Member Info for Brockwl

Lewbo,

EOY is June, results end October. that's 4 months on my calendar.
That's what it is about.
Find me another company that takes 4 months, to issue results that is reputable.

Trouble is those dates are shocking.
Most companies provide trading updates within days or weeks not months as is the case here.
4 months to produce results is shocking, and does them no favours.

Last year was 3rd August, now this year we are end of August.
We had to wait until late November for results, nearly 5months after EOY.
I hope they are not going to repeat that again, but trading update date doesn't fill
me with confidence they won't.

I think the likelihood of a bid is low at this stage.
Whilst there are plenty who would like to own us, very few would have the financial strength to guarantee winning. As a result that rules out all the smaller players as Qualcomm will outbid all of them.
Qualcomm obviously have us in their sights, but I suspect they realize they are on the cusp of something big
with auto and won't want to take the risk of upsetting future auto customers at this point.
They may also only want to bid when they know they will win, and can't be sure if that is the case.

So the only way it could happen is if the big players want us ie intel , Microsoft, Apple. I'm yet to see that as likely at this time.

S2020,
Every time you try to score points with people who's views don't match your own, you further demean yourself.

I've just said they have a bright future. Big difference between that and making ridiculous valuation claims without providing a single future earnings figure.

No irony there, unless you want to twist whats been said. You seem to do that a lot of late with dissenters.
Always seems you can't let go without always having the last word, with certain posters.

Part 2

As a result of the above, and other recent RNS’s and promotional videos, I’m more convinced that ever that this company will be a massive success.
I just think its going to take a little longer than most on here. However, I have patience, and expect that to be rewarded.
GLA

Great interview by Colin. Even for those who think they understand the technology, and the application, it’s well worth the hour spent listening to it.

Key take away's for me were:-

1. DMS in auto, is now so much more than the DMS we understand in Fleet. For Fleet it is about alerting the driver and avoiding accidents due to distraction or micro sleeps.
In Auto it’s becoming interweaved with ADAS, and makes ADAS a much better product as a result.
So currently there are a number of ADAS safety features that exist within cars currently on the road, such as emergency braking, lane assistance, etc.
However, most of these often initiate, when the driver was in complete control and aware of the danger, as well as when not. As a result, the driver becomes irritated with the continual warnings and either switches off the feature or moves it to low sensitivity.
Some even complain that it is dangerous, e.g. if it emergency brakes, when you are in full control.
Current DMS deployments, now plug DMS into the ADAS solution and allow ADAS to use DMS to determine if the driver is fully attentive. If attentive, the ADAS app is less likely to auto deal with the problem it has spotted, and gives the driver more time to respond, if not attentive it will enact immediately.
The result is that the driver suffers many less false alerts, and more likely to embrace the technology.
DMS is now key in helping ADAS apps make better decisions, and as a result key to any decent ADAS deployment going forward.
The importance of a credible DMS solution, just went up in value significantly.
It’s no longer standalone, it’s the key component.
I’ve had some worries about DMS as a standalone product in auto, but this realisation that it is now key, has convinced me that it is a much more commercial proposition

2. Given the lead times and time it takes to get into a auto manufacturers solution. Plus, the technology lead we have currently, I don’t see any competitor eating our lunch for a long time. I’d go so far as to say we have at least 6 years ahead of us where we make hay and dominate the market.
Its clear that the data we own, is one aspect that makes staying ahead of the competition relatively easy. Whilst no one else is building and collecting data at the levels we do, I don’t see the gap closing quickly.

3. Interestingly he thinks and hopes that a bid is unlikely. On the basis that we have made it possible to license our IP, and if someone can license it, they don’t need to own it.
Not sure I totally agree with that, but I do think a bid isn’t as likely as others think.
Primarily because, once someone big starts a bidding war, they need to be 100% sure they will win, and I’m not sure any of the big companies can be certain. So better to just license rather than take that risk.

I'm sorry but based on what he actually knows, he is seriously ramping.

MrBB states "$5bill would value us at around 100p per share, but are we worth only 10% of their value,if you project our revenues & profitability just 2 or 3 years down the line.

So what are those revenues and profits? You can't make statements like that without some figures and not be accused of blatant ramping.

What was new was the 340k total now shipped.
Take away the 110k from previous years and we get 230k this year.
Lets assume by the end June it's 250k.
Thats actually a fair bit lower than my expectations.
However he also said 2 or 3 x next year, which suggests 500 to 750k.
My calcs suggest we need about 1.5m to hit break even
So break even pushed back to Fy 2024.
everything else seems pretty positive.

Further confirmation to me that big numbers won't happen until late 2024.

Those stats have been garbage since last October.
I've collected them daily and since October they tell you absolutely nothing.
Stop ramping stuff you know little about.

Well as they have only previously updated every 6 months, you will have to control that excitement a while longer.
Quite ridiculous they don't give more regular fleet updates.

I will be interested to see whether Paul tries to get this back to 9.6p or whatever it is in June, for him to collect this year’s bonus.
Keep the belief, but don’t expect it to happen tomorrow.
All the best.

Nothing really new in the results that the TU and presentations didn’t already provide
However, there was a nice simple table which broke things into segments and helps illustrate what we need to happen going forward.

OEM Loss of $6.495m
Aftermarket Profit of $844k
Other Loss of $8.124m
Total Loss of $13.775m for 6 months.

So, what needs to happen to turn that into a profit, and when will that happen?
To keep things simple, I’ll largely ignore getting into any detail re Aftermarket. As currently that growth doesn’t make that much difference to the overall profit/loss situation. It’s a nice to have, but OEM is where we need to deliver to make a serious difference.
Let’s assume that profit for aftermarket grows at 15% going forward, in any calcs below.
That being the case then OEM revenue is what is needed to make up the $13.775m loss.
Using the slides from previous presentations and pipeline of orders I’ve assumed the company has the following expectations in my table below. *note - these were taken before Paul suggested that its likely we will get into China through third parties such as Qualcom. That will improve the overall situation, but not in the immediate (pre-break-even) future, in my opinion.
Year Auto units Revenue in $AUD

2021 110,000 $1,248,500
2022 600,000 $6,810,000
2023 1,000,000 $11,350,000
2024 3,200,000 $36,320,000
2025 16,000,000 $181,600,000
2026 26,400,000 $299,640,000
2027 34,400,000 $390,440,000
2028 44,800,000 $508,480,000

The above assumes we charge $11.3 per unit. Which can be deducted from previous presentations, and we win the majority of the RFQ's

So, if we lost 13.775 in six months, we need to see additional revenue of at least 27.5m from OEM before we break even. Let’s say 27m if aftermarket makes an extra 0.5m
I suspect it needs to be a little more than that, as our costs are increasing with extra staff, in going for the potential growth.
So, if you believe my chart projections above, financial year 2024, (which is July 2023 to June 2024), is when we should break even. As OEM revenue hits $36m
I don’t believe anything that could come along, from the myriad of opportunities that may emerge can change that. Basically, because as we have seen with the business we are in, everything takes 2 years from announcement to actually putting some bread on the table.
So, there is little that can change the financials from now until 2024. But new stuff could enhance the post 2024 situation.
After that, things get interesting.
2025 is the big year as auto units increase by some 400%, and its here that we should start to make some real money.
After that (if we are still here) it’s all downhill.
As I’ve said before whilst the reward will be very nice when we get there, we need to be patient for a couple of more years. Keep a core holding and trade a few until then is my current policy.
Other than a takeover I don’t see this rerating massively for at least 18 months.

Unlikely to get any further fleet updates with interims.
They tend to only give 6 monthly updates and we have had that already.
Interims Will just confirm trading update.

Fleet mileage figures have been creeping up over the last few weeks, which included a very large jump today.
I'm hoping they have fixed the problem where we lost input from about 30% of the install base.
Hopefully full figures will be fully restored shortly, and we can have a rough idea of where fleet currently stands.

Agreed a very positive interview, and it has done the share price the world of good.
No need to cover the positives, as that's been done admirably by the earlier posts.
So, were there any negatives? Well, someone has to consider them.

1. Great that they have taken on another 40 to 50 engineers, but that comes at a cost, probably A$4m a year, and I doubt they will be the last. So significant additional costs going forward, while we are trying to reach break-even.

2. Paul made the point that we have a healthy $A80 cash position, and then went on to say something along the lines of “we will definitely need it”
This suggests to me that getting past break-even, before this runs out, is going to be tight.
It also suggests that break-even may be pushed back even further. Possibly 2024.
Others may argue that all these improved margins and market share gains will counteract this. However, whilst they are great, I suspect the benefit of these will not be truly felt until further down the line.
We know that they were burning 7.6m a quarter, mid 2021, so I wouldn’t be surprised to see 10m a quarter currently. Won’t take too long to get through 80m when considering some of that money was earmarked to buy in licenses.
So in summary, I’m thinking longer wait for profitability, but greater rewards down the line.

3. Whilst the increased market share sounds significant, and the better margins are always useful, we still lack any actual hard financial forecasts. The share price can only get so far without meaningful forecasts, and I still see that as some time off.
They have clearly decided to go for growth, and I'm fully behind that approach. But important to realize how this affects the evolution of the company.

Phil,
Nice to see a more balanced view on the Trading Update, which actually goes into proper detail, rather than all the one liners (which rarely have any financial context), that the majority churn out on here to support the bull case.
Overall I think I see it very much as you do, ie think the company has a wonderful opportunity, which should only be improving. But increasingly see negatives that bother me.
You raise most of the key points, however I’d go a little further.
1. They still have plenty of cash – True they do, however previous updates have suggested a A$7.6m burn rate per quarter. My calcs suggest that they have burned A$15m in the last quarter 2021, which is a worrying increase. With another 38 vacancies to fill, that will further increase the burn. If it continues then they only have 12 to 15 months money left.
2. You’re right that Fleet only increasing by 5200 installed is poor given they had pre-sold 5000 units.
More worrying though is that despite a 16% increase in installed units, recurring revenue at 18.8m has only increased 6%. Ignore the H1 2021 figure they compare with at 15.8m and use the figure from 2021 results which is 17.2m.
3. Market expectations for FY2002 are for revenue of A$55.6m and EBITDA of A$(32.7m).
Note the $32.7m loss, and that’s before tax and interest. That’s nearly twice as much loss as I had them down for in my model, and I had slightly less revenue. I had them breaking even, around November 2023, but this suggests it may take longer.
4. Whilst I still have confidence, they will get there in the end. Everything shows costs increasing and margins reducing. Which suggests the chances of a 40 or 50 bagger is rapidly receding.

It's an ok TU, depending on your outlook.
As I've before it's becoming clearer by the day that meaningful revenues don't materialise until 2024 and 2025. Until then we are just getting by.
Costs have gone up, because cash in hand, is lower than I'd expected, but that doesn't surprise me, as covid helped hold costs back previously, and we have been recruiting for growth.
Fleet recurring revenue is lower than I'd have expected against installed base, which suggests monitoring margins may have reduced.
So very slightly worse than my conservative expectations.
We are still on course, but not getting there anywhere near as quickly as some on here expect.
Hope it's enough to support the share price.

Lewbo,
Tomorrow is a trading update, not results. Check your own financial calender below.

Would be hoping for ca 35000 units still to be connected including the shell contract Brockwl !

I think you're missing the point. These are units that have already been sold and not connected.
Where the hardware units are already paid for.
That won't be the case with Shell. Some possibly but not 35,000