Vection Technologies (ASX:VR1): Fairdinkum or just a fad?

Vection Technologies (ASX:VR1) is one of the few ASX stocks involved in Virtual Reality (VR).

As a result, its share price has been volatile over the years as investors wonder whether it is fairdinkum or just a fad. A trading update today might suggest it is the former, even if it is only at an early stage.

Who is Vection Technologies?

Vection Technologies has a suite of VR products aimed at businesses. Its most popular, Mindesk, helps businesses render designs in realtime VR.

The company listed on the ASX in April 2019 through a reverse takeover of ServTech, which had listed in 2016.

Its share price has been volatile ever since, going through spikes driven by individual client wins and even non-binding MoUs (Memorandums of Understanding).

The company’s finest moment was in 4Q20 when it won the Italian government as a client, to develop a remote maintenance solution for trains.

Vection Technologies (ASX:VR1) share price chart, log scale (Source: TradingView)

An intriguing week

Vection Technologies told shareholders this morning that its Total Contract Value (TCV) was ~$14m, 40% higher than it announced barely a month ago.

It also told shareholders the next two quarters would deliver strong uplift head of $24-$26m in revenue guidance. The company credited sales growth, both from new and existing customers.

It has announced several new contracts of late, most recently a ~$1m order from a top ten defence contractor – announced last Thursday.

Ultimately, we do think Vection Technologies is a fairdinkum business,  although it is still not cash flow positive.

So even though it had 10 quarters of cash left as of its last quarterly cash flow report (issued in late December), longer-term investors might not be confident to gamble on this one (yet).