WhiteHawk Limited (WHK) Earnings Call Transcript & Summary

Welcome. My name is Louisa Ho, and I'm the Company Secretary of -- here at WhiteHawk Limited. Thank you all for joining us today. It's my pleasure to introduce our group CEO, Adrian Vallino, who will be speaking to you about the CEO's 100-day plan. Adrian, over to you.

Many thanks, Louisa, and good morning to everyone, and thank you for joining us today. Before we begin, I'd like to welcome our Chair and fellow Board members, our team across the business, and of course, our valued shareholders and investors. It's a privilege for me to share this update with you today, and thank you again for joining. Again, my name is Adrian Vallino, and I've stepped into the role of Group CEO around 3 weeks ago. As per the announcement, I felt it was important for -- important that you hear from me today about what we're doing, our plans and some of the observations that I've come across in the last couple of weeks. I'll keep things tight, and with a short introduction on me and how I work, but also what I've observed and the plan that we're now executing on. So let's get started. With regards to the last 30 days, I've been talking to people behind the business and the spending that goes on within the business itself. This is to give me a good overview of the foundations that we're working from and then project how we can make some changes in the future to the benefit of the business. So some of the other observations I've come across are, we have a trusted cyber risk platform. It is well recognized, well acknowledged. And there is experience in us delivering this across partners, government and commercial clients. We're also approved across a number of federal contract vehicles. This provides direct access to the federal buyers. Without this approval, we can't participate. It's very essential to our business. We're also looking at progressing, and we're currently doing that now, subject to shareholder approval, of course. Quixxi products that would extend the WhiteHawk cyber risk area into AI governance. This means that we have more opportunities to be involved across the sales cycles within our customer base and across different divisions within the business as well. We already have an experienced and committed team executing against a prioritized pipeline. This is really important. Our pipeline is important, but having priorities of that pipeline is more so. The delivery capability is there. This is not something we need to build, but we need to remain focused and diligent on. Our partner-led distribution strategy is also underway. This is a critical channel for us. This allows us to get beyond direct sales into other areas of industry as well as partners that already have formed customers. So some of the things that I've noticed just in the last couple of weeks, where we must act is around customer concentration risk. When we have revenue that is dependent on a few clients within a single or a few sectors, this leaves us exposed. We need to diversify. We need to get across different areas of industry, so financial services, insurance, education, government, et cetera, so that we can have a good clean spread of our business into these areas. This will also strengthen our ability to generate cash. Implementing cost controls is very important. We've been doing this diligently as well, going line by line. Every expense item that we have must align to the revenue that we generate. Market reach is important as well. So as I mentioned, through the diversification process, our direct sales alone is limiting our capability to get more revenue through the door. So we need to scale this through partner-led channels. Our sales conversion cycle, we're also reviewing that. How can we improve it? How can we ensure that we're selecting the right opportunities for our business to generate revenue quickly and effectively and efficiently. This also is an urgent area that we need to address across the board so that the revenue that we're working on today becomes apparent very quickly. So after 30 days, the expectation is be submitting a cost management plan to the Board to review and finalize, ensure that our spending habits align with our growth potential. The priority pipeline is very mature. We understand exactly where our opportunities are, what they will deliver and the likelihood of that deliverable. And our revenue diversification and partner channel is an imperative foundation. This ensures that we work with our partners as synergistically and that we also match with not only what they do, but we offer additional services to them that make them much more attractive to their own customers. So we have a good relationship that we work with each other. As I said, we're coming to the close of those 30 days. As I said, I've just -- I've been here 3 weeks. And we already have some things in progress. So what we also need to do is ensure that we stabilize the business, ensure that we implement these controls around cost, we bring our expenses down. We live within our means, and we ensure that our business grows. The revenue side, we also need to focus on expand, diversify and look at our modeling of how we can achieve sales in a faster routine. Like I said, we've done the line-by-line cost review. We're continuing that. We are looking at the customer concentration, how do we expand on that? Some examples there of what we're doing is -- I'm already talking to some of the -- my contacts within Financial Services. As you know, you may have read, my background is from -- mostly from financial services. I've worked for organizations like Challenger, Australia's largest annuity provider. Bank of New York, I was Head of Operations and Head of the Digital Transformation for over 12 years within the capital markets area. I've also worked for National Mutual, MLC, AMP, Genworth, Australia's largest lender mortgage insurer. Bringing in all of that expertise, but also the contacts that I have in that area, working with these clients directly, and to ensure that we have the best possible opportunity to expand our business, both here in Australia and in the U.S. I find the Australian business is very well ready for this sort of technology. It's actually they're asking for it. From the partnership people that I've spoken to or partners that we're prospecting to work with, they're saying that this is a very good time for us to join forces. Moving forward and what to expect as we roll out the cost plan and looking at how we spend our money, and then our pipeline, communicating our value proposition is really important. It's important that the market also understands what we do, why we do it, how we do it, and what is the value proposition of what we're providing. As I mentioned, we're subject to shareholder approval of the integration of Quixxi. We bring in additional prospective solutions into our suite of products. This will extend our services through professional services into technology solutions into AI governance platforms. These subjects are very relative right now and important, and it's a good time for our business to be expanding into these areas. Through this presentation, there are some key messages that will be repeating throughout. This is important. And I think I started with the 3 pillars of what I'm focusing on: stabilizing, commercialize and diversify. Diversify is one of the most important strategies that I'm focusing on. Understanding the business, what we do today, as well as what we have in the pipeline and how we can expand and then convert on that is important, and getting the breadth and scale across the industry is really important to our business to bring value into the business. So why should we focus on partners? Why change this particular aspect or I should say, focus more on it? Each partner brings a customer base, that's pretty logical. But the important part is this customer base is a trusted customer base with this particular partner. That means we are accelerating the sales cycle of what we would typically do. We don't have to do the full pitch from the start. We are dealing through the partner that already knows their customers, know what they want, know that what we have for them is something that they want. And it's in our interest, both of our interest, to make very good value propositions to those customers because we will then both exceed -- excel, I should say, and grow our business together with that customer. Broader access to customers is also important, like I said, concentration risk is something to identify and acknowledge. By -- we need foundational clients, and we need foundational clients in other industries and sectors. So like I said, financial services, that whole financial services, banking in particular, is a highly regulated area. There are many things there that we can talk to them about and that we can offer. And going through partners, and we've already released some through ASX announcements or partnerships that we've put in place. We are already working on commercializing on those and adding further partnerships that we will also advise as they become more mature. So the idea is that we strategize and we align and we ensure that our narrative with these partners is on point, and that we work together to execute on those. This will then get us into more opportunities across banking, insurance, credit unions, et cetera. So that's the why, what are we doing right now. So as I mentioned, we're working with our signed partners right now on that plan. I have had meetings already this week, and I have further meetings next week and then beyond. These meetings are happening in Australia. I have meetings in the U.S., and I even have 2 meetings in Canada. So we are looking at this holistically. This is real. We want to ensure that these partners can -- what we have is something that they need and that we work together to ensure that we execute together. We also, once again, need to ensure that the narrative is well understood. We need to equip our partners with the sales collateral that's needed. Having a standard collateral set is useful as an introduction, but sometimes these need to be tailored. So depending on the industry that we're in, maybe it's government, maybe it's financial services, education, et cetera, we need to ensure that the messaging that's coming across is relative and understood. Otherwise, they'll just be ignored. They won't be taken up. We also need to ensure that the market understands what we do and why we're doing it and what is our value proposition to our customers. This is important. So we will look at the way that we are messaging things through, whether it's our website, written collateral, et cetera, and how we form that narrative to ensure that people really understand, and they're driven to come to us, and ask questions because we will come out with, whether it's white papers or other pieces of information that's relative in the industry today that acknowledge what they are -- the problems that they're finding are the solutions we have to solve them. Our focus around this is uplifting our annual recurring revenue capability or transparency, I should say. So the reliance on this is really important. As I said, we -- revenue is a key critical area for us. We want to ensure that we have a seamless process in place. But for the long term, we also need to ensure that our annual revenue transparency is there so that we have resilience over a longer period. It's great getting those upfront payments -- revenue payments upfront, but we also need that recurring monthly revenue where possible. So even though, as far as I believe, some government contracts may not allow this. We're going to also pursue though with other industries that longer-term multiyear contract to try and start building this up. And ensuring that it's very transparent in what revenue is coming down the pipeline. We're now headed into closer towards the 100-day mark, and this is now realizing many of the things that we've been talking about, which means we need to start commercializing, as I said, building towards recurring revenue. Our products, our services, once again, Quixxi acquisition subject to approval. These are all important pillars that become the foundation of our growth moving forward. So without repeating, as I've already said, extending our capabilities and services allows us to get -- grow our reach, get us into more areas, get us into more industries, more potential contracts. Looking at multiyear contracts, expanding our revenue run rate beyond that upfront fee as well as expanding our pipeline, ensuring that it's prioritized, making sure that we are targeted and focused on the opportunities that will convert aggressively going with our partners and just forming very close bonds and ties with them. We just become almost part of their business to a point that they need us to expand their own business, their own capabilities because we're filling a need and a gap that their customers want. So it makes sense for us to work together. As I said, I've already started having those conversations. And reducing customer concentration. So by diversifying, spreading, accelerating our sales cycle, expanding our partners that should help us reduce our customer concentration with risk as we go across the board. It's also important to have more transparency over what we do. This will come through various mechanisms, whether it's announcements, our website, even how we deal with our customers to ensure that the WhiteHawk brand remains strong and is reputable. I'll be also internally meeting with our Board and Board Chair to report back on how we're progressing. It's important because there may be some things still that I haven't come across yet that I'm not aware of as we go through. For example, next week, we're meeting as a team, the management team coming together, and we're doing strategic planning on how we implement all of these strategies in place, but also understanding what -- who are we as a business? What is the opportunity? And then how do we deliver on that opportunity. Before we wrap up, and thank you once again for spending time with me today. As I said, this is -- was to, first of all, introduce myself and to share this plan with you. But like I said, there are 3 takeaways that I'd like you to take away from today. The first is we're stabilizing things right now. With strength -- what that means is we're strengthening cost discipline. We're ensuring every dollar we spend is aligned to some form of revenue growth. We're improving cash generation and building a more sustainable business. We're not only just looking at the immediate term, which is important, but we're also looking ahead of ourselves and how -- whatever we do today impacts us in the future. This work is already underway. The second is commercialize. We're focused on generating greater value from our existing capabilities, but also what's coming in the future. And of course, the Quixxi integration subject to shareholder approval. Our objective here is to grow high-quality revenue, not just one-offs and to diversify our business and ensure that we are better managed around the customer concentration risk area. The third key takeaway is diversifying. We'll expand our reach through partner-led distribution channels, we're enabling this through partners that already have trusted customers and therefore, this gives us access to more markets and more opportunities as opposed to just direct sales alone. This expands our sales force without expanding our cost base. And we will align ourselves with those partners that are synergistic with what we do and where we add real value to their business. So in closing, as I begin my tenure as CEO, I'm committed to a disciplined execution, sustainable growth and creating long-term value for our important shareholders. So I'd like to thank you for your continued support and for joining today's webinar. If you have any further questions, please feel free to e-mail them through investors@whitehawk.com. And I'd like to thank you again for joining and taking the time to be with me this morning. Thank you.