Orcoda Limited (ODA) Earnings Call Transcript

[indiscernible] for Orcoda's quarterly update webinar. We plan to do this about once a quarter. And I just wanted to use my few minutes today to focus on what I believe are the most important changes taking place at Orcoda. So our rough agenda will be that I will talk for 3 or 5 minutes. Our Managing Director, Geoff Jamieson, will provide some detail on what's going on at the operation and business level, and then we'll just open it up to some questions. We expect that the whole webinar will be 15 or 20 minutes. This supports our announcement that went out to the ASX this morning. So I guess what we wanted to get across or what I wanted to get across first is that the growth in the quality of our revenue base is changing and particularly what we call annual recurring revenue, ARR. So whenever you see that acronym, ARR, we're referring to revenue that happens again and again. Financial year '26 was a year of quite a lot of operational improvement, strategic repositioning, and we improved our EBITDA, we reduced our net loss and we moved our operating cash flow back into positive territory. We also grew our revenue base from a recurring perspective. At the end of financial year '26, our annual recurring revenue was about $6.2 million. Entering FY '27 and following the Wagner Wellcamp contract, which was established in June, the annual recurring revenue increased to about $14.2 million. So that's a big increase. And today, I believe the ARR is $14.7 million, and we've got $15 million in sight in -- at some point in the near future. So that's the number we want the shareholders to focus on. We have moved from $6.2 million annual recurring revenue at the end of financial year '26 to what will soon be $15 million. This is a very significant change in the quality and visibility of Orcoda's revenue base. This matters because recurring revenue gives us greater earnings, visibility and better financial predictability. It also fosters deeper customer relationships over time, more robust operating leverage, and this is where the Board sees the core of Orcoda's future value. Our priority is to continue going -- growing, not going, recurring revenue through our platforms, particularly through our Transport360, Contracto360 Software-as-a-Service platforms, but also supported by our entities future fleet and the better group up in ROCE, our broader and more agile operating capabilities. These other parts of the group, future fleet and TVG, we call, which is the better group remain very important to us. Increasingly, we see them as enablers of our software strategy. They give us access to connections to new customers. They put Orcoda inside more complex opportunities to deploy more of our software technology. This effect is particularly evident at the Wagner Wellcamp project into Wamr Queensland. The Wagner relationship is an important while not simply because it generates revenue, it is important because it demonstrates how Contracto360 as an application can become embedded in a major workforce and infrastructure environment to form part of the way that customer operates. This is a model for our future projects. The first quarter of financial year '27 shows momentum is coming through more broadly. The group revenue was approximately $6.2 million for the quarter, up 63% on the previous quarter, while customer cash receipts increased by -- increased to $4.8 million. Resource and infrastructure revenue increased strongly to approximately $4.45 million, up 154% on the previous quarter. And it's really pleasing to see that the resource and infrastructure business is recovering by diversifying its customer base and becoming a stronger platform from which we can introduce Orcoda's software technologies. I want to be very clear, the Board does not see Orcoda's future as simply growing contracting revenue. Contracting revenue is important to us, but also ARR, annual recurring revenue, services revenue is important. They are complementary, but ARR is the engine we want to grow. As Chairman, I want to say something about governance. As Orcoda grows, the Board has a responsibility to make sure our governance and commercial disciplines and oversight grow with it. That's why I'm particularly pleased to welcome Peter [indiscernible] who has joined the Board recently as an Independent non-Executive Director. Peter brings extensive leadership and governance experience, including senior multinational organizations, ASX company experience, he's done turnarounds and has deep knowledge of the mining and resources sector. These relationships will also be valuable as Orcoda pursues its larger customers and more complex commercial opportunities that exist out there today. Peter's appointment strengthens the Board at an important point in Orcoda's development. Now that we have a much larger and growing recurring revenue base, Peter's experience will also be crucial to developing new opportunities across our technology platforms given that our business is becoming more complex. Strong governance, disciplined execution and clear accountability are therefore increasingly important as we scale. This includes both from the Board and the broader team on the ground doing the work. In summary, where are we today? We have significantly increased our annual recurring revenue. We have returned to a strong quarterly revenue growth. We have a broader customer base than before. We have strengthened the Board, and we have a much clearer view of where we want to create value in the market. The challenge now is to execute cleanly and we've got a team on the ground that's well equipped to do that. Our first quarter has been encouraging, but this is only the start. On behalf of the Board, I want to say thank you very much to the shareholders for their continued support, our customers for their confidence in Orcoda and our team that worked with us for everything they have done to get us in this position today. I would like to now hand over to our Managing Director, Geoff Jamieson, who's going to take you through the business progress in a bit more detail. Geoff, over to you.

Thank you, Brandon, and that was very thorough and well done, Mr. Chairman. I would like to just reiterate to shareholders about our ARR, which is the most important part of our business. I'll go into a little bit more detail of what it's made up of, and the margins that we achieved from our ARR, just so the shareholders and investors out there understand more about what we call annual recurring revenue. Like Brendan said, it was $14.7 million, up $500,000 on what we forecast before. Most of that was from Contracto360 being implemented. And that $500,000 extra is very, very high margin across the 2 software platforms, Transport360 and Contracto360. The ARR itself, if you look at the margins split up, about 50% of that ARR is very high margin, between 70% and 80%. And the other -- the balance, that 50% balance is around 17% margin, but very, very good, strong recurring revenues. And those margins net out to profit at the end of the day, as everyone should understand. The strong pipeline that we have in our business for future contracts, I feel very confident that we're going to drive ARR strongly into the future. And I would like to say also that I'm very confident that this year is going to be a better year than we've ever had before from a revenue perspective, so -- which is very encouraging. And that's on our look forwards. Whilst I can't forecast, I can say that I think it's going to be better than anything we've had in the past, which is great to see, again, particularly since we've had 2 bad periods, most of it all around 1 customer, which, as we stated in the release this morning, that has changed. Our reliance on that 1 customer now has disappeared, and we've got a very, very strong large customer base to share that revenue load. I want to go into a little bit about the business itself because I think the market seems to struggle with what we are all about, and I really want to paint that picture again. We have a very, very strong USP. We have -- I believe we're the only company in the world that's got the full transport ecosystem in our business operations. And I'll just go through that again because what the business is about is optimizing the transport of people, parcels and goods. And we do that through our core assets, which is Transport360 and Contracto360, but the transport ecosystem is made up of a lot more than what our 2 core assets deliver. But the connection of all of those core assets into the Transport ecosystem is critical to our strategy and our USP and our model going forward. If you think about the transport ecosystem, in our opinion, it's made up of 4 parts: one, the vehicles themselves. The vehicles need things in them to control what the vehicle does for its servicing, it's tracking, all of those sorts of things. Telematics does that. Telematics connects all of the in-vehicle AI cameras, it's driver behavior, all of those sorts of things are all connected through the telematics into the computer systems into the vehicles and that's going to become even more relevant as we go into autonomous vehicles, be they trucks, cars, whatever they are. So that's a critical part. The other critical part of that ecosystem, so that's number one. The second part of that ecosystem is the ability to be able to plan, route, schedule and deliver the goods -- people, parcels and goods to where they need to be delivered to the to. They need to b be picked up from somewhere and delivered to somewhere else. That's what our core Transport360 does. The other real important part of that is no good having both of those if you can't book people, parcels and goods into the assets that they're going to travel on whether that be playing bus car, truck, whatever it is. Those things have to travel somewhere and they need to be booked. And Contracto360 is the essence of that booking system. That's where our booking system first started from. It's what our patent is about regarding booking, and that's really about booking people on Transport assets to remote sites, but it still does all the things. It books, people, parcels and goods onto the assets they're going to travel in and then our software goes all of the scheduling, routing and optimization of the deliveries in that whole process. The other critical part and the fourth sector of that transport ecosystem is road, rail and air infrastructure. If you aren't connected into that infrastructure for the future, you don't have a transport egos system. Hence, why we purchased TPG because that has the capability and capacity to teach us how that infrastructure should be built and should be implemented within the Transport ecosystem. So TPG becomes a very, very important part of our process. So we've got the 4 pillars that are critical to a transport ecosystem. What our long-term strategy is and where Orcoda can become the next unicorn is the central part of that whole process. So what we're doing and concentrating hard on is building that central platform that connects all of this into a AI-driven process that were proper management decisions right through that transport ecosystem can be made and that central system will allow other -- all of the other plethora of software programs out there in the marketplace that we participate in to join in with our system and our central platform at the end of the day. So we're not there competing against anybody. We're there enhancing what the whole marketplace is doing to make it a far better marketplace. And that is all being driven and will be driven by AI, digital twins and all of the things that are required to drive a central platform that delivers the decision-making process for all of the people, parcels, goods and the clients and customers out there in that marketplace to deliver a better transport ecosystem. The only person that I know out there in the marketplace is thinking a bit like this at the moment is probably Musk. And he, I believe, is thinking along some of this process, but we -- I believe we're even ahead of that in our thought process; we now have to deliver. And that's our long-term strategy, has been from the last 3, 4 or 5 years. But bringing it all together is a massive job. But at the end of the day, I think the shareholders will be very, very happy if we are able to pull this off and our share price should perform accordingly as it comes together. We're actively out there looking for a new CEO at the moment. And it will be his job to implement this, and we're looking for somebody with the skills that can bring all this together for us in the way that I see the future of that ecosystem looking like. But the good part about it Orcoda has a USP, we're the only ones in the world that have got the 4 critical parts to make this work. So I will open up the floor to questions at the moment, which you can send in from -- we'll open those up and Brendan and I will answer those if you have any questions on where we're going, what we're doing, what the future looks like? And is there anything anymore anybody would like to ask, we're happy to answer.

So Geoff, I'll jump in here. There doesn't appear to be any question, but what is encouraging is we've got 24 people listening in and that's probably double what we thought we'd do in the first one. So if we do this regularly, then it provides a bit more color to the quarterly updates.

So there's a question that's just come in by the looks of things.

Yes. [ Matthew ], I'm very happy to talk about that because 1 thing that's occurred and it's occurred to every single company across Australia at the moment. Our cash position was affected in this quarter, purely because for the first time, the ITO decided that all of us have to now pay all of our PAYG and superannuation in everything else we pay people, which meant that we had the last quarter in this quarter, payments which were quarterly payments. And now we got the full quarter of this quarter in our -- that we've had to pay out, which would normally be paid next quarter. So that affected our cash position quite dramatically. I hope that answered your question, [ Matthew ].

Yes. He said thank you. So that's good. All right. Well, we've definitely on the move, we've provided you with an update. There's a quarterly update out there. And then, of course, we've opened that up to questions. Let's give it another minute just in case anyone else's typing at the moment; and if not, we'll close it off there, and thank you very much.