Good to hear from the company, Chris presented well.
Notes from the Qtrly update:
EV $2.7m + $2.5m cash
Bringing value to sectors that have high labour costs, increasing risk and inefficiencies in collecting high volumes of data.
Critical asset monitoring (Powerplants, substations, pipelines, data centers) is a very good opportunity for the group to grow new revenue opportunities for the group. New regulation is coming through that is placing greater emphasis on companies in regards to how they monitor critical assets, capture and retain this information. This is where RKT plays a critical role. Discussions have been had with asset managers.
The business is focused on building products that can be used for multiple industries to provide economies of scale.
RKT's product can enable companies to capture information on a high frequency basis. The RKT business model is to sign longer term contracts that have the ability to unlock additional products in the suite for the client / additional revenue opportunities.
BARS certification during the quarter is very important for the business, with only a handful of companies globally achieving this level of safety certification. This is a minimum requirement to be able to operate with Tiere 1 clients, the likes of BHP etc. No company in Australia has both Aus and SA signoff.
The automation aspect of the RKT offering is very exciting as the company is moving customers away from previously manual forms of data collection with the drone offering to automated systems that can deliver the data more efficiently onsite in real time, whilst reducing resources required from to do so. The partnership with Strayos is seeing many new customers testing the software within their operations. Once the customer is acquired, they are very sticky.
South32 contract is the first 5 year contract being signed for the business.
Customer interest in the Ai offering has been very good, with the first Ai sale to a Tier 1 customer occurring on the first level of the product offering, plenty of opportunity now to move that customer up into further products within the Ai offering.
A lot of time last quarter has been spent with customers tenders and the re-brand of the business.
A good mix of country, client and type of revenue mix - 12mth / recurring revenue etc. Focus on continuing to build out the recurring revenue + also sector diversification. Very good visibility on revenue delivery that underpins the business. Once off revenue contract with clients will continue to remain important as it lets the business interact with new customers, testing, building out the potential service offering to then move into a longer-term contract arrangement.
Continue to remain focused on cash spend, ensuring dollars are being spent appropriately whilst the business moves into cash flow breakeven. Always a balancing act to juggle to applying capital to growth opportunities for the business vs running a very lean model. The business can look at accessing debt to assist with cash requirements when the time is right to drive this further. Positive dialogue with banking partners around this.
All testing and data has been completed for CASA approval and once formally received, the company will be the only operator both in Aus and SA to have approval to operate the Ai solution for customers. Imminent is the work Chris used. The don't for see any stumbling blocks for this being awarded.
Tier 1 + 2 customers the business is servicing are looking to take RKT into other jurisdictions they operate in, which is exciting for the business.
RKT can integrate and scale these solutions much cheaper than their customers can do it themselves. Approvals take circa 2 years to be received before operating these types of solutions.
Open to businesses that can add value to the RKT service offering by way of potential acquisition. Achieving scale for RKT is key when considering these opportunities.
Strategic partnership interest has been strong both from customers and software companies.
Very good cost benefit validation with customers, both by way of employee safety, through to operational down time savings.
Educating customers is key to growing the business from here. The company has a clear strategy to do this and will push hard once the CASA approval is received.
Half year accounts expected to be out late August (blackout period ends).
Copy of the update will be made available online shortly.
RKT Price at posting:
1.0¢ Sentiment: Buy Disclosure: Held
(20min delay)