Ann: ZOLEO Officially Launches into UK and Europe, page-18

A good but expected announcement. Certainly market sensitive but we were guided that it would drop this week and it did. Glad they did what they said they would - tick for management credibility.

Hard to read the play re SP action on a down day with an interest rate rise but there are a few observations worth calling out:

1. A lot of the investment in the infrastructure and setup has already been made. The JV made a loss in the half when it probably would have made a profit (on my numbers/analysis). Management couldn’t spell it out but did confirm investments did impact the outcome so there’s a sunk cost we’ve paid for without receiving the benefit (yet). Something to think about

2. Stock has been ordered already and presumably paid for. Go back through Zoleo sales announcements and you can see the allocation to Europe. Again, another benefit

3. We are making 50% here. Sure it’s not as good as ANZ where we make 75% but sales here have been slower. If we can replicate anything like what roadpost have done, that will be huge upside. The TAM is significant

4. Last but not least, the AUD equivalent of the Zoleo is higher which COULD imply higher equipment margins. I recognise that FX moves but at spot the AUD equivalent in euro and pound is $395 and $367 - both higher than our local retail price. Sure there could be higher shipping charges but even $5 extra per device for us is a win.

A really positive announcement and it’s hard to reconcile our size and potential vs our enterprise value.