Skyfii (ASX:SKF) Presentation, FNN Online Investor Event, May 2021

Company Presentations

Skyfii Limited (ASX:SKF) CEO & Managing Director Wayne Arthur provides an overview of its software which collects and analyses billions of data points each month from a range of venue types to improve the performance of venues, its recent acquisition of CrowdVision, strategy and outlook.

And good afternoon, everybody. Thanks for your time today. As Clive mentioned, my name is Wayne. I'm the CEO, founder of Skyfii. Currently residing in San Francisco. Recently left the Australian shores and looking forward to taking you guys all through a little bit about our history and current performance.

So next slide, please. Thank you.

Next one again. Thanks so much. So just a little bit about who we are. So, as Clive mentioned, we operate in the physical venue space. We are a software and services company. At our core, we have developed a technology solution that overlays over the existing infrastructure in shopping centres, airports, department store, retail groups, restaurants, smart cities, universities, basically anywhere there's large volumes and movement of people, we have an application. And our software overlays over things like Wi-Fi networks, camera systems, to help them understand how people are moving through those spaces in real time. We operate today in 35, different countries. We're rolled out across about 11,000 different venues across those different verticals. And I guess, the space that we occupy is behavioural analytics.

Next slide, please. Those data sources that we work with most commonly include technologies that are typically already installed in these venues. So we are a pure software play. We overlay over public Wi-Fi networks, camera systems, CCTV systems. We integrate directly in with point of sale transaction terminals. We work with beacons. We work with mobile data from the carrier. So, we're helping to bring together all of these different technology sources into one software layer, which reduces the cost of installation of various technologies. It reduces the costs of subscriptions to these technologies. But most importantly, by stitching together all of these different touch points, we provide a much more accurate view of how people are moving through spaces. What the times are the people spend in these areas. Where there is an attraction or where there are not.

Most recently in the COVID era obviously, these applications have been really front of mind for basically every physical venue as they've either stayed open and needed to manage occupancy levels, or as they've looked to reopen with checks and balances in place around crowd management. So, suffice to say that this last 12 months, whilst we weren't immune from the impacts of the initial COVID outbreak, has certainly been an interesting growth period for this business.

Next slide, please. And so essentially, we are a provider of software solutions, as I mentioned. We've built ourselves three different product families that we call Connect Insight and Engage. And broadly, what those technologies are, Connect really is the software layer that is deployed initially in every single technology deployment. It is, as the name suggests, the connector from our cloud-based solution to the local infrastructure. So, it is essentially, the data feed between the local area Wi-Fi network in the building, the camera system in the building, and those types of technologies. And feeds that data from those networks into our cloud system.

Insights is the visualisation tool. That's the part of the product that actually visualises the data around the movements and flow of people. And to give you some examples of what those insights are, in airports, we used a lot to help airports understand curb to gate lounge check-in times. We help them understand queue monitoring metrics. How many people are waiting in queues, how long they're waiting in queues. In shopping centres, it's all about flow of traffic through the centre. It's about understanding which retailers are attracting more traffic than others, and on what days, and during what campaigns. In university campuses, it's more about movement and flow of students on campus. It's about understanding student attendance to various lectures and optimising the staffing around those. In big box retail, it's more about customer loyalty and retention. It's about understanding the impact of local area marketing events on driving traffic. And again, in the current climate, it's very much about understanding real-time occupancy levels.

Engage is the marketing solution. It's the marketing component of our platform. It's a fully baked marketing product, which allows customers to either send out marketing messages to people within their venues. More importantly though and most recently, it's been used more for alerting thresholds when occupancy levels reached certain numbers. It's also used for customer sentiment surveys as well in a lot of our venue types.

And then, the final product is not a software as a service solution. It's more of a professional services outfit. That's our Labs environment. As the name suggests it's our research and innovation product. That's where a lot of our customisation takes place. It's also where our data and marketing services teams reside. And when I talk a little bit later on about our revenue model, we also, in addition to providing software products, which are typically long-term recurring revenue generators. We also provide professional services in the form of data consultants and marketing strategists to help these venues actually utilise the insights and apply them to specific and customised business cases.

Next slide, please. So, some of the key highlights for the business outside of the product itself. We have made a relatively strong statement in recent years about becoming the number one player in this space over the next three years. We have made four acquisitions to support our organic growth in order to be the industry consolidating our space. The most recent acquisition we made is a company called CrowdVision, who are in the top three leading suppliers of security technology to airports today. This business works... Within our ecosystem broadly, they operate a software as a service solution that utilises data from cameras and LiDAR sensors, but predominantly focused on security checkpoints, immigration checkpoints, and ticketing checkpoints within airports.

So, we bought this company. We announced the acquisition about a month ago. We're absolutely thrilled for various reasons. First of which is, it's a technology source is rooted in computer vision and utilises a large amount of artificial intelligence, which will amplify our own product stack over time.

Second of all, the business has a very similar financial profile to our own. They operate about a 60%, 40% split between recurring revenue and non-recurring revenue, much like ours. And also, on longterm stickier revenue contracts. They've got a very, very strong customer base, predominantly today in the airport space. They're in 13 out of the top 30 airports in the United States, some of the biggest names.

And I'll talk about some of those in the next slide. They've also enabled some very key partnerships, which we're obviously looking to get behind, now that these airports are reopening and reopening to full capacity. One of those is with the TSA CrowdVision is the only TSA approved supplier for checkpoint analytics in the United States currently. And then, I guess the big part of this acquisition obviously, it is a counter-cyclical acquisition. We've picked this business up as the sector itself is rebounding. And we also see adjacent opportunities within other verticals, including stadiums, as they begin to be open shortly in the future.

Next slide, please. So, as I mentioned, CrowdVision uses AI, artificial intelligence, to deliver its solution. A lot of business rules that drive, being able to actually observe and manage traffic in large volumes and queues. Much like check-in desks, security check-in zones, and immigration zones as depicted here.

Next slide, please. Some of those customers that I mentioned, as I mentioned, 13 out of the top 30 airports in the US as determined by passenger volumes. So that includes JFK, LaGuardia. They're also in Europe, in Heathrow and London city, Miami, Chicago O'Hare, and Phoenix, to name a few.

Next slide. Thank you. I spoke a little bit about our financial model. Quite simply, we deliver our revenues in two forms. Recurring revenues, which are typically long-term three to five-year contracts, where we charge a subscription fee per venue per month. Depending on whether they are buying one of those three software products that I mentioned. And then, non-recurring revenues, which is largely related to our services team. Typically our data scientists or digital strategists are our providers as consultants to a lot of our enterprise customers, to help amplify the insights that the product actually delivers. And so that's a non-recurring component of our revenue mix. About a 60/40 split in favour of recurring revenues.

Next slide. Thank you. So to give you some idea of the revenue history of the business, we have delivered over the last four years an average CAGR at the recurring revenue level of close on 60%. The business has been a very strong performer, double digit growth quarter on quarter, every quarter pretty much through that period. Aside from Q4 of last year in FY20 where, like a lot of businesses obviously, the initial impact of COVID were felt. But pleasing to see that we've we've recovered, we have returned to that pre-COVID growth trajectory today. And we also have maintained over that four year period, a positive operating EBITDA position and a very, very strong cash position as well.

Next slide. Thank you. So, in terms of some guidance in terms of forward-looking metrics, we have started to provide investors with a snapshot of our rolling 12 month pipeline, which doesn't include everything in our pipeline. It just looks at opportunities that are at a sufficient stage in our pipe to be converted. And at the stage, our pipeline, exclusive of the CrowdVision business, which we just recently acquired, stands at about $30 million in terms of revenue opportunities into this next 12 month period. That's up 30% since the previous quarter. And so, we've certainly started to see, in terms of a lead indicator, the return to the pipeline. A lot of deals that have now become top priorities for businesses, as they start to reopen and look to reopen safely, they need to implement these kinds of technologies so that they've got a good check and balance on customer movement patterns in their venues.

We provided some guidance at the end of the last quarter, which was a slight improvement than the guidance provided at the previous quarter. So we are expecting to deliver a little under $16 million in this financial year, with somewhere between 11 and 12 million of that in recurring revenues.

Next slide. Thank you. So in closing, couple of things I'd like to point out in terms of our outlook. We have been particularly focused in the last month and will be focused over the next quarter until the end of the fin year, on some investment around a couple of key players in the business. As noted, we just recently acquired the CrowdVision business. We are part the way through the integration of that company. And looking to really turbocharge, particularly around sales and marketing, as we take that product to market and invest in the integration of the two technologies in the backend. And so, certainly some investment in those two areas over the next three to six months. This is definitely a period where we will be looking to leverage that rebound story, particularly in the airport spaces. Airports all around the world have started to reopen at certain levels of capacity. But also, the applications of particularly the CrowdVision technology around security checkpoints in event centres and stadiums, as they look to reopen as well.

We have launched a number of different product initiatives over the course of our history. We run an Agile product development process. And so that's not a new thing for us. But during the COVID era, we did launch a series of products around occupancy monitoring, social distancing management, and contact tracing, which have all done extremely well over the period. So, we will continue to look for market opportunities obviously, in the next coming quarters as well.

We've maintained a positive operating EBITDA position, as I mentioned. That is something that we will continue to do over time. We certainly look to fund our growth on our own balance sheet. And so certainly, we will be looking to maintain profitable operations moving forward.

Then, the integration component for CrowdVision into the Skyfii core business, is obviously a really, really key factor for us over the next six to nine months, as we look to rationalise and create efficiencies both on the cost side, but also on the revenue side in that period. And then, as mentioned, we have been pretty active. We are looking and aim to be the number one provider of behavioural analytics in the world. We're on our way to doing so.
We have started to consolidate what is a relatively fragmented market already. And certainly, we'll be on the lookout to continue to pursue accreted acquisitions as they become available to us to compliment what is a very, very strong, organic and profitable growth rate story already.

So, with that, if I go to the next slide, please, I'll leave you with some contact details. I thank you all for your time. And if you'd like to reach out, please do reach out to either John, our COO who is Sydney based, or Craig, who is our investor relations consultant. But with that, I'll hand back to you, Clive.