So 100 licenses, 24 months long, for $2.5m (excluding hardware **I think**). That's $1,000 per month, per license, to maintain access to the BirdDog cloud. Let's say this technology becomes so game changing that every one of Australia's 697 public hospitals install them over the next 5 years.
We're looking at $8.4m in recurring yearly revenue if every Australian hospital picks up a license, over a five year period. With BirdDog's last total annual revenue at $38m, we're adding about 20% to revenue, or ~+4% per year. I really hate to rain on the good news, but even under the most unrealistically good scenario, this hardly factors into my valuation.
What's weird is that it reads like the majority of the licenses are going into India, some to Japan and then "Asia Pacific" which is who knows what other countries. As optimistic as I am about medical facilities in second world nations, I'm wondering why a developing country is putting money into this technology when the vast majority of Phenox's operations are in Europe and North America. Phenox actually doesn't seem to yet do business in Japan, which makes this deal seem even more odd to me.
The first thing that springs to mind is the endless levels of bureaucracy in Western hospitals, which might slow down any potential sales pitching. There'll be administrators and ethics committees to deal with, who will have infinite questions about whether live steaming a surgical intervention is wise, and whether using an Australian camera maker is the best service provider in terms of privacy and security measures. The lawyers are going to be against it, that's for sure.
So I don't know, I take it as a major sign of a weak deal that we're getting this rolled out in India and nondescript "Asia Pacific".
BirdDog is a camera company, I personally think they need more variety of consumer products. I think Dan is pursuing variations of the live steaming environment, because that's his background and comfort zone. If I could have one wish, it would be to widen the range of products from music venues and now, weirdly, hospitals, to Twitch streamers and content creators. The maths speaks for itself, but they could be doing a lot better than 2.5m by taking a very small chunk out of the current market.
I'm still all about BirdDog, as I think the cash holdings and continued sales make it a perfectly fine business to invest in. And I see a budding brand recognition factor that will eventually be a faux moat of sorts, but I just don't see why we're pitching this cool brand to stuffy administrators. It feels like that should be a different brand under a different subdivision. Why would a US senator want a half dog half bird brand on his oak wood desk as he's having meetings in the war room. Where's the market research on getting hospital administrators to approve a proposal from a company called BirdDog?
I don't know. Mixed feelings.
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