ASX listing rules won't let the company talk around any numbers. These will be covered off in the upcoming qtrly. The company will be doing these updates more regularly going forward. Call to finish in an hour as the company needs to be on another customer pitch call.
- BHP employs over 600 drone pilots + other Tier 1's with +400 pilots. This is just a snapshot of the opportunity the company has to deliver into the already strong mining pipeline.
- Business model / sales opportunities to clients can be generated via 3 ways, hardware sales / leasing, software fees, labour synergies
- All wrapped in a regulatory and commercial model that easy to onboard by customers
- Whilst customers may own +400 drones, they are really only interested in the data that comes from this hardware
- The CASA approvals are very important to the business and value offering. RKT have approvals for very large areas both in Aus and South Africa. One of only a few globally with remote operating approvals
- Tailoring the right products for the Tier 1 + 2 clients. Not over complicating it, but making sure it's fit for purpose. For the mining companies to get this type of solution + approvals right it's a 2yr+ process
- Puts the company in the box seat to be the outsourced provider of choice
- The sales model is to secure long-term contracts with customers. I.e the most recent contract was a 3yr leasing deal + the service / data.
Some clients are wanting the full solution- Tier 2, with many of the Tier 1's have software they want our drones to integrate in to, which we can easily do.
- The Xbot manufacturing is a unique part of the business. Up until now the company has been system integrators. The assembly of the drones brings together 30+ components. They have performed very will over a number of extreme weather conditions of late.
It's setup now to deliver these products at scale, with enquiries now coming in from the US
- The company through their longer term relationship and investing in suppliers has allowed them to be one of the first to receive the new DJI dock 2. I think it's safe to assume that when Chris mentioned 'early stage trials and approvals are in place for the new product', he is referring to the DJI Dock 2 product.
- The company is well on the way to reaching cash flow breakeven / profitability for the business. Looking at the current trajectory in the last deck, I think we are likely to see this occur next quarter. The company is hyper focused on achieving this and are very focused on unnecessary expenditure, whilst managing the delivery of near term growth opportunities. Hence the reason why the company went to market last quarter to raise a small amount of equity to deliver into these genuine opportunities.
- The company has a very good track record in delivering on the build out of a business whilst being capital conscious. The upcoming qtrly should give some good visibility on how the company is tracking.
- The local market opportunity in the other verticals - farming, asset management, oil and gas opportunity is in the hundreds, if not thousands. Hugely exciting for the company as they start to win contracts in these sectors.
- The AI is the last process to close the loop for the client in order to be fully automated. The company is currently providing single transactional services with AI being used to enhance the acceptance by customers re the quality of the data being provided. As customers become more accepting of these services, we will see longer term contracts for this type of product. The consultation with the customer around this type of service is really enhancing the longer term relationships with these parties.
- This type of service can enhance the value to the company by ~10x vs legacy services in terms of scalability
Go to market strategy / sales pipeline
- Customers who have previously bought their own units, seeking fast engagement from the company to deliver services
- First unit is the hardest to sell. The company sees very good engagement post a commitment on this to bring on additional services and hardware.
- By getting these new drones built, they can get the product in the hands of current / prospective customers earlier. This has historically seen contract commitments eventuate
- Strong enquires coming through from asset management, infrastructure, insurance companies, ports, solar, construction and oil & gas sectors. Huge opportunity to replace existing processes to remote and risky locations.
- Discussions with the infrastructure sector can see assets replaced over a longer time frame with more frequent monitoring with RKT's products / services. Obviously a massive opportunity in this sector.
Q&A -
In regards to the first batch of 6 Xbots
Mining environment is a very low risk mindset, which requires acceptance of the safety and project management of such a product. Hence a high level of onboarding for new customers. The hook for these types of clients is a trial to begin and what the company sees is at the end of such a trial period, it moves to commercial discussions quickly thereafter. We expect the sales cycles a result of having these drones with customers should be much quicker.
- Other competitors - the company isn't the first to market, however they have produced a scalable solution with regulatory approvals and commercial model in place to deliver. The biggest competitor is the customer themselves who have bought and operate their own drones. This however is now the company's biggest opportunity to pitch to. Some providers are hardware focused or do consulting services, where RKT has the entire solution, which is unique
- Cost structure of the business / scalable on the current cost structure. The business has been built to be variable as to when they bring on costs. There is enough margin on current sales for the business to play with. The raise in December was only done to take advantage of customer enquiry and push hard on the marketing of the units being in the hands of customers to complete the sales cycle. RKT can scale because they can operate many drones with a single pilot.
RKT Price at posting:
0.8¢ Sentiment: Buy Disclosure: Held
(20min delay)
