Dear Investors,The first half of 2022 has been characterised by extreme volatility in global markets and the emergence of significant headwinds to global growth. Prompted by fears of inflation, the conflict in Ukraine, and by the fragility of the economic outlook across global economies, stock market indices have declined, interest rates have ratcheted up, and consumer confidence has eroded. In such circumstances, traditional safe-haven investments, such as gold, treasuries, and low beta currencies (US$, JPY, CHF) continue to appreciate.Reflecting higher costs of capital and diminished risk appetite, the technology sector has borne the full weight of investment uncertainty with even the share price of the five largest US-listed big tech companies, the so-called FAAMG’s1, declining by an average of 30% between end Dec 21 and end May 22. The negative response of markets to prevailing economic and political challenges has been felt across almost all sectors. Even the traditionally resilient providers of essential consumer staples are being adversely impacted by price inflation due to rapid increases in energy and supply chain costs. Whilst Harvest Technology Group (HTG) is not immune to market conditions, the key sectors we target for the company’s growth, such as the international maritime, energy, mining, and defence sectors, have each significantly benefited from current market conditions. Disruption to trade routes, tight energy markets, and high commodity prices have created significant earnings growth across international shipping companies while the rate of their adoption of new, digital, technologies is unprecedented.Similarly, high commodity prices benefit miners, and self-evidently, the defence sector is projecting marked upticks in overall defence spending in the light of a rapidly changing strategic geopolitical context. Whilst the technology sector as a whole has suffered in H1 2022 and is likely to continue to do so due to negative projections for discretionary consumer spending, we believe HTG’s specific outlook for the second half of 2022 is very different due to a far more favourable short and medium-term outlook for our key target markets. In an increasingly volatile and complex world environment, companies such as Harvest need to continue to evolve and adapt to meet ever-changing global challenges. To ensure HTG can maximise its ability to meet these opportunities and near-term targets, we will be leveraging regional operations to increase lead generation and conversion of a growing pipeline of opportunities into monetised sales.The focus of our regional structure and product strategy in the near term will be to prioritise growth in revenue and customers for the Infinity suite of products, which now includes our recently launched flagship RiS™ (Remote Inspection System). We have recently concluded an internal strategic review to validate our phase 2 approach to market whereby we are focussing on revenue growth and customer diversification. We have a clear strategy and pathway to accelerate our Annual Recurring Revenue (ARR) and manage our cash reserve more effectively, towards a cashflow positive operation. To ensure market alignment, HTG will continue to actively review market conditions and our strategy as we move forward._ _ _ _Key updates for you:Our U.S. team are directly focused on providing sales support throughout the Americas for the Infinity product line, whilst Opsivity™ platform development work remains on schedule during FY23. We expect to integrate the Opsivity™ platform as an industry-specific plugin with our next version of Nodestream software in FY23. Once released, this will provide Opsivity™ with a very competitive market differentiator. The enhanced Nodestream cloud application, expected to be released for pilot by end of 2022, is designed to significantly increase our operational footprint and market applications by enabling IoT (Internet of Things) edge operations through cloud-based networks.We have increased HTG’s on-ground capacity in the UK to support sales and business development activities for Infinity products across the UK, Europe, Middle East, and Africa regions, which included an additional technical support function.We continue to work closely with our resellers and partners to explore avenues to increase customer conversion rates. In addition, we have started new conversations and collaborations associated with the direct embedment of our software into customer products and expansion into new end-user markets.With Western Australian COVID restrictions eased, our Perth-based team have travelled to conventions, such as Oceanology International in London where we announced the global availability of our flagship product RiS™ and Xponential in Orlando, Florida (U.S.) for joint sales and marketing efforts with our partner Inmarsat. The ability to travel and spend more face-to-face time with our partners and resellers has had a significant positive effect to grow both sales and development opportunities.Read more hereWe have been working closely with Inmarsat Aviation to deliver a new Unmanned Aerial Vehicle, i.e., Drone (UAV), facilitating complete proof-of-concept realisation of a satellite terminal with embedded Nodestream™ technology capabilities. We successfully enabled and demonstrated UAV direct to satellite video and control streaming functionality at less than 100kbps, setting the stage for simple and clean BVLOS (Beyond Visual Line of Sight) operations for small commercially deployed UAVs anywhere in the world.More information here Supplementing our direct focus on innovation for the maritime industry, we are successfully working with Inmarsat on their maritime initiative as a Certified Application Provider (CAP). Through gh the CAP network, Inmarsat is promoting direct to its customers, our one-stop-shop” packaged solution of live streaming Infinity technology solutions together with Inmarsat’s Fleet Connect dedicated bandwidth. Inmarsat generates the leads and channels them direct to Harvest for conversion. As a result, we are currently working on solutions for several prospects.Read more here_ _ _ _For the quarter ending March 2022, HTG reported an increase in revenue performance for the Infinity product line, with a substantial increase in monthly recurring revenue (MRR) of more than 70% when compared to the previous quarter. We believe our continued focus as defined within our three-phase strategy has HTG well placed to meet market challenges and capitalise on opportunities. HTG is working to ensure that we strike an appropriate balance between growth and continued product development with net cash outflows that enable the Company to operate on a sustainable basis whilst maintaining a strong balance sheet into FY23.On behalf of the Board and Senior Leadership Team of Harvest Technology, I thank you for your continued support.Please do not hesitate to reach out to a member of the team or myself if you need further information. With best regardsPaul Guilfoyle
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