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Mobilicom (ASX:MOB): Servicing the emerging drone industry

February 2, 2022

MOB, Mobilicom, video

Mobilicom (ASX:MOB)

We spoke with Mobilicom’s CEO, Oren Elkayam, about the company’s evolution into a provider of end-to-end solutions for drone developers and the growing revenue stream from a range of blue-chip clients. In particular we noted that Covid-19 has not hindered the company’s technological progress or business development because of the fact that the company is international.

Full transcription below.


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Stuart: Hello, and welcome to Stocks Down Under. My name is Stuart Roberts and I’m one of the founders of our publication. And joining me today from Tel Aviv in far off Israel is Mr. Oren Elkayam who’s the CEO of Mobilicom ASX-MOB. Oren, good morning to you.

Oren: Good morning. Good afternoon, in your case.

Stuart: So, it’s the 31st of January 2022. And Oren, it’s been an interesting 18 months from you, you’ve morphed the company that you’ve been leading for the last several years into a world-leading drone technology company, is the way I would summarize it, but you can summarize the company better than me. What exactly is Mobilicom?

Oren: So Mobilicom executed the focus strategy for the last 18 months. We decided to focus the company around the sole market of drones, robotics, and autonomous platform. The fact that this market is right now wrapping up, and it’s clearly going to be one of the biggest markets going forward in the world, we decided to focus our energy, work solution, R&D, and solution into this market. Mobilicom currently is an end-to-end provider of cybersecurity and smart solution for commercial drones, robotics, and autonomous platform. We are showing that we are able to bring the assets that we built over the last years, and build a very current strategy that position, as well within these markets. Mobilicom solution are varied between data links and mesh networking solution, which is our heritage that are used by drones, to robotic manufacturers, to operate and maintain the operation of such elements and vehicles. We are also selling mobile control stations, which are the mission, the terminals that operate such drones, robotics, and we extended recently into the SaaS software solution with the cloud management networking solution, as well as with our cybersecurity eyes that are protecting the drones, or robotics operation. And with this end-to-end offering, we are enabling drones, robotics manufacturers a very good partnership that we bring them to the market in fast, short time, and enjoy lucrative in operation, and excel over others in this market.

Stuart: Now, the last 18 months have seen you announce a lot of very interesting contracts with some powerful names in the drones’ space. I think recently of Teledyne as a customer of yours, what is it that attracts your customers to you?

Oren: So I think that the focus strategy that brings an end-to-end offering, it help the customers to release to their market new platform at faster pace. The fact that our pieces are integrated well together, it give them better performance. In that case with Teledyne, they’ve done numerous tests between different competitors. They had a beauty contest, and Mobilicom again, and again show the best results in performance by utilizing our core technologies and tends to that. They chose us for their solution that are sold or proposed to the American different government agencies, and the partnership and the designing that we have with Flir Teledyne for us is an important piece of the puzzle going forward, given that it’s one of the biggest billion-dollar companies in this field, and definitely one of the leaders in the American market.

Stuart: So, you talked about the importance of the commercial drone market. It’s fair to say that the military drone market is of some interest to you, right?

Oren: Well, like many other technologies in the world, you start by creating innovative solutions that many times are starting with the government as well as defense agencies, and then being utilized in the commercial markets. Drones, robotics is one of those examples when the first few users are defense organization, public safety, home, and security that utilize the new capabilities of these technologies and market, which are exciting to bring services and capabilities that they were unable to do it in the past. But we already see the commercial market using the same platforms in different segments like securities, surveillance, monitoring of assets, operational of industrial sites and mines, and so forth. So yes, it’s engaging first with government agencies across different aspects, and in parallel, working with the commercial market. That’s what makes it very exciting.

Stuart: Now, the most recent quarterly, which you’ve just published showed you had a fantastic end to the calendar 2021, your revenue was up by two or threefold on a year ago. What’s the highlights for the quarter in your mind?

Oren: So, I think that you can see from the quarterly that, again, the strategy that we build as an end-to-end provider, bringing different pieces to the market is working well for us. We can say that the revenues from the customers jump by more than 200% in the last quarter showing a very solid number over the previous year, we are showing that we managed to lock additional R&D programs going forward that will be implemented in 2022, which is over close to $1 million to date. We have a strong backlog, and deliveries that are playing going forward. We have very solid balance sheets in our bank, which is about $4 million, and the burn rate was decreasing dramatically to this quarter, which was several hundreds of thousands of dollars. So in that case, we are showing that we are getting closer and closer to the cash flow positive, and we are showing great momentum with our customers, and revenues. And that’s what you expect from high-growth company to focus on our strategy and execute it with the Tier 1 players, and show the numbers rise.

Stuart: And what’s more remarkable about that is, obviously, 2020 and 2021 were difficult years in order to be able to attract talent and operate successfully in an environment where there are COVID outbreaks all the time. What’s been the biggest challenge for you in the last 12 months, or so?

Oren: Mobilicom is a international company, selling to 15 countries and tens of tens of different drones and robotics manufacturers. Creating new deals, integrating those sophisticated, critical, smart technology pieces within the drones or robotics manufacturers that are working with them is very hard where their teams are mostly at home working away from their factories. So the pace that things are moving is slower, that affected our capability. Obviously, the supply chain issue have been a challenge. We won some big deals over the last year or two that we have to implement and execute. And that was a challenge to do international manufacturing in different places, including Asia-Pacific in those challenging times. I think that the fact that the team in Mobilicom, which is experienced team, was managing that very well, overcame many of the obstacles, and show growth in this significant challenging period, was a good example for the fact that first, the strategy is working well, and we have a solid team that is able to execute it.

Stuart: Now, our investors who don’t you, tell us about your background before you took charge at Mobilicom.

Oren: So, I’ve started in an Israeli Air Force. I was chosen for an elite R&D program that was shooting things into space and operating the Israeli [inaudible 00:08:27.429]. Testing, evaluating, and bringing new technologies on board was something that we’ve done on a daily base. I’m very proud of the teams and the work that we’ve done over there. From there, I shifted to the high-tech scene of Israel, which is as you know the most important sector within Israel, which is ramping and ramping up. I’ve been part of different companies, designing solutions into mobile phones in large corporates like Mitsubishi, Nortel, Motorola, Alcatel, and other big brand names like Samsung, and bringing innovative solutions into the marketplace in the fields of networking and communication. This is what we’ve done first with Mobilicom. We brought both the data links of startup as well as the mesh networking of Mobilicom into different sectors, and the drones or robotics is enjoying that fruitful technology. And we expanded that over the years to having software cyber, as well as hardware solutions for communication and controlling operation. And that’s the story of me until we utilize this knowledge and experience, working with giants around the world, also with Mobilicom.

Stuart: And if there’s one thing that’s characteristic of Israeli tech companies, they never sit still. So if we’re having this conversation in January 2023, what do you hope Mobilicom will have achieved?

Oren: I think that what you can see is something that we are already seeing for the last few quarters, and those of you that carefully monitor Mobilicom, we said that we are going to bring additional solutions into the software and the cybers. We managed to release those just recently. We’ve been releasing the solutions for the cloud, the controlled cloud networking management solution that enables to operate fleets of drones, and monitor them, operate them, maintain them, and that is one solution that we’ve released. The second is the cybersecurity, like many other fields, drones or robotics will be exposed to harsh cyber environment attacks. And you’ve already seen some of those things, those that follow the news, and you have to be protected. The cyber for drones or robotics, and autonomous vehicles is totally different from many other cyber. And we brought a very unique solution to the marketplace.

We’ve been able already to lock first deals based on that, and that’s very exciting. In a short period after we released the cybersecurity, we managed to lock a $270,000 initial deal of the cybersecurity. So you will see more and more software cyber pieces, which are SaaS model based into Mobilicom end-to-end offering. And I think that you will see us working with the [inaudible 00:11:23.310]. They will extend, and increase their device from Mobilicom. They will have additional capabilities based on different of our business model element, and that will ramp up the sales, the revenues, and bring the company to new heights.

Stuart: Well, well done on what you’ve achieved to date, and here’s to a great 2022. Oren Elkayam, thanks for joining “Stocks Down Under” this afternoon.

Oren: Thank you very much for the time.