Hi
@Ginger_steps_ good to see some new interest in Icetana. I've been holding this for a long time (seen quick spikes and steep drops), so my view is biased - take it with a pinch of salt
I personally think this is fantastic announcement, the best I've seen released by Icetana since it listed in ASX...the fact that the Chairman of the company as well added some commentary indicates that the company is excited by the prospect. The reasons why I am excited are:
---> Obviously large $ figure attached, 5x... if not more... than any contracts we've seen so far since IPO, which is huge in itself
---> However, the scope for expansion further within (as you've noticed, this is only for 5% of the cameras of this one operator/site) and across (many other sites and other operators). Icetana has an excellent reputation when it comes to renewals (close to 100%), so I am quietly optimistic that we are only seeing the tip of a mini iceberg with this resort contract
---> Expansion into new resorts vertical could open up more doors with the same VAR and others. Singapore takes security very seriously, so potentially new opportunities as well in surveillance in the country, who knows!
"
The contractual arrangement disclosed in this announcement is between icetana and Prosegur, rather than the end user."
My reading of the above statement is that you can take out the VAR commissions off your cals. Prosegur negotiates directly with the end customer, adds their premium and quotes an unknown amount....turn to the other side and makes a contract with Icetana for $550k SGD, so I believe the VAR commissions are included in the former rather than latter, otherwise it would be double dipping. I am not from this industry, so I might be wrong though!
Coming to some of your questions.
Costs (basic):
Now because this software seems to be a 'one size fits all' solution, the admin and staff costs should be somewhat constant, with incremental increases for installations / deployments for new contracts. I have taken the HY expenses and doubled them to get an annual figure, and then divided that monthly, which gives us a cost base of about $295K per month.---> Agree with the assumption that the cost base should be low/stable in their current model...they've done a lot of work both on their platform as well as on the contracts side to move away from monolithic installation and revenue recognition to SaaS and recurring revenues. When they grow massively, this is where I think their COO, Kevin, adds huge value because of his experience in VGW. I'm sure, he is the man behind all the current product development and deployments, but he can really show his expertise when Icetana grows 3x, 5x, 10x their current size. The main variable costs would be on the marketing end, especially if they hire more bodies in various regions, which I am totally supportive of. Icetana IMO has an excellent product that's begging to be rolled-out multi fold. I think what's holding the company back is the ability to rapidly sell a lot more. It's easy for me to say this sitting behind a laptop...
.... but I totally appreciate the fact that it's a competitive space and negotiations are often lengthy. Icetana spent a lot of time building the relationships and confidence with VARs, combined with live reference customers in this space (which the competition apparently lacks of) and this resulted in the VARs acting as a proxy sales people for the company.
So going back to your example of how many new customers are required to be cashflow positive (you used the term critical mass) - prisons might need 400 sites, but contracts like today's would only need a further 29 similar sites to be cashflow positive / hit critical mass. And this was all based of the most conservative numbers we have. If we assume the VAR's commission is 30% then the number of sites required falls to 25.---> Their model is based on per camera per month, so think about the size of the sites rather than the sites themselves.
Im keen to buy in on this thesis, because many commercial / retail / public safety sites will save lots of money through using this software (theft, vandalism, reputational damage etc). I also like how the technology can be deployed quickly and without much customisation. My only worry is that the current technology is somewhat basic, it would be great to see the AI use object identification (knives guns etc) amongst other features (like marking possible events of interest on recorded video for later reference etc).---> I have a slightly different view on this. My understanding is that the company intentionally stayed in the lane of anomaly detection (their patent is based on this i.e. anomaly vectors) rather than facial or object detection because it gives the product to deployed into any vertical without modifications (rules). For example, if the product is deployed in an army training camp, it would learn (during the 14 days learning period) that drawing guns and shooting etc are normal on this site. On the contrary, if a gun is drawn at a shopping centre, it identifies the anomaly and alerts immediately. The advantage of this model is that possibilities of picking anomalies are endless. For example, during COVID, one of the university sites is not being used much and there has been a water leakage under the carpet, which the camera spotted as an anomaly and saved lots of money. I doubt such sort of things could be achieved on rule based / object detection products. For the target space they are aiming at, I think their product is perfect. There are some interesting product updates in the pipeline - batch processing rather than live processing, alerting mechanism to cater for sites with no active personnel etc., which I would assume expands their reach within the target space.
Will wait for a pullback after todays announcement - if it eventuates, but keen to hear your and other posters thoughts after today's revelations...---> Based on the past price action, I suggest patiently wait for an opportunity to buy, because investors/trades who bought for quick gains in the past were frustrated by slow progress and lack of liquidity in the market, and many typically sell after spiky days like this. What the company is lacking IMO is a cornerstone investor, who can provide stability in the market by putting a floor on the price drops. Having said that this company has low SOI, Top 20 is decent, including the board holding lots!, and last but not least, this is still way under the 20c IPO price and there are decent chunks on-sale upto 18c, so I doubt the price would run up very fast.
Hope this helps mate. All the very best in your investment.
Just noticed an update released and it says casino rather than a resort...could be a typo, but possibly another Singapore based casino order in the works atm!
Above all is my opinion only, please DYOR!
