DigitalX Limited (ASX:DCC) Executive Director Leigh Travers provides an update on the company's strategy, its focus on blockchain consulting and development for the enterprise market and digital asset management, the impact of COVID-19, and priorities.
Katrina Bullock: Hello. Katrina Bullock for the Finance News Network. And joining me today from DigitalX (ASX:DCC) is Executive Director Leigh Travers. Leigh, welcome back to the network.
Leigh Travers: Thanks so much. Great to be with you.
Katrina Bullock: Always a pleasure. Now, DigitalX provides blockchain solutions to enterprises and the management of digital assets. Can you bring us up to speed with progress?
Leigh Travers: Yeah, absolutely. So DigitalX provides both blockchain consulting and digital asset funds management to give investors exposure to both elements of the blockchain ecosystem.
On the consulting side, we're fortunate to be working with a tier one professional service firm that provides us access to the world's largest companies to create solutions for where blockchain could be used inside their business. And this consulting is really our Trojan horse, as it allows us to validate real-market demand for blockchain products. And that's something we want to be building and owning for the long term.
Katrina Bullock: Thanks, Leigh. Can you tell us more starting with blockchain consulting and development, and what sorts of clients you're servicing?
Leigh Travers: Yes. That professional service firm, EY, has been really supportive and helpful. Allowing us to get access to these large companies, including through the public sector as well. So, looking at those public sector tender opportunities in the blockchain space is a big area of focus for us. While the start-ups initially led that blockchain movement back in 2017, we're now seeing that it's public sector as well as some of the largest companies that are really starting to adopt the technology. We originally thought it was probably the SMEs that were going to be next, but I think they're proving to be laggards. And that's why we're sort of focused on the larger companies as well as the public sector. So, I think the pipeline to securing clients has taken a bit longer, but hopefully it will be much more rewarding for us as well.
Katrina Bullock: Now, Leigh, you touched on COVID. What impact has COVID-19 had on the broader business?
Leigh Travers: Yeah, that COVID-19 impact was initially quite strong. Our blockchain centre, our consulting workshops, were pretty heavily impacted to start off with. However, we're really fortunate being over in WA, that in line with state guidance, we've been able to bring both of those elements back. And the blockchain centre is actually at full capacity now. So, that's been quite an interesting and positive development for us.
And then secondly, on the digital assets side, having that huge amount of global government stimulus directed at increasing the money supply, putting money in the hands of individuals around the world, has obviously been a tremendous support for Bitcoin and digital assets more generally.
Katrina Bullock: Thanks Leigh. We'd love to hear a little bit more about blockchain smart contracts. What can you tell us?
Leigh Travers: So this is a strong area that our development team really focus on. A cornerstone client for us has been xbullion. They're in the gold sector. So, where we're at now is using blockchain to improve the traditional experience of buying physical gold bullion. With xbullion, investors will be able to get exposure to audited, insured, vaulted, physical gold bullion, at a fraction of the cost as what they could traditionally. So, I really think xbullion is going to play a major role in a bit of a transformation in how investors acquire physical gold in the future.
Katrina Bullock: And Leigh, can you tell us more about the growth in your digital asset business?
Leigh Travers: On the funds management side, we have had the diversified digital asset fund up and running for a period of time, but bringing the DigitalX Bitcoin Fund to the front of our funds management focus as the flagship fund I think has been really important. We see Bitcoin, and we're actually starting to see traditional investors as well start to see Bitcoin, as part of a diversified portfolio. And where we sit is bridging that gap, providing that technical and administration support, using a traditional fund product to give investors that exposure to Bitcoin and what has been the best-performing asset class over the last decade, and certainly through COVID and beyond has been performing quite strongly.
So, where we want investors to play is just to be able to make investment decisions, and we can sit in and provide all that technical administration support, so they can make asset allocation to this sector and get exposure to some of this tremendous upside that we see.
Katrina Bullock: Sounds very positive. Now, turning to finances and strategy, could you give us a comment on each?
Leigh Travers: Our quarterly report, which was just released, does show a pretty positive picture. Operating costs have reduced by 59 per cent over the period. And that's part of the measures that the board has taken to really provide investors exposure to Bitcoin, as well as having a really long runway for delivering some of the products from our innovation department. So, the working cap comes out at over $10 million. And if you just strip out the cash component of that, we do have over 12 quarters of runway to go.
So, from a financial point of view, we're in pretty good shape. And on the innovation side, the team has been working really hard to bring a product to market over the second half of the year. So yeah, look forward to bringing that to market, hopefully soon.
Katrina Bullock: And can you provide an update on the share price?
Leigh Travers: Over the last three months, the share price has been responding really positively to both the market opportunity that we have, and then also recognising that DigitalX is the leading digital asset exposure. So, in terms of our treasury, we've got the largest Bitcoin position of any ASX company, and seeing new shareholders come on the register. We've seen days of over a million dollars in trade volume per day. So, that's been really positive to get that recognition from a share price and new investor perspective.
Our innovation work has been really strong. So if we can bring something to market that we've been working on, as well as grow the funds under management division over the next 12 months, I think I'd be really pleased with that, and hopefully our shareholders will too.
Katrina Bullock: Leigh Travers, thank you so much for taking the time today to give us an update, and good luck with the new initiatives.
Leigh Travers: Thanks. Great to be a part of it. Cheers.