a great day.

Thank you very much, all. Thank you for attending.