Vection Technologies Limited (VR1) Earnings Call Transcript & Summary

So thank you all for joining us today. So my name is Gianmarco Orgnoni, and I'm a Director of Vection Technologies, so ticker code, VR1. Today with me, we've got our Chairman, Umberto Mondello, who is also joining us on the call. So thank you for being here today. I'll just give a little bit of overview on the format of the investor call for those of you who are not used to it. So I'm just going to touch on the key points of the investor presentation, just give you an overview on what has happened and what's to come. And then following this, I'll answer your questions through the Q&A section of Zoom. Already have received some questions yesterday. So I'll answer all those questions at the end of the call. So let's start from here. So what is Vection? So what do we do? So we seek to impact business innovation. So what does this mean is that we endeavor to drive digital transformation within companies. So create new and exciting ways of doing business through technology. And as you can see from this slide, our focus is XR. So XR technology, so extended reality, so 3D, virtual reality and augmented reality. We've developed in the last 3 years, a number of platforms, a number of frameworks in XR that we continue to develop and grow. And we endeavor to integrate, so combine these XR technologies with traditional emerging technologies. So you can see in the slide, IoT, so internet of things, computer design, hardware, ICT, artificial intelligence and cloud computing. So by doing this, we essentially are embedding our technologies in the companies and the clients' processes. And by doing this, we verticalize. So we are essentially focusing our solutions, our platforms by industry. So creating exciting new features for clients in specific industries, verticals that's going to drive significant more adoption in those specific verticals. Here, we try to give an example of what these technologies do based on vertical. So here, you can see medical applications. So during the year, and we're going to touch on it later on in the presentation, we established our Healthcare & Pharma division to really drive innovation in the health care and pharmaceuticals industry. We've performed a number of trials really in the hospital system. We've been working with leading medical doctors in really bringing augmented and virtual reality in surgery, essentially, so in the theater. And you can see in the image on the bottom right, there was a real trial with a real patient. Obviously, he is sleeping there. And you can see how these technologies can really impact how doctors outperform surgery. So visualizing diagnostic images, surgery checklist and also endoscopic video feeds. So we're really endeavoring to grow this division entering FY '22 and bringing more and more, and further innovation in this particular sector, which is a very significant sector for the company. It's an exciting, let's say, industry where these kind of technologies can bring significant innovation and adoption from a client standpoint. Another sector where we've been focusing, so another vertical, is the AEC and real estate industry. So architecture, engineering and construction and real estate. So here, you can see how our Mindesk software can really bring innovation and create some significant benefits for clients operating in this industry. So we can, essentially, in real time, so live at the same time, create real or say, [ live ] renderings of the design of the particular building. So you can see how a design from the top right can become a design in the bottom right in real time. And we do this by linking existing computer design software with, essentially, visualization software, such as the Unreal Engine. So this is an exciting new way of visualizing and working and iterating on designs. And we're also now working on the official launch, expect the fullest month, of Mindesk for ready. So the prelaunch happened a couple of months ago. We're now launching the official version in the coming -- in this month, in September. Another example, so machinery maintenance and training. So another exciting solution that we've been developing is called Trainer Creator. This enables the client to visualize in 3D, augmented reality and virtual reality a specific machinery and create animation. So step-by-step guide on how to maintain a specific machine. On the other hand, it also works as a training software. So clients can or operators can really visualize how they can operate a machine. And they can do this in 3D. So through, let's say, a normal tablet, for instance, obviously. Through augmented reality, so by phone, tablet or wearables, such as the [indiscernible] tool. So the product for Microsoft for those of you who don't know this. And also in virtual reality. So this is really becoming one of our flagship products, a lot of interest in the market, a lot of new clients coming along joining us for this exciting riding for this particular product. So very excited about this. We'll be giving more and more information about this product as we go along. It was a product developed with the industry. So we've developed it with our clients. Obviously, we'll retain the whole IP on the product and we're now developing more and more features to really bring this to market in a more significant way. Another example is product visualization. So through our FrameS software, we enable clients to visualize products, customize products. You can see here an application for the automotive industry. You can pick your [ capping game ]. You can choose your materials, you can really customize your vehicle without the requirement of being in the showroom. So it can work by cloud, so from home or also in the showroom. So we've been working with the automotive sector for quite some time now. We've appointed Dr. Siegmar Haasis to our Advisory Board. He was [ our first ] appointment when we established Advisory Board just last month. Dr. Siegmar Haasis is the former CIO for Daimler. So Mercedes-Benz, he was there 27 years as CIO of the company. So we're expecting some very exciting to come from the automotive sector in the coming months and in FY '22 in general. So where do we come from and what have we done since the commencement of the -- of our strategy? So we started in the, let's say, in 2018, essentially, where we focused on developing a strategy for the introduction of emerging technologies in our product portfolio and really pushing on XR technology. So that was our core focus. So since then, we've been able to build a global technology company. So we're in a lot of countries today with a lot of people. So there's a lot of work that have been going -- that has been occurring to really make this happen. So we had, in FY 2018, circa $0.5 million in revenue. We're now -- we're today a group of $10 million plus in revenue. So I'm going to touch on that after. Where -- we started with 20 people circa, we're now over 100 people. We're only focused on more traditional ICT technologies, but we really want to focus on XR and building XR capability. So we've been able to do that. We've also now combining the second level of value creation, so IP, CAD, AI and ICT. We've got 9 global offices globally, Asia Pacific, EMEA, so Europe, Middle East and Africa and Americas. We've got 10 verticals. Again, I'm going to touch on it later on in the presentation. We've grew our net assets from negative net assets to positive net assets of $12 million. We started with $0.5 million cash at bank. We're now over $7 million cash at banks. So we're really fully funded to pursue our growth strategy. And for those of you who -- obviously, investors are interested in this, we started with $0.016 as share price, and we're now over $0.09 in share price as of today. I think we're $0.098, circa. Okay. So how we've grown our revenues? So we went from $0.5 million in FY '18. We grew up to $1 million circa in FY '19, $3 million in FY '20. And today, we are a company with $10 million in revenue. So if you want to look at it from a purely audit accounting standpoint, we've done $3.5 million in the FY '21 financial year. But the reality is that today, Vection is a company that does over $10 million in revenue because during the year, true to our strategy, we've acquired a number of companies, specifically 2 companies, plus the establishment of Vection Healthcare & Pharma. So we're going to touch on the acquisitions later. But this makes us a company with over $10 million revenue, which is the growth platform to really consider our growth in FY '22. So for us, it was really important, and it was one of the questions from some of you. It was really important to showcase what Vection is because, in our view, the financial numbers provided to you in the 4 years, so in the preliminary final report, really don't give us justice in what we've been able to build during FY '21. And this is also underpinned by a strong momentum in FY '22. So we've got over $4 million and growing in total contract value just in the first 2 months of FY '22. So this gives us a very strong path and outlook for the rest of FY '22 as we pursue -- as we continue to pursue our strategy, and we continue to grow from an industry standpoint, from a technology standpoint and also from a geographical standpoint. So we're going to see what are those in a second. And with this, obviously, we've been able to diversify and expand our verticals, so our industry focus. So the $4 million in TCV really gives us also an overview on a lot of the industry that are going very well and industries such as the automotive sector, for instance, in health care and pharma sectors. So if you look at this graph, health care and pharma is only 5% of the TCV. So we're expecting this to grow significantly during this FY '22, and moving forward. So our goals and outlook. So one of our goals is revenue acceleration. So as I stated, we're starting with a growth platform of $10 million. Our goal is to double the yearly revenue from an FY perspective. And we're already supported by $4 million TCV just in the first 2 months of FY '22. Secondly, there's a very strong international expansion opportunity. So in FY '22, we really are focusing on growing our international expansion from a revenue standpoint, from a people standpoint, and a partnership standpoint. So we're really seeking to grow this. Thirdly is the further strategic acquisitions. So true to our strategy, so the verticalization strategy, the leading strategy, we're now looking at further acquisitions to rebolster our market presence, bolster our recognition in the market and really creating that upselling in terms of XR technology. So the combination and upselling of XR technologies. That brings us to the fourth point, so scalable XR technologies. So our XR technologies are easily replicated across diverse industries and geographies. So what does this mean? That for [ 2022 ], new verticals are to grow into new verticals or industries. We really just need to develop some new features. And once this is done, we can then scale across geographies with the same XR technology. So this will also grow our ACV metrics in the coming months and years. And obviously, we're going to update the market on this as well. And all of this is supported by some very strong market trends. So I think all of you have obviously researched the XR market. So this is some very big trends happening in the market. So it's a fast-growing industry that is projected to reach $463 billion by 2026. So it's a very big industry. Let's look at FY '21 a bit more in depth. So what has happened? So true to our strategy, so we've been delivering on our vision. So this is -- from a graphical standpoint, the slide has been redone a little bit. This was a new slide we put out to market probably over a year ago, showcasing what our plan were, what our objectives were and what has been done to date. So we started in the 2017, 2018 period with a rebuilding phase. From there, obviously, we're focused on the XR strategy, let's call it, so the transforming part of the strategy. We've acquired Vection and that has happened with the change of name. We're focused on 3D, VR and AR enterprise software. We changed our name and ASX code to really bring that vision to fruition. We transformed our strategy towards our recurring revenue business model, which is happening as we speak. We have acquired Mindesk to bring XR in the CAD industry, so computer design and now BIM as well. And we received some strong client industry and revenue growth. So we went to $3 million in that period in revenue, a very strong share price appreciation and very strong market capitalization appreciation as well. And this brings us to the leading strategy commenced in January 2021, where we seek to really bring to fruition internal and external value-building initiatives that are going to link to long-term recurring revenue growth across key industries, obviously supported by strong market trends. And we're working from a base of $10 million of revenue. So during FY '21, there was a lot of work happening in the background. So a strong progression across all objectives, as you can see from our ASX announcements. And everything else that hasn't been announced that is happening right now, so it's going to come to fruition and it's going to be announced as soon as [indiscernible]. So during FY '21, as I was mentioning earlier, we restrengthened and diversified our industry focus. So in the AEC and real estate, we focused on the acquisition of Blank Canvas, really bringing to market a stronger market presence for our XR technologies in this particular sector. We established Vection Healthcare & Pharma with -- which is a separate division within Vection, obviously, leveraging off the core XR technologies. And we brought on board some very, very senior in -- professionals that come from the health care and pharma industry led by Dr. Carlo Centemeri, who is the CEO of our Healthcare & Pharma division. In addition to this, we acquired GMC that enabled us to accelerate on our European expansion, but also brought us a wealth of knowledge and clients in the defense and military, media and communications, sports and betting, public sector and education, and so on and so forth, industries. And by doing this, so by not only focusing on the development of existing core technologies, but also bringing on board these new companies, these new individuals, these new people, we were able to really bring to market a more comprehensive technological disruption. This means that we're now combining our XR technologies with the existing technologies and emerging technologies, to bring to market a 360 degrees value proposition for our customers across verticals and across geographies. And as you can see here, global expansion is happening. We've been growing in Australia. We've been growing in the European, Middle East and Africa part of the world, and we're now focusing on the global expansion on the left, so in the Americas, specifically in North America. And we expect this to happen in the coming months. We've got a very strong portfolio of partnerships that enable us to really grow our market presence, grow from a technological perspective, and we're working on some very exciting new partnerships that are expected to drive more significant growth in FY '22 and onwards. Corporate overview. So from a corporate overview, you can see our leadership team. Obviously, that has been bolstered compared to the past. We've got the appointment of Dr. Siegmar Haasis, so the former CEO of Daimler and Advisory Board. Management has been bolstered. We got Paul Clayton, who has joined us to drive the AEC and real estate division. Dr. Carlo Centemeri, who's driving our Healthcare & Pharma division. Jacopo Merli, who's been -- who joined us through JMC acquisition to drive growth across Europe, Middle East and Africa. And Kavit Goswam, who is our CEO of our Indian division, which is one of our, let's say, core development arms within Vection Technologies. From a corporate snapshot, today, I think we're roughly $100 million market cap. Cash at bank is $7.1 million. Board and management owns 44% of the company. Institutional shareholders such as Italian government, HTC and some other European funds, such as Primomiglio and A-11 owns circa 13% of the company. The other top 20 own circa 11% and that leaves other shareholders with circa 32% of the company. So I'll open up the Q&A section.

Before reading your questions on Zoom, I'm just going to go through the questions that I've already received prior to today's call. And then from there, I'll start answering your live questions. So the first question was regarding the discrepancy between cash and accounts receivable. So that discrepancy is mainly due to acquisitions. So as we were in the acquisition during the financial year period, that obviously created a discrepancy in terms of cash in, in the accounts receivables. So there's no problems with the accounts receivable. They're obviously in the process of being audited as we speak. And yes, so that money is expected to come in the coming months. The second question was regarding one -- I think it was from a [ LinkedIn ] post from one of our partners called [ Alma Virtual Labs ]. I can confirm that [ Alma Virtual Labs ] is one of our partners. They've engaged us to deploy our core XR technologies, of which we retain the IP. And they essentially are just our commercial partner to bring this technology to the market. The third question was the expected growth for virtual, augmented reality for XR compared to the acquisitions. The reality is the acquisitions are strategic acquisitions that are expected to drive growth for XR technology. So our whole point of performing this strategic acquisition was -- acquisitions was to really drive the upselling, the cross selling and also, and more specifically, the combination of our XR technologies with emerging technologies and existing technologies. So we expect the majority of growth to really come from XR technologies, which is the focus of the company. The fourth question was regarding the marketing strategy. So as part of the acquisitions we performed during FY '21, the restructuring of the company from a sales perspective and marketing perspective, we're now in the process of creating an internal division for marketing. And this marketing division is going to drive then the, let's say, verticalization of our social media presence, of our websites and so on and so forth. So expecting to really drive -- to really focus more on our marketing endeavors, which is then, in turn, going to drive more interest from clients and also more interest from investors as they see what Vection is deploying and developing from day to day. The fifth question was if the XR products are ready for market. The answer is yes. Obviously, what we're doing today is we are verticalizing our XR technology for specific verticals. So as that is happening, we expect to drive more and more interest from specific industries, let's say, AEC and real estate, health care and pharma and so on and so forth. And this is, in turn, going to drive more growth for Vection Technologies as a whole in all the different global jurisdictions where the company is operating. There was a question regarding profit. If we expect to become profitable in the next 12 months. The answer is we expect to increase our underlying performance significantly. Obviously, as we integrate, we identify more synergies across the acquisitions as we drive the upselling, the cross selling and also the ACV and TCV metrics of the company, we expect to really improve on the line metrics. So you can make your own assumptions based on the $10 million in revenue and growing on what that could be. The last question was, why the $10 million -- why did we explain the $10 million in the presentation, so the one we just saw, compared to the $3.5 million for the FY '20 (sic) [FY '21] financial year? I think I already answered that, but I'm going to try and give a bit more color in this particular aspect. So the point of showcasing the $10 million was to really show to our investors in the market, but also to our clients that Vection today is not a $3.5 million in revenue company. It's a $10 million plus company. And yet that's really important because as we grow and as we perform these acquisitions, and as we're growing geographically, as we're growing from a technology standpoint, Vection is really becoming a company with a more comprehensive and more strong market presence, stronger revenue, stronger metrics and stronger technology capabilities. And this is very important for us from a commercial standpoint but also from an investor to make his own assumptions on it. Okay. So let's see the Q&A section, and let me see what are the questions. Okay. So [ Tony ], so when you say that you aim to double revenue this year, is that from a $10 million base versus $3.5 million base? So the answer is we're starting from a $10 million platform. So the objective is to double revenue from there, obviously. Let me just see the questions. So just give me 1 second. I'll stop sharing for a second, so I can look at the Q&A section. Okay. Can you discuss the $5 million receivable at the end of June? Are they in addition to the $4 million secured in the first 2 months of FY '22? The answer is yes. The $4 million in TCV is specifically revenue that is to come in the current, so FY '22 financial year. So the answer is yes. Another question. Can you please expand on a significant international opportunity underpins Vection's strategy in FY '22 supported by strong direct market presence? There's a few answers on that, really. So answer number one is, as we have a stronger sales presence in each specific jurisdiction, so Asia Pacific, let's say, Europe and the Americas, or North America, particularly, we are driving more and more interest from a client perspective. So that is item number one. Item number two is from a partnership standpoint. So we've been working on some very strong partnerships to really bring to market a more comprehensive commercial proposition. These activities have been going on for the last, I will say, at least 6 months, and we expect this to drop very shortly. So we're very excited about that. And then thirdly, that flows on into the next point of the goals and objectives, which is the potential for further strategic acquisitions. Are there any developments with Olivetti? The answer is yes. We've been working with them for more than 6 months now, obviously, probably 9 months. Some very interesting opportunities with Olivetti. So as soon as they come to fruition, we'll update the market, but we're very excited about that. So when we say Olivetti, we're obviously saying Olivetti in Telecom Italia, which is one of the biggest telecom operators in Europe, and obviously the biggest in Italy. So we have to think about them as a group, but the answer is yes. Okay. There's another question here. Okay. Did you hit your aim for 50% recurring revenue in FY '21? The aim was FY '22. So we're still on track to reach that metric. Let's see how the next months go, but we're very confident on delivering a number that could be very close to the 50% recurring revenue, yes. And that's by FY '22, by the way. Hospital trials. Hospital trials actually flows on to the Olivetti question. So just -- let's just deliver on that, but we're going to update the market on that very shortly, we expect. Some very good progression there. What are you doing to get in front of new investors and institutional shareholders? Thank you, [ Keiru ]. So obviously, investor presentation such as this one, always available to answer any question for an investor, any new investor that wants to join the register of the company. So we are an open book and always got an open door for that. Secondly, we are undergoing some investor presentations to institutional shareholders, which are going to start -- which have already started in the last couple of weeks, but we aim to -- we'll intensify those activities from next week onwards. Can you elaborate on what opportunities are coming in from the sports and betting opportunity? We're in talks with a number of clients right now. So those were existing clients for JMC. We've been now working on a number of technological initiatives within the sports and betting industry, and we're now working on deploying that combination integration and upselling for XR that I was mentioning earlier in the presentation. So again, as soon as these come to fruition, we'll update the market. Would you tell us more about the new Australian BD appointment and opportunities being pursued? So I think when you say Australian BD appointment you mean Paul Clayton, which was showcased in our management section of the presentation. So Paul came from the acquisition of Blank Canvas in April 2021. So Paul is heading up the AEC and real estate division. His objectives are to grow the XR upselling, cross selling and combination of technologies within the Australian market. And in the coming months, we're then going to really drive that AEC and real estate growth across the other divisions. At the same time, there's quite a few clients that are on a recurring revenue base in the AEC and real estate metric in the TCV that are in Europe, in North America, specifically. We've got some clients in Africa and some clients -- or Middle East, I will say, sorry, and some clients also in South America as well there on a recurring revenue basis. Neil Armstrong, good catch. So Neil is our new BD. He just joined us in Vection Australia. He's a senior salesperson who comes from experiences in Siemens and other companies. Specifically, he was focusing in the safety kind of space. And he is appointed to drive growth for XR technology, specific augmented reality and virtual reality in the Australian market. We're pursuing the mining and mining services industry, and we're pursuing the education industry as well. So those are the 2 key segments that we're targeting in Australia. As of today, we're starting from WA and then we're going to grow across Australia. So that was the first appointment in Australia. So good catch, [ David ]. Can you elaborate in the law enforcement and military space? From [ Eugene ]. So law enforcement and military space, there's a lot of -- there's many clients there. Some I can discuss. Some I cannot give too much detail. So law enforcement, we've got one particular client and it's specifically XR, AI technology, so XR and AI technologies. And I cannot say more than that. In the military space, we've got clients such as Fincantieri. They're using our software mainly for the design engineering phase. And then we've got a number of other clients that we cannot mention because it's confidential, but it's a combination of technologies. So XR, AI, cloud, et cetera, et cetera. Okay. Any further questions? So I'm here, obviously, to answer any of your questions. So please feel free. Okay. It looks like there's no other questions today. Okay. Perfect. It looks like there's no other questions. So I thank you all for joining us today. It was a pleasure meeting you virtually. And if you've got any further questions, please flick me an e-mail and I'll endeavor to answer as soon as practicable. A lot of you, gents, already, and ladies, obviously, already have my phone number. So please flick me a text message or give me a call if you got any further questions. We're always available to any questions and to really engage with you guys who are, obviously, our shareholders. I'm really excited about the next couple of months. So thank you for -- all for your support, and have a good day. Cheers.