Swift TV Ltd (STV) Earnings Call Transcript

Excellent. Good morning, ladies and gentlemen. Welcome to the 2024 Annual General Meeting of the members of Swift Networks Group Limited at which the annual financial report, directors' report and auditor's report for the financial year ending 30th of June 2024 will be considered amongst other items of business. I am Charles Fear, the Non-Executive Chairman of Swift Networks Group Limited. A copy of Swift's constitution and share register are available should any member wish to view them. Today's proceedings will be in two parts. Firstly, we will deal with the formal business of the AGM, including the items in the Notice of Meeting itself. The second part will involve a company update, shareholder presentation by our CEO and Managing Director, Brian Mangano. I have satisfied myself that in accordance with the constitution, a quorum is present, and I therefore declare this Annual General Meeting open. Seated in Swift's Perth Boardroom are Swift's Managing Director, Brian Mangano; Non-Executive Director, Brad Denison; Company Secretary, Suzie Foreman; and CFO, Ryan Sofoulis. Joining us via video conference is Swift's Non-Executive Director, Pippa Leary. Also in attendance is the company auditor from BDO, Jarrad Prue. Mr. Prue is in attendance to answer any questions you may have regarding Swift's 2024 audited accounts. I note the company did not receive any written questions submitted before the AGM for the auditor. I have been informed that the Notice of Annual General Meeting dated 15th of October 2024 and the addendum dated 22nd of October 2024, together with the notice, was made available to all registered members within the notice period required. A copy of the notice is available on request. I now table the notice. And unless there are any objections, I will take the notice convening the AGM as read. Are there any questions? No. Thank you. We'll now move to the formal business of today's Annual General Meeting. Proxy voting instructions received and a summary of each proxy voting instruction are now tabled and available for inspection. I declare the proxies valid in accordance with the constitution. In my capacity as Chairman, I will today request a poll on each of the resolutions. The poll will be taken and the results of which will be released on the ASX platform following the meeting. Swift Networks has received proxy voting instructions from members representing a total of 123,572,487 votes in the company, constituting approximately 90% of the issued capital of the company. I table a summary of the proxy votes for all resolutions. And note during the meeting, I will refer you to the table displayed on the screen for how the proxy votes have been cast on each resolution. The proxy votes received are significantly in favor of each resolution. There are 6 items of business to deal with today, and I propose to take the process as quick and as simple as possible. Please note, I intend to vote all proxies cast in the Chair's discretion in favor of each of the resolutions being considered. We will now commence with considering each item of business and voting on each resolution contained in the notice. I refer you to the first item of business of the Notice of Meeting and table Swift's annual report for the financial year ended 30th of June 2024, which includes the annual financial statements, auditor's report, directors' report and the remuneration report for the financial year ended 30th of June 2024 for consideration by members. Members should note that the financial statements and reports are tabled only for discussion and not for approval by the members. Are there any questions on the financial reports? There being no questions, and as this item does not require a vote, we will move on to the next item of business. I refer you to Resolution 1 of the notice regarding the company's remuneration report for the financial year ended 30th of June 2024. I note that this is a nonbinding ordinary resolution. The resolution and proxy results for Resolution 1 are published on the screen. I now refer you to Resolution 2 of the notice regarding the reelection of Mr. Bradley Denison as a Director. The resolution and proxy results for the resolution are published on the screen. So the resolution is to consider and, if thought fit, pass with or without amendment the following resolution as an ordinary resolution, that Mr. Bradley Denison, who retires by rotation in accordance with Article 7.2 of the constitution, Listing Rule 14.5, and for all other purposes, being eligible and offering himself for reelection, is reelected as a Director as described in the explanatory statement. As you can see, it was overwhelmingly in favor. I now refer you to Resolution 3 of the notice regarding the approval of an additional 10% placement capacity in accordance with Listing Rule 7.1A. The resolution and proxy results for Resolution 3 can be viewed on the screen. I note that this resolution is a special resolution. So the resolution is to consider and, if thought fit, to pass with or without amendment the following resolution as a special resolution, that, for the purposes of Listing Rule 7.1A and for all other purposes, approval is given for the company to issue equity securities under the additional 10% placement capacity as described in the explanatory statement. Again, I notice that the votes are significantly in favor of this resolution. So I declare the resolution passed. I now refer you to Resolutions 4a and 4b of the notice regarding the approval to issue securities to Mr. Brian Mangano comprising of, a, 1,862,489 shares and 1,862,489 performance rights. The resolutions and the proxy results for the resolutions 4a and b are published on the screen. The resolution is to consider and, if thought fit, to pass with or without amendment the following resolution as an ordinary resolution, that, pursuant to and in accordance with Listing Rule 10.14 and for all other purposes, shareholders approve the issue of securities to Mr. Brian Mangano or his representative nominees as follows: 1,862,489 performance shares as described in the explanatory statement. And again, I note that the votes are significantly in favor of. And do we have b, Brian? Yes, we do. That, pursuant to and in accordance with Resolution 10.14 and for all other purposes, shareholders approve the issue of securities to Mr. Brian Mangano or his representative nominees as follows: 1,862,489 performance rights as described in the explanatory statement. Again, I note that the votes are substantially in favor, and I declare the resolution passed. I refer you to Resolution 5 in the notice regarding the renewed approval of the Swift employee incentive plans for approval of up to 40 million securities under the employee securities incentive plan. Note that this is a requirement under Listing Rules to specify and obtain approval for a maximum number of securities to be issued under the plan. The resolution and the proxy results for Resolution 5 are published on the screen. The resolution is to consider and, if thought fit, to pass with or without amendment the following resolution as an ordinary resolution, that, pursuant to and in accordance with Exception 13(b) of the Listing Rule 7.2 and for all other purposes, the shareholders approve the issue of up to 40 million securities under the Swift Networks Group employee securities incentive plan pursuant to Exception 13(b) of Listing Rule 7.2 as described in the explanatory statement. Again, I note that the proxies are in favor of this resolution. I now refer you to Resolution 6 regarding the appointment of BDO Audit Pty Ltd as auditor of the company with effect from the closure of the meeting. The resolution and proxy results for Resolution 6 are published on the screen. So the resolution is to consider and, if thought fit, to pass without amendment the following resolution as an ordinary resolution, that, for the purposes of Section 327B of the Corporations Act and for all other purposes, BDO Audit Pty Ltd, having been nominated and having consented in writing to act as auditor for the company, be appointed as auditor of the company with effect from the closure of the meeting. Again, I note that the proxy slots have been voted in favor of the resolution. Does any member have any questions related to the resolution? There being no questions, we will now conduct a poll for each of the resolutions numbered 1 to 6. For the purposes of the poll, I appoint Suzie Foreman, the Company Secretary, to act as returning officer. There are no persons present at the meeting, physically present at the meeting, I think, Suzie?

That's right, Charles.

I declare that the poll closed and the results of the poll will be released on the ASX platform following the meeting. I would now like to open the floor to general questions for the Board and management. I don't believe there were any questions submitted online, Suzie?

No.

Okay. Are there any questions of the CEO Board? There being no further question, that concludes the question-and-answer session. As there are no other business that can be brought before the meeting, I formally declare this meeting closed at 9:42 p.m. Western Standard Time. I thank you for your attendance and participation in Swift's 2024 AGM, and I thank you for your attendance continued investment in Swift. That being the formal close of the meeting, I now ask Brian Mangano to provide an investor update and company presentation. Thank you. Brian?

Thank you, Charles. Just quickly a bit of an update or a refresher for those who don't know exactly what Swift does. We spent a bit of time really trying to hone our messaging, Swift provides really an enterprise-based connected TV platform. So we're not a B2C product. We're basically a business-to-business product. So that has strengths, and the biggest strength of that is basically long-term relationships with some top-tier customers that Swift has developed for over 10-plus years, in some cases. So really looking at the company and the attributes of the company that are shared by all here, we've basically developed this technology, which has something like over 1 million lines of code, that has actually gone into this platform that's been developed over the 10-plus years of this business. So it's not something that can be developed overnight. This is not a mobile app-based iOS or Android solution. It's basically a high-end TV platform hardware-enabled SaaS solution that we have developed. We've also worked on aligning our product road map to actually open up new markets for us. So we spent the last year developing, and we just launched last month into a large aged care conference, our new user interface, which is not just a new user interface, but is also a new user experience that brings together a lot of features and functionality that really culminated in a lot of the 10 years plus of development that Swift has put into this product. We have also a very enviable blue-chip client base. So we have some of the best and biggest, both in aged care and mining, customers that Swift has developed over the years. So the takeaway from here is we have a very good path to a very strong market. Additionally, we have annualized, at the moment, about $15 million of subscription revenue. So when you look at that in context, our market cap is about 1/3 of what our annual subscription revenue is. Aligned to all of that and really what we've developed over the last 3.5 years of my tenure here, we've stabilized the platform, grown new tech, have a new user interface. And we've done all this and still maintained a cash flow stable business. So in 3.5 years, we have not raised any capital. In fact, we've had over $5 million go out of the business in terms of financing interest charges and repayment of debt. So we've been able to do all of this with that background as a business. So looking a bit of what really brings together Swift into a solution. We have what we call a hardware-enabled SaaS, that's our connected TV device. Within this, this operates as an entertainment platform, but also as a comms information platform that also has capability now of transactional financial transactions. It can now happen on our platform. In addition, we also provide support, training, installation and all the infrastructure associated with bringing together our platform on a TV in some of the most arduous environments in the world, whether that's an oil rig in the East Timor Sea or a big large aged care facility in the CBD. And what we're basically doing is trying to move from our traditional markets, being mining and resources and aged care, which effectively, we had the false start with COVID, and we've only really relaunched in aged care recently, but moving with our tech and, as our tech develops, into retirement living, into global markets and also into in-home care markets. And that's really what's driving our technology pathway as we move forward. So just looking at our Swift ecosystem, one of the things we've developed, and when I mentioned user experience, it's not just the features and functionality that appear on the screen but the ability to integrate our technology and our platform into other providers. So there's a plethora of applications out there that are designed for mobile apps. Basically, a lot of the providers or a lot of these people who actually come up with these apps don't have the capability of rendering these on a TV. They can mirror them on a TV, but they can't actually interrelate with the TV screen and the remote control as well. So what we've designed, through the back-end APIs of our product, is the ability to integrate. So we have already integration partners with Checked in Care, who's an aged care data management provider; Tell Touch, they provide customer satisfaction surveys in aged care. So we've taken their tech and we can now render that onto the TV. So it can provide all sorts of functionality, the ability to do surveys on the TV or the ability to order meals, the ability to render medical information on the screen, if that's desired. So all that functionality is there. And in fact, the industry is trying to look at using this functionality to basically fill in the void of a lot of the new regulatory environment that's coming in the industry, which I'll touch on a bit later. In addition to that, Swift has its own app, which is called My Family My Community app. And this app allows the family of people in aged care to provide not just videos and pictures onto the resident's actual TV screen, but it's quite a powerful communications tool that will, in the future, allow even transactions to actually be purchased on behalf of the resident on the TV as well. So it allows aged care providers to harness other revenue streams that don't presently exist. This is all supported by a recently upgraded new, very intuitive back-end interface, which the aged care provider or in the mining area can basically manage all the notices or information that they wish to put on the TV screen, so really to make a lot easier for people to actually use. So looking at really the challenges that we basically address as a product. As I mentioned in aged care, there's a lot of regulatory issues, and it's a very regulated environment. And this is something that's just changed this week with the introduction of the new aged care bill and the passing of that bill through parliament. This has imposed a lot of regulations and changes around aged care and how they deal with additional services. So Swift offers a solution which allows aged care providers to generate revenue from the Swift platform through the ability to order additional goods and services from both the resident in their room or their families remotely. Looking at number two, we've got high bandwidth. Now this bandwidth issue is traditionally was an issue in mining, but it's also an issue in even a CBD aged care-based facility with 100-plus rooms. So our tech basically provides a faster, more reliable technology. The cost is a big issue, again, in aged care, and we also offer our solution in terms of both aged care and mining, providing a way for providers to actually save costs through our system and through its support ability. Efficiency is probably the fourth item there. We have various tools that can actually help with efficiency in terms of circulation and notices, manual handling of these things, things that can actually be concentrated on to the TV screen. And of course, then in aged care and also in mining, there's the psychosocial issues that are both present in each. And these can be solved with Swift, whether it's live streaming of services in aged care or various other tools and social tools, whether it's well-being content that can actually be provided in the mining environment. Looking at our competitive landscape, where we sit and where we see ourselves in amongst the streaming services. When you see what's out there at present, we have a lot of streaming services, which are hardware supported. Those things like Google, Apple TV, Fetch, Hubbl. These are basically residential mass market products that are designed to stream and aggregate a whole lot of residential content, entertainment content only. What Swift is, is really a commercial product that provides the communication tools and tools that can actually be tailored for the two environments in which we are actually targeting, which is aged care and mining. So we have that high ability to integrate along with that commercial solution. The closest thing to us is maybe a hospitality-based smart TV, where some notices can be put up on the TV or a traditional pay TV product. So we come from really targeting those two industries which we've actually focused both not just our technology efforts but also our marketing efforts as well. So when you look at the two industries, just briefly, and please take your time, go to our website or our investor hub or the ASX, and you can download our short 1-minute promo demo for both mining and aged care. But really, the takeaway from this slide is, in mining, we provide a resort-style experience. So it's a high-end resort experience that provides more than just the traditional entertainment scenario. So providing that workplace health and safety training activities and events, whether it's a corporate messaging from head office or the barbecue that's happening on camp at night. These are the sort of things that we can do in an environment where you can have up to 3,000 rooms in a very concentrated mine site environment. Now we've only really been in mining since June '22 with our new products, Swift Access. So we've sold close to 10,000 screens in Swift Access, so currently 6.5% of the market, and we have considerable room for growth within our existing client base. So these are all clients that we currently service with huge scope in which to grow. Some clients have us completely across their portfolio, some we've only just started with. So there's huge potential just with our existing clients, a little on the new clients that aren't on that list. Looking at our aged care solution, this is a more resident-focused personal solution. So it still is driven by the same tech and the same platform at the end of the day, but it is more of that real personal solution. And we've actually spent a lot of investment on the AI aspects that this brings to aged care. So we have a functionality that allows the system to recognize what time of the day is. It can provide recognition to the person in the room. We can even, subject to the integration into the back-of-house systems, put, for instance, the medication for that particular individual that they might need to have with breakfast on the screen. So these are the sort of functionalities that can happen. But also with the AI, it can actually learn what's the preferences of that person in Room 8B. It might be that they watch Channel 7 at 4:00 every day. That then with our TV, it will allow that to be, first and foremost, as the first thing that they turn on at that point in time. So it's very much machine learning. And these are the benefits that AI can bring. And this is particularly important in a market where you have dementia issues and you want to really provide something that is effectively choice but simplifies the delivery of that choice. Looking at the aged care market, as I mentioned earlier, we really have had a rebirth in that market. We've only really relaunched not just our new user interface but effectively the brand last month at the big aged care conference in Adelaide. And this aged care conference is where the C-suites of all the major aged care providers attend and present, so something like 2,500 delegates. So since that conference, we've had, I think, about 12 different requests for demonstrations and for further engagement on the product. I think those 12 sites or 12 providers represent something like 11,000 rooms. So we're still really in our infancy in this market. So we are just really scratching the surface at this point. So when you look at our providers, again, we have some of the largest providers from Opal being the largest, through to a whole range of local providers in Perth, through to a range across Australia. So someone like an Opal, who we are looking at a proof of concept with at the moment, they have 12,000 sites. They recently acquired the BlueCross site. So they're the largest provider, so a huge opportunity for us. And they see us as hopefully the future of this type of technology in residential aged care. Looking at the international market opportunity. As we evolve into our next generation of hardware, so it's a smaller TV device that's more compact, has more functionality, will be actually certified by Google, this device will be something that we can actually take to international markets. So it could either be white labeled or as a subscription-based product. So as I mentioned earlier, in this market, there is a lot of activity in terms of mobile apps, so apps that are designed for your mobile phone or an iPad. There is a lot of issues with those in an aged care and a mining environment: someone has to keep them charged, they get lost, they get broken, they have all sorts of issues. At the end of the day, the TV is still the interface of choice. It's a larger screen. It sits there on the wall. It's safe. And that's really where we're finding that people want things rendered. So there's a real demand in this industry, and we've looked pretty thoroughly at the U.S. market and other international markets to see is there a product that actually renders this properly onto a TV, and there isn't at the moment. You can basically do it maybe by moving HDMIs and casting these type of things on the TV, but there's not something that actually interfaces with the TV. So it utilizes the remote control to actually add that functionality to the TV screen. So that's something which we'd like to pursue as we release our new hardware device. Just turning quickly to our financials. It is our Annual General Meeting, so it's a good time to sort of reflect back on the year that was. Most of you will probably be aware of these numbers. We're sitting at a revenue of sub-$20 million at the moment, but we're generating an enterprise EBITDA of $2.4 million. That's after excluding corporate costs, the cost to be listed, which gets us to a group EBITDA of about $1.4 million. For the last financial year, we had a subscription revenue base of $14.5 million for the year, but we're now sitting at about $15 million. That 65% gives you some idea of our growth rate of Swift Access. So you really got to see us as almost a new start-up that we've basically gone through this period of change of fixing the tech debt within the business, but also now we've basically launched a new user interface, and that's where we're charting our future. We have a strong, what we call, a stable cash position. At 30 September, it was $2 million. So we sit at that level. It sort of shows you the strength of this business, again, that we can do all this development work, pay interest bills and keep the business in a sustainable cash position. So it gives you an idea of the strength. So think of us as a start-up that's already well and truly on its way with also a very strong path to market. And this gives you an idea of our mining sales and our aged care sales and combined sales of Swift Access in the short period since June '22. So considering that both markets had their own issues as they came out of COVID, these are great numbers, which we will see growing substantially over the course of the next 2 years. Just to give you a bit of an idea of the transition of Swift, and this is rather illustrative. As we move more to this hardware-enabled SaaS product, this is a very high-margin product. So Swift has traditionally resold traditional pay TV product. We are basically moving away from that. That was a low-margin product and really is opening up the market for us to sell our own product, and that's where we're seeing that large increase in sales. One of the other factors that contributes to sales is what we call project revenue. Now that's the installation of our product, but it also could include the upgrading of the WiFi system on a mining site or within an aged care accommodation village. So that tends to be lumpy in nature. One year, it could be $4 million, $5 million. Next year, it could be $3 million. It depends on timing. But that's sort of the main driver of growth. At the end of the day, it really is the Swift product revenue that is really driving the growth of this business. And that's what I ask all of you to hold us to account on and chart that as we go forward. So just sort of winding back to the markets and looking at the real market opportunity, and this is where the road map is really linked back to those markets. So we're sitting here at the moment with only access to the mining and aged care market. The retirement living market will come with this new device that has the functionality, so you don't need to change sources or move HDMI cables or this sort of thing. So it's a lot more integrated device with a lot more features and functionality, which I probably won't go through publicly. We want to hold some of this back from our competitors, shall we say. This is all integrated with what will be a new updated remote control. So it has the latest available chipset that is probably really a few generations beyond not just our competitors in the commercial type environment, but also even in the domestic environment with a mass type product like Google's new release, Box. Our product is quite a few generations beyond in terms of chipset because it is really a design as a high-end product to take TVs to that next level. So when you look at the TV landscape over the last probably 10 years, TV manufacturers have really centered their technology on the resolution and the vibrance of color within their TVs. The software package that actually drives the TV really is evolving and changing, and it isn't really enabled to the level that can provide a high-grade commercial solution with all the functionality. You can do a domestic sort of solution where you can basically pull down your Netflix app and various things like that. But even within that environment, you have issues where suddenly your 3- or 4-year-old Samsung TV doesn't run Binge or something like that. So the whole idea of having a box, and this, as I say, reflects the trend in the domestic market that if you want to have your TV to do more, you've really got to do it in a box as opposed to trying to use the software within a TV, which keeps changing, is limited and is very costly if you've got to keep changing the TV for an aged care provider with 12,000 rooms every time the software changes because you want to add a bit of new functionality to your system. And that's really why we do what we do. And when we move to the next version, which will be a cloud-based product, this opens up the whole in-home care market. So there's a huge area there not just in aged care but also the NDIS as well to provide a communication tool between providers and people at home on the TV screen. This can be further integrated into various devices around the home, whether it be a doorbell camera, so that a doorbell push could actually be then rendered on the TV in the middle of a Netflix program to let you know who's at the doorbell without you having to get up, having to find the mobile phone or the tablet or whatever other device that gets you into seeing who's at your door. So it could be quite handy for those of us who don't want to move off the couch like myself sometimes. Looking at what's going to happen over the next 12 months, really mining, oil and gas, we see a lot of expansions and a lot of upgrades in amongst our existing customers. So there's a lot of work going on at the moment as people need to bring their WiFi systems up to the next level. We're also seeing a move away from traditional entertainment products. This has been something which has been, I suppose, on the boil for a number of years, but that's really starting to take place with the number of people moving away from what was satellite-derived products looking for more. And they're coming to Swift really looking for an entertainment solution and then they go, "Oh, well, you can provide all this HSC content. You can provide all the communications to our guys, which wasn't previously there." So it's opening up this other area, which we call the engagement part of our platform that people didn't even know existed. So that really provides a compelling argument for people to move to our product. And effectively, we're half the price of traditional pay TV solutions. So we have good profitability even at that level, which allows us to provide a lot more functionality and also probably some of the best entertainment content. In the aged care market, there's been some huge changes in aged care with the new legislation. So we've actually been engaged with a number of providers not just understanding what attributes our product brings to the care and the resident support but also working with providers to integrate with new additional services business model. So with the new legislation, that's provided aged care providers with significant more funding from government, both in terms of direct government funding but also in the residential deposit and the level of residential deposit that aged care providers can now charge for rooms, this allows aged care providers to actually invest now for the first time with certainty in their infrastructure. So it allows us to get our systems in but also, for the provider, it's not just this ability to put entertainment, it's the ability to also generate other revenue, other revenue from the ordering of additional services that can be discretionary ordering from a pizza in the middle of the night or a glass of wine or a hairdresser appointment. These things can be done easily and readily on the TV and hence, provide an additional revenue source for the providers. So this is something we currently do with parts of our system with a number of providers, and that generates a significant revenue stream at the moment. We're basically looking at releasing our next version of that, which will have a lot more functionality to coincide with the adoption, the first adoption, of the new legislation on 1 July, even though there is a 12-month period to actually roll this out. So in addition, the government is also giving providers $10,000 each to towards technology to actually solve these issues for them. So it's a real big focus on the industry. And our big takeaway is we are engaging with a lot of the major providers to provide the best possible solution that is tailored for this industry. So it's a real focus for us. And that is part of the product innovation, and that will really give us that success in both those markets. So really, I think in summary, what we've done as a business is really gone in the bunker over the last 3 years, come out with a very good, stable product with now the next-generation product, which is this new user interface with this new software tech that goes beyond what's available in the market. So in some ways, our technology is actually ahead of what the market is actually demanding. So we can actually work with the market to design the actual interface, the practical solutions to provide the best possible outcome to our clients. So in summary, Swift is now well placed for growth in both 2025 and well beyond. So I'll just ask all of you, please reach out to me personally if you have any questions beyond the presentation for today. And thank you for your time and attendance. It's much appreciated. Thank you.

Thank you, Brian. Shareholders, I'd also like to add to that, thanks to the Board and management for your continued support. This company has great potential, and I look forward to it charging ahead. So that being the case, I declare the AGM and presentation over. Thank you for your attendance and, as I said previously, your ongoing support.