Spacetalk Limited (SPA) Earnings Call Transcript & Summary

[Audio Gap] Virtually. All attendees can watch a live webcast of the meeting. And in addition, shareholders and proxies have the ability to ask questions and submit votes. Questions can be submitted at any time. [Operator Instructions]. Please note that while you can submit questions or comments, we will not address them until the relevant time of the meeting. Please also note that your questions may be moderated. If we receive multiple questions on the same topic, we will merge them together. Finally, due to time constraints, we may run out of time to answer all of your questions. If this happens, we will answer them in due course via e-mail or by posting responses on our website. We will certainly give our best efforts to answer everyone's questions. Voting today will be conducted by way of poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. For those attending this meeting and voting on the online meeting technology, if you are eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. I appoint Boardroom Limited, our share registry to be returning officers. Before we start the formal business of the meeting, I ask our CEO MD, Simon Crowther, to provide a brief business update. Over to you, Simon.

Thank you, Georg. Good afternoon, and thank you, everyone, for joining us today. I want to take a few minutes to update shareholders on where Spacetalk is today, what our priorities are for FY '27 and why we believe the business is entering a materially different and exciting phase. Over the last several years, we have been transforming Spacetalk from a business primarily dependent on children's wearable hardware into a software-led hardware-enabled family safety platform. FY '26 was the year in which much of the difficult work required to enable that transformation was completed. We rebuilt the core technology platform, strengthened our operating capability and created the architecture required to support new products, new revenue streams and significantly larger distribution opportunities. That investment was material and was clearly reflected in our FY '26 financial performance. If FY '26 built foundation, FY '27 is now about execution. The strategic objective has not changed. Our long-term vision remains family safety at every stage of life. And our commercial objective is equally clear to build a cash-generative and defensible position within the global family safety market. We're organizing the customer proposition around 3 simple needs: locate, connect and protect. And increasingly, those capabilities are delivered through one Spacetalk software platform, connecting devices, family members and services across different stages of life. The difference today is that we now have the technology architecture required to commercialize that vision at scale. There are already important indicators of what the transformed business can become. Recurring revenue increased to 66% of total revenue. Spacetalk Mobile subscribers grew 18% to approximately 60,600 and mobile revenue increased 16% to $8.1 million, representing approximately half of the company's revenue. Those metrics matter because they demonstrate the increasing importance of recurring connectivity revenue within the business. At the same time, our agreements with Vodafone Australia and TPG Telecom provide important external validation of the strategy. Vodafone provides the first major proof point for distributing Spacetalk software through a telco partner. TPG provides the opportunity to materially improve the economics, flexibility and customer proposition of our existing mobile business. The foundation is, therefore, substantially different from the one we had entering FY '26. The priority now is to convert it into commercial outcomes. Management is, therefore, concentrating FY '27 around 4 priorities. First, deliver Vodafone. We need to successfully launch the co-branded Vodafone Family Safety application and demonstrate that our software can be distributed through a major telco partner. That is important not only for the revenue from the Vodafone relationship itself, but because it establishes a repeatable B2B2C model that we can take to telco partners internationally. Second, strengthen Mobile. Spacetalk Mobile is our largest recurring revenue business. The TPG migration is designed to improve unit economics, provide greater commercial flexibility and allow us to develop more sophisticated offers across children, families and eventually seniors. Third, monetize the platform. Our product road map includes tiered pricing, online digital safety, Apple and Samsung watch apps, 24/7 monitoring, improvements to the app experience and ultimately, a broader range of premium software and services. Those capabilities allow us to increase engagement and revenue from customers already within the Spacetalk ecosystem on relying solely on acquiring another hardware customer. And fourth, control the cost base. We're focused on converting investment into growth and a sustainable business. FY '27 will demonstrate that the investments made in technology and product capability can translate into revenue growth, better unit economics and a clear path towards cash generation. Focus on household is perhaps the most important structural change in Spacetalk. Historically, much of the economics of the company began again every time we sold another watch. The new revenue architecture is very different. Hardware acquires a household, it remains an effective entry point and generates immediate revenue. Connectivity makes the relationship recurring. Watch connectivity and broader family mobile plans increase customer lifetime value. Software deepens the relationship. Subscriptions, online safety and future premium services allow us to generate additional digital revenue and increase engagement and partners scale distribution. Telco distribution is the opportunity to reach large installed customer bases without acquiring each customer individually. Over time, that also opens potential revenue from software licensing, monthly active users, premium features, data products and attributed commerce. One Spacetalk user is no longer a single revenue event. The opportunity is to build a recurring relationship with that household and progressively increase the value we create for that household and the revenue we generate from it. That brings me back to what FY '27 needs to represent. It's not another year in which we ask shareholders simply to believe in transformation. It is a year in which we need to demonstrate it. The measures of progress are increasingly tangible, deliver Vodafone, strengthen Mobile, monetize the platform and control the cost base. If we execute those priorities successfully, we should begin to demonstrate what the new Spacetalk business can become, a business with a larger addressable market, greater recurring revenue, better unit economics and substantially more scalable distribution. There is still significant work ahead of us, but we now have a technology architecture, recurring revenue foundation and major telco partners validating the model. Our focus is, therefore, firmly on disciplined delivery and accountability for results. If FY '26 built the foundation, FY '27 is the year we prove what the foundation can start to deliver for Spacetalk. Thank you very much.

Thank you, Simon. And now without further ado, let's go straight to the formal business of today's meeting. I now declare voting open and will provide ample notice to complete your voting prior to close of voting. In addition, to your directors attending from the Spacetalk executive team are Innocent Ndoda, the CFO; and Company Secretary, Hasaka Martin. No apologies have been received for today's meeting. The notice of meeting dated 14 August 2026, was made available to shareholders. And if there's no objection, I shall take the notice of meeting as read. Where a vote is required on a particular item, the valid proxies received in advance of the meeting for the proposed resolution will be shown on the screen to enable shareholders to view them as each item is considered. I will address the resolutions and any questions received in respect of the resolution during each item of business. I note that as Chair, I intend to vote undirected proxies held in favor of all resolutions. Your Board recommends that you vote in favor of all resolutions. Resolution 1, Ratification of Tranche 1 of the August placement. The first motion before the meeting proposes the ratification of the prior issue being Tranche 1 of the August placement. The motion is to consider and if thought fit, pass the resolution the following resolution is an ordinary resolution that for the purposes of Listing Rule 7.4 and for all other purposes, shareholders ratify the issue of 34,581,000 Tranche 1 August placement shares to the August placement participants on the terms and conditions set out in the explanatory statement. The proxy details are displayed. I note that undirected proxies directed to the Chair are intended to be cast in favor of the resolution. The directors unanimously recommend that shareholders vote in favor of the resolution. I will now pause for a moment to allow shareholders to lodge any written questions or comments on the online platform.

Georg, We have one question from Stephen Mayne.

Yes. Can you hear me?

Yes.

Just on Resolution 1, why wasn't there a share purchase planned on the same terms as the $10 million placement so that the 1,500 retail shareholders could participate on the same terms rather than being diluted?

We considered a share purchase plan to complement the placement, Stephen. And at this stage, a share purchase plan would very likely have depressed the share price as it often leads for shareholders to selling the shares they buy at a discount and not depressing the share price meant that we were able actually to increase our market cap for the company from $7 million to $24 million. Going forward, we will not rule out any of those participation ways for shareholders. Are there any other questions?

I don't have any written questions. Are there any other...

Verbal, we had. There being no further questions, I invite you to submit your vote. Resolution 2, approval to issue Tranche 2 August placement shares. The next motion before the meeting proposes to approve the issue Tranche 2 of the August placement shares. The motion is to consider and if thought fit, pass the following resolution as an ordinary resolution that for the purposes of Listing Rule 7.1 and for all other purposes, approval is given for the company to issue 97,419,000 Tranche 2 August placement shares to the August placement participants on the terms and conditions set out in the explanatory statement. The proxy details are displayed. I note that undirected proxies directed to the Chair are intended to be cast in favor of the resolutions. The directors unanimously recommend that shareholders vote in favor of the resolution. I will now pause for a moment to allow shareholders to lodge any written questions or comments on the online platform. Hasaka, do we have any written or verbal questions?

I don't have any verbal questions, and there are no written questions either at this stage.

There being no questions, I invite you to submit your vote. Resolution 3, approval to issue shares to a related party, Simon Crowther. The next motion before the meeting proposes to approve the issue of shares to a related party being Simon Crowther on the terms as the participants in Tranche 2 of the August placement. The motion is to consider and if thought fit, pass the following resolution as an ordinary resolution that for the purposes of Listing Rule 10.11 and for all other purposes, approval is given for the company to issue 1,333,333 shares to Simon Crowther or his nominee on the terms and conditions set out in the explanatory statement. The proxy details are displayed. I note that undirected proxies directed to the Chair are intended to be cast in favor of the resolution. The directors unanimously recommend that shareholders vote in favor of this resolution. I will now pause for a moment to allow shareholders to lodge any questions or comments on the online platform. I do believe we have a verbal question.

We do. Stephen Mayne has a verbal question.

Yes. Thanks, Chair. A couple of questions. First one is, why was Simon the only 1 of the 5 directors to participate in the placement?

I can't speak for everyone on -- of the participant. But I mean, we're obviously very happy that Simon participate at such an amount. We have as directors and also the executives participated in previous raises, but we didn't have the means to participate in this raise.