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Spectur (ASX:SP3): Talking smart security with CEO Gerard Dyson
May 12, 2023
We spoke with Spectur (ASX:SP3) CEO, Dr. Gerard Dyson, about the company’s unique security and warning solutions, its large market opportunity and recent new wins.
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 co-founders of our service. And joining me today from Perth on Friday the 5th of May, 2023, is Mr. Gerard Dyson, who’s the CEO of Spectur, ASX:SP3. Gerard, I think it’s still morning in Perth, so good morning.
Gerard: Oh, well, thank you, and good afternoon to you, Stuart. It’s a pleasure to be talking to you
Stuart: Right. Now, Spectur, it sounds a little bit scary, but there’s one thing that’s not scary about this, and that’s the growth that you are enjoying with your…let’s think of the right description for it. It’s a Internet of things play where, which allows local governments, owners of infrastructure to keep track of what’s going on in the neighborhood and warn, defend, and otherwise manage their property in real-time. Is that a good description of what you do?
Gerard: Well, that’s a pretty good first shot of it, Stuart. I think, you know, where I start with this, we’re a business that’s about making communities safer, smarter, and more sustainable. And the way that we do that is we focus on solutions like security, safety, warning, environmental monitoring. And we do that in places which don’t have access to power cables, don’t have access to wire data, and don’t have access to people. So, we have a hardware technology platform that’s solar-powered, and it’s effectively a robot. It can sense, think, and act, connected to a cloud platform, which also has artificial intelligence, and that connects to people. And it does a lot of the things that, you know, that a person could do, but it does them very cost-effectively, in a very safe fashion, and makes a big positive impact in the community.
Stuart: Right. So, take you back to the sustainability bit. The solar panels are important. Your equipment uses all of the Bluetooth low-energy type modalities that are out there. And presumably, you’re not stinting on your use of panels. So, you’re not overly reliant on whether the sun’s shining to keep it on the road.
Gerard: So, you know, we are absolutely skimping on the use of panels. We try to use the least amount of power to do the most with it. So, you know, we have designed our technology from the bottom up to be very frugal for power. And then we match that with our own solar battery technology that, you know, pairs these things up. So, you can put them effectively anywhere. They will go for up to five days with no sunlight, you know, continuous overcast rain, nothing. So, we’ve certainly designed them for the regions that they’re in, and the weather conditions that we expect, so that they can run effectively 24/7 without any interruption at all.
Stuart: Right. Talk to us about a typical example of a deployment of a Spectur system that you’ve made, and how it added value to the customers.
Gerard: All right. I’ll give you two. So, a typical one is security application. So, you may have a local government authority that has an issue with illegal dumping. People are going out to one of their parks or section of bushland and just emptying out their trailers with rubbish and/or building waste or anything like that. They can’t afford to have security guards. They can’t pick up every gate. What we can do is put one of our systems at the entrance or in the pathway to where people come in, the systems are watching all the time, and at night, they see some movement, a vehicle is moving. The camera uses artificial intelligence to identify that that’s a vehicle. It then lights them up with a floodlight, and immediately it starts speaking to them and saying, “You know, you’re not meant to be here. It’s illegal to be doing dumping, and you are being recorded.”
And in real-time, you are being recorded. And that’s being sent to the cloud. At the same time as perhaps if you are the ranger or the security officer for the council, is you’ve got an alert on your phone that comes up and says, this is what’s happening. You press a button, you are live viewing what’s happening, and then you press another button, and you can speak to that person directly, you know, “Hi, fella, in the, you know, Toyota Hilux, we can see where you are. We’ve got your license plate,” and then they just hightail it. That’s what happens. So, that’s one security application. No people being there, does it fine. Another example would be a lot of beaches around Australia. We’ve got some, for example, in New South Wales, we have beach warning systems, so they can be connect…so, when a shark is detected, either someone’s seen it or a drone, or if they’re tagged, and they go past a sensor, our system is activated.
It’s got a big speaker flashing lights that says, everyone get outta the water. There’s a shark there. Or as often has happened, they’re located near where people are swimming, someone’s having a heart attack, or they’re in trouble. They can run up to our system, they can press a button, and immediately be speaking to a first responder who can see the face of who they’re talking to, and they can also see on the big camera what’s happening in the water. And they’re able to immediately deploy a first responder, a jet ski, or whatever it is to rescue. We have saved multiple lives just with that application in the last 12 months, people washed off rocks, people got in trouble drowning. They’re having that communications platform in the middle of the sand dunes. You don’t need power. When people are swimming, they don’t often carry their phones with them, and even if they do, who you’re gonna call? 000 don’t have jet skis. So, you know, that’s just two examples of the ability to provide sensing, thinking, and taking actions that really make a positive impact on, you know, safety and security in that application.
Stuart: Right. The customer base is responding quite well. Obviously, COVID was difficult for all of us, and particularly for you. Coming out of COVID, you’ve been reporting a significant uptake in your business to the point where annual recurring revenue is somewhere in the order of 5 million at the moment. How are you feeling about your progress in 2022 and into ’23?
Gerard: Yeah, well, I mean, if you look at H1 ’20, which was like the darkest hour for us from a COVID point of view, we’re 77% up on where we were there. And this year, you know, we’ve grown, continued to grow strongly, and we also did an acquisition in February, which has added to that recurring revenue as well. So, you know, feeling very bullish about the top-line growth. We have built out our infrastructure. Today, we have more than 600 active customers. We have more than 2,800 active camera systems deployed around the country. That requires a really substantial, robust architecture to support that number of customers. We’ve effectively been rebuilding that for scale, and that’s largely done now. So, we’re in a position to really scale up. I mean, this isn’t a twinkle-in-the-eye company. We have literally thousands of systems deployed with hundreds and hundreds of customers, including tier-one customers like Optus, State Government. We are on Department of Defense bases. We are a proven business. And now it’s just, you know, we continue the growth, we are improving our gross margins, and control our overheads, and we’re going to be rapidly growing and becoming profitable in the very, you know, forecast future.
Stuart: Right. And, interesting. The one thing that’s not going so well for you, if I could put it like that, I can now buy your company for less than the annual recurring revenue, in terms of the market price. So, you’re traveling a little bit below most people’s radar screens by the looks of things.
Gerard: Yeah. Obviously, you know, when I look at the performance of the business, and I look at what I can see in front of us, I’m very, very positive about the organization. I’m very optimistic, the shape that we are in, and then I look at the share price, and I don’t continue that degree of positivity and optimism. I think we’re, you know, obviously, I can’t directly comment on the share price other than to say, you know, disappointing. You know, why is it where it is right now? I think everyone in the micro-cap section of the market has been suffering. There’s no doubt.
Stuart: And remember, tech, tech was, was 2022 was not tech’s year. So, you were not alone in that regard?
Gerard: No, no. So, not often there. You know, I think specifically, you know, we had positive cash last quarter in Q2. We didn’t have it in Q3. We’re almost there, but we’re not quite. So, you know, there’s some angst about that. We’ve got a debt facility, which we can either extend or convert or do something with. There’s a little bit of angst about that. That’s December. But, you know, I’m not concerned about those things. I see a good way forward, and it’s a tremendous time to buy Spectur. You know, it is so cheap right now. If it was possible for me to buying on market, I probably would be.
Stuart: Right. Now, Gerard, before Spectur, you were a bit of a big shot at a company, most people will have heard of called Wally. Tell us about your career pre-coming to Spectur.
Gerard: Yeah, I wouldn’t say I was a big shot. You know, I had a pretty senior role. I was a group managing director for infrastructure, which was a billion-dollar portfolio when I was looking after it. And then the last role I had was looking after all of their consulting business at Vizient in North America and South America, which was about a thousand people, and a $150 million business. So, absolutely. You know, I’m an engineer. I’ve got a Ph.D. in engineering and a few other, you know, bits and pieces to my name. I had a great time at Wally, a fantastic place to work, learned a lot of things, which I am absolutely excited to be applying, and all the new things at Spectur.
Stuart: Yeah. And interesting how you arrived there. You had some ideas about how the company could be fixed, and the board said, “Well, come and run the company yourself.” Well, that’s how you end up being in charge of this whole operation.
Gerard: Yeah, it was a little bit bizarre. And I see God’s hand in all this, is that I was talking to the board about offering some strategy services, and instead, they said, Well, this is the stuff the CEO should be doing, would you be interested in that role?” And, you know, it wasn’t quite as simple as that, but, you know, three months later, I was the managing director. So…
Stuart: Okay. So, let’s just address something that I suspect some of the viewers are thinking about at the moment. How are you different from all the other people who are putting CCT cameras up around railway stations and in football stadia, that sort of thing? What is Gerard Dyson and Spectur the best in the world at that, that exceeds all these other solutions that people can invest in?
Gerard: Well, I mean, the biggest differentiation is that most of the time, most cameras that you see have got a power cable that goes in the back of them and an internet cable. And our systems are fully wireless, no data cable, no power cable. So, when you need to put a technology somewhere where you can’t plug it into power, or plug it into internet, that removes, you know, 95% of the market. So, we are in that space. And then you can say, well, there are other people with solar-powered cameras, and that’s true. But our systems do much more than a camera. They have edge processes that can do artificial intelligence and can control all of the other things, whether it’s a digital signboard, you know, the VoIP phones, speakers, lights, open a box, give you access to a defibrillator, you know, all of these sorts of things on the device.
So, they do much more than that. I think the other big difference is that we write all of our own software, both for the devices and for our cloud, and that enables us to provide a very bespoke solution to our customers. Well, it feels bespoke, it’s actually configured by us because we have a modular platform. And so, it’s really easy for our customers to use. It works at a enterprise scale. So, customers that have hundreds of systems, Optus, for example, or many of our security resellers or our hire companies, they’re able to manage. It’s reliable, it keeps working. It’s scalable. And that’s the difference. The other people that are in the solar space, it’s pretty basic. It might have a flashing light and a speaker and one camera, but it doesn’t have four cameras, it doesn’t have AI, it’s not scalable, it’s not reliable, it’s not repeatable, and it certainly can’t be purchased at anything like the price that Spectur does for that sort of performance. So, you know, there’s everyone else in their Spectur I would suggest in this space.
Stuart: Okay. Well, Gerard Dyson, well done on what you’ve achieved at Spectur, and here’s to a great end of FY ’23, and potentially, I can say this because I’m the analyst here, potentially onto profitability in FY 24. Keep up the good work.
Gerard: Thank you very much, Stuart. Bye-bye.