ZenaTech, Inc. (ZENA) Earnings Call Transcript & Summary

Hello, and welcome, everyone, to today's drone conference and cooperation with Dr. Reuter Investor Relations. My name is Franziska, and it's a pleasure for me to have ZenaTech here with us for a very special roundtable and to talk to the leadership team directly. Welcome, Vice President of Corporate Development, Linda Montgomery; and Simon Henry, the Vice President of Business Development. Linda, Simon, the stage is yours.

Well thank you very much and thank you for everybody that's attending today. We're thrilled to be here and this is actually one of our first conferences like this in Europe. So I'm very pleased to tell you about ZenaTech. So we are a company that is operating in the drone space and also the enterprise SaaS software space. And we went public last year actually the 1st of October in 2024 on the NASDAQ Exchange. And so we're just over 1 year now as a public company. And so we're actually based in -- well, we do business pretty globally for an emerging tech company in the drone space. We have -- our parent company is actually based in Canada. Our drone company, ZenaDrone, is based in the United States and -- but we also manufacture in 3 different places around the world. And we are growing a business area called Drone as a Service. And basically, as it sounds, we're just making it easy for businesses and government to be able to access drone-enabled land surveys and inspection services and a lot more. And -- and so we're just -- we just launched this at the beginning of the year, and it's a growing area, and I'll tell you more about that. And then I guess the other thing to note is that we are -- we also are -- as well as business and government, we're also after the defense market and with our drones. And I'll tell you more about what we're doing in that area as well. So just advance my slides here. And we're -- and I think I just told you about all of this. And one of the things of note is that our Done as a Service business, we are growing by acquisition. We are acquiring land survey, engineering companies and other types of companies. Basically, what we're doing is taking low-tech types of services and companies that are ripe for innovation and adding our drones and basically innovating and improving these services. So here's our cap table. And I think like most drone companies, we -- this is from the end of October. And our market cap is about $125 million (sic) [ $185 million ] now. So it just dropped a little bit like a lot of our peers, unfortunately. And then these are the 2 areas of our business. First of all, we have our drone offerings. We have 2 drones there, and our Drone as a Service. And then on the other side of our business, our traditional -- since about 2017, we've had a number of enterprise SaaS software companies. And these do -- and these brands are doing everything from compliance software to field services management software to workstation to workplace management software. So that's -- we have recurring revenue there and customers there and in that side of our business. Our drone offerings are at -- the actual drone products are more at the pilot stage at the moment with various customers, and we are just commercializing our drones. And Drone as a Service, of course, is an operating business that we started rolling out about January this year. And then on that note, our revenue models, our enterprise SaaS software business, we had $2 million of revenue there at the end of 2024, and that was all of our revenue. It was all enterprise software revenue. And we've turned that around this year. It's an integral year for us as most of our -- 60% of our revenue as of the end of the third quarter is on the drone side and our Drone as a Service. And then on the -- and then our drone products, we also plan to sell those to government and defense. And we are in the process now of finding opportunities and program managers. We're starting off, first of all, with the DOW and those agencies in the U.S., given that ZenaDrone is a U.S. -- is -- we're going to be manufacturing in the U.S. for those needs. And then we plan to also sell to NATO countries. Let's see. And so for the third quarter -- the end of the third quarter of this year, our revenue was almost $8 million. We had a 1,225% increase in revenue. And I think it's probably one of the largest increases of many of our drone company peers. And that -- sorry, so for the first 9 months, that gives us almost $8 million. And of course, that was $4.35 million for the quarter. And we ended up the quarter with almost $20 million in cash, marketable securities. And then we did make a lot of progress in our Drone as a Service business. We now have 14 acquisitions as of right now. And then on our defense business during the quarter, we made a lot of progress. As I mentioned, we are actively engaging with program managers in the U.S. defense agencies, and we are looking for those demo opportunities, which will be followed by field, like trial opportunities and eventually contracts. And of course, we need to get the -- what's called the Blue and the Green UAS to be on the procurement list for the U.S. for the DOW, Department of War, and we're making progress with that as well. Okay. And I don't need to tell this audience the -- about the growth of the drone industry and the growth opportunities for the industry. I mean the ones that are important to us is, first of all, the FAA, and we're seeing historic policy directives in the United States that will basically make procurement -- will streamline the procurement process. And there's a lot of -- there are many initiatives going on there that are tailwinds for drone companies. And then secondly, the -- that's the same thing with the policy directives we're seeing around doing business with the DOW and U.S. Defense agencies. We're also seeing that procurement -- that traditional procurement cycle. Also, we're seeing great policy directives around speeding that up. And so basically opening up the airspace for drones and also making it easy for U.S. manufacturers to be able to do business, manufacture drones in the U.S. rather than the foreign-made drones that we see. And we -- as I mentioned, we are very much a global company. So in addition to Canada and the U.S., we have an office in Dublin, Ireland, and Simon is our VP of Business Development and looks after Europe and the EMEA regions. And we've long had an office in Berlin, Germany. And we manufacture our drones, as I mentioned, 3 different places in UAE, near Dubai. We've been manufacturing for about 3 years now. And we have a manufacturing facility in Arizona, in Mesa, Arizona, near Phoenix. We've long had a sales office there, and we are -- we have a manufacturing facility that we're currently commissioning and hiring people to manufacture in the U.S. And then we have a component parts manufacturing company called Spider Vision Sensors in Taiwan, and we established that last year because we wanted to have NDAA compliant parts, component parts, PCB boards, cameras, motors, whatnot, and those are coming from that facility. And I guess we've come a long way since 2017 as a private company. We're now a publicly listed company on NASDAQ and certainly growing our business. We've certainly -- we're experiencing a lot of growth. And this is our ZenaDrone 1000 product. It's a heavy lift medium-sized drone. It is 7x12 feet. It flies for up to an hour. It carries a payload of 40 -- up to 40 kilos. And this is the drone that we're going to be using for defense applications, like carrying medical supplies, like blood in the field. And then also we see ISRT applications for this drone, Inspection, Surveillance, Reconnaissance types of applications. We're working on a gas version that's going to fly for longer. And this -- and we've also -- we've already done trials with both the Navy and the Air Force for -- with this drone. And of course, we're hoping to do more as we engage with the military. And then these are our other -- this is our IQ series of drones. The smallest one is the IQ Nano. It starts at 20x20 inches. And we are using this drone right now for inventory management, indoor inventory management. So it reads the bar codes and does inventory audits, puts it into an inventory management system, it interfaces with inventory management systems and basically improves the speed and the precision and, of course, the safety in warehouses of the whole process of taking inventory, and we've been working on a trial there with a large multinational auto parts manufacturer. So we see opportunities for that drone in -- with other small, medium-sized warehouses, and with the government and the DOW as well. And then the IQ Square is the larger version of that, and we use that drone for land surveys and also outdoor line of sight inspections. And we're -- our current customer applications are certainly agriculture, and Simon can certainly tell you about what he's been doing. We've been doing a lot of work in Ireland with farmers. And so that's an important application for us, spraying and also irrigation management types of applications, all improving crop yields and those types of things. And then in defense, of course, in government and warehouse and logistics, those are just some of the early applications, but we're not stopping there. We know that there are a lot of applications in oil and gas and mining, for instance, that we're focused on also. And I mentioned our Drone as a Service business. So we are rolling this out across the U.S. and globally. And -- we are -- we're starting with land survey, engineering companies. So these are smaller companies. It's just a perfect marriage between what they do and what we do that they don't really have the wherewithal to add drones to what they do. But these companies have been in business for a very long time. They've got established customers and these are profitable businesses. So we're acquiring them and adding our drones. And basically, we see a Drone as-a-service location in various communities is our goal. And it's a one-stop shop for business and for government for drone services. So we envision a lot of different services. We just did -- we just completed our first U.K. acquisition, a company near Bristol. And this company does telecommunications, works with telecom companies using drones for the design and the maintenance of cell phone towers, very large and growing business at the moment in the U.K. And so that's another service that we've just added in addition to these land survey engineering companies. And so we also see power washing as another application that we'd like to do through the -- under the Drone as a Service brand. And so -- and all of our drones, our inventory management as well, precision agriculture. And here's our rollout, 14 acquisitions so far in the U.S., a lot of them are in the Florida area. And in fact, in Orlando, Florida is our global headquarters for Drone as a Service. And then I'm going to have to add to this map because we got to put the U.K. and Europe on there. And we manufacture our drones, as I mentioned, in 3 different places. All of those facilities are growing, and we're also growing our teams at all those facilities. And we're -- our internal goals right now are getting our capacity or the number of drones that we're shipping out of these. We've got monthly goals that we want to keep increasing. And UAE is where most of our production of final drones is taking place. And as I've mentioned, we're -- all of our facilities are growing at the moment or we're adding new space or we're commissioning new facilities and adding staff. And of course...

Just with regards to the time, Linda, we only have a couple more minutes, and then we move forward with the Q&A session. So Simon, if you want to present a little bit, please go ahead. Thank you so much.

All right. So maybe just a little bit about our founder, which is really important. Shaun Passley, he's a serial entrepreneur. He's had -- he's been developing and growing in tech companies since high school with 6 advanced degrees, and he's our visionary that has very much of clarity of vision in terms of where he's taking ZenaTech. And just a little bit on our differentiation. We have a software background. So we feel that differentiates us in the drone space. Also, we are the only ones with an indoor drone, and we're really -- well, we're -- I wouldn't say we're the only ones, but certainly, our indoor drone differentiates us. And also, certainly, our Drone as a Service business, our vision and the way we're rolling that out certainly differentiates us as a company. And that's basically it. I'm happy to take some questions. We are listed on NASDAQ, ZENA.

Thank you so much, Linda, for the presentation. Simon, would you like to add something? Otherwise, I would move forward directly with the Q&A session.

Yes. I'll just mention that I'm in the process of rolling out Drone as a Service in Ireland. It's our first organically grown drone service business. We have a good focus on agriculture, working closely with the Department of Agriculture, Teagasc, a lot of the agricultural bodies in Ireland and focusing on construction, renewable energy. Over the past year, we've been working with a number of beta customers in these different sectors, showing the value we can add to their businesses. And in January, we'll be going live with the business. And essentially, we've been building up the teams and our offering for the market. So yes, it's an exciting time in Ireland at the moment. And further to that, then we're going to roll it out to the German market. And also our recent acquisition in the U.K., we'll be integrating our drone technology into that business. They have a great customer base. There's a lot of additional services we can add to their business. So yes, it's all going good in Ireland and Europe.

Thank you so much, Simon. We now are in the Q&A session. [Operator Instructions] And we received already some questions. So the first question is, could you please provide the organic revenue growth for Q3 in 2025?

I'm sorry, what was the question?

Could you please provide the organic revenue growth for Q3 2025?

The organic revenue growth. So our revenue was $4.35 million for Q3 of 2025, which was a 1,225% increase in revenue over the same quarter last year.

Thank you so much. And the second question is, do you see large EU defense spending budgets as offering opportunities for EU growth?

I'm sorry, it was just a little muffled. Could you repeat the question?

Do you see large EU defense spending budgets as offering opportunities for EU growth?

Yes, we do. We are -- well, we have -- we are, as I mentioned, engaging with program managers, and we just actually opened up a Washington area office, where we intend to hire -- obviously hire some -- we need additional business development and capture people. But we're in the process of just understanding where all those opportunities are, and there's many -- there's grants. There's a lot of new programs that we see an opportunity for our drones. We -- basically all of our drones, we think, have opportunities somewhere within in the defense sector. Certainly, if you look at our indoor drone, there's over 1 billion square feet of armament and warehouse space that the federal government looks after. So we see opportunities there. So I hope that answers your question.

Thank you so much, Linda. Then we have another question for Simon. Could you please tell us more about operations in Ireland and how that will evolve in the next years?

Yes. Well, we've done a thorough analysis of the market and the service offering over the past few years. And we're very focused on our various sectors. We have a big team of lead generation staff. And -- we're working closely with each sector and ensuring that we're adding value to these businesses. So in Ireland, there are a number of drone service companies, but they're not very focused on the big industries. It's a smaller type of business. We're looking at -- to be a well-known brand name in Ireland with all our PR marketing and working with the government bodies for the various sectors as well. So the growth in Ireland, we expect it to grow significantly over the next few years. And yes, it's all the services we're providing. We sat down with each a -- beta customer in each sector and looked at all the different possible services we can provide to ensure that we are ticking all the boxes and providing an end-to-end solution and really adding value to the business. So there's huge growth in Ireland and Europe for this business.

Thank you so much for answering the questions. We have received no further questions so far. So I would love to hand over to Sabine Nawotka from Dr. Reuter Investor Relations. And then Sabine, if you could kindly hand over to Linda and Simon. And from my side, from Airtime, I wish you all a beautiful festive season. Remember to the investors, you can always access the recording and the transcript on our platform. Thank you so much for being here, Simon and Linda.

Thank you. At first, thank you for joining the roundtable. My name is Sabine Nawotka, and I work for Dr. Reuter Investor Relations. ZenaTech is one of my customers or clients. And after the roundtable, I will send you an e-mail. This is because you may have further questions or would like one-to-one meeting with ZenaTech. And with that, I hand back to Linda.

Linda, if you have some final remarks and Simon and then otherwise.

Final remarks. Sorry. Okay. Yes. Well, final remarks is that we continue to -- I think investors always want to know, look, what's next. And we can tell you that we're very focused on Green and Blue UAS certification and continuing to engage with program managers focused on the defense business. And I can tell you that we are certainly focused on our manufacturing and ramping up our manufacturing and meeting our own needs certainly for Drone as a Service, but also for the solutions we'd like to sell to -- and the trials and that we hope to do with the government. And then we do have a goal of 25 acquisitions by midyear next year for Drone as a Service. So we're going to continue to expand that in the U.S. and internationally, in -- certainly including Europe, and we just also announced an LOI in Australia for Drone as a Service. And then we're certainly focused on continuing to advance all of our -- the trials that we're doing and customer trials and we continue to iterate with our products and constantly test improve our products. So that's going to continue. And then just -- and then I'll also add that we do also focus on R&D. I mean there's immediate needs, but then we're also thinking about the next generation of solutions as well. We have an R&D team that is very interested in applications like wildfire management using drones and drone swarms and weather forecasting, for instance. So -- and so then we have a team that's very much focused on that as well. And that's just a flavor for our path forward.