icetana Limited (ASX:ICE) CEO and Managing Director Matt Macfarlane discusses the company's recent deal with Japanese group Macnica and the launch of a new product with Tim McGowen from Finance News Network.
Tim McGowen: We're talking today to icetana Limited (ASX:ICE). Market cap of around $12 million. The company's a global SaaS software company, providing video analytics technology, designed to identify abnormal events and unexpected behaviour in real time for large-scale surveillance networks. We have with us Matt Macfarlane, who's both the CEO and Managing Director. Matt, nice to meet you. Nice to meet you in person.
Matt Macfarlane: Good to be over here, Tim. Nice to see you too.
Tim McGowen: Now, icetana, can you give us a little bit of colour of the market you operate in and what customers you service in that market?
Matt Macfarlane: Yeah. So, we tackle a very specific niche. So, icetana is all about what we call anomaly detection, which is unusual events, unusual things happening. Unlike most of our competitors, we train our product on the cameras. Each individual camera has its own model that's created over a period of time to understand what's normal and then report what's abnormal. The vast bulk of our competitors use what we call rules, which is they might say, "Tell me if there's like more than 10 people in this scene." Or, "Tell me if this face matches this facial recognition database." If you have rules, then you are limited to just performing to those rules. With icetana, we are saying, "Well, if there's anything unusual, put it in front of the guys and let them decide whether they need to respond to it." So, it's a very unique niche. It differentiates us in the market because there are very few players who offer that type of approach. And that's our core focus, and it's going to stay that way.
Tim McGowen: Can you give us an example of that, a type of client who is using your product and how they're using it?
Matt Macfarlane: Yes. So, we have over 30 shopping malls who are using our product. They use it for finding people falling down escalators. They use it for finding people doing graffiti late at night outside their centres, for unscheduled maintenance, or just fights breaking out in the food court because somebody's taken somebody else's spot in the queue. icetana will pick up a wide range of unusual motions, unusual behaviours and events and put it in the control room so that you can, as an operator of those facilities, get out there really quickly. And that stops a lot of the costs very rapidly that can escalate from those events. But it also saves money in terms of how many guards you have in the facility. So, we are increasingly selling on the basis that, for every 100 cameras you put on icetana, you can save a guard in the field. And those manpower savings mean it goes straight through to the bottom line.
Tim McGowen: And your client base, are they internationally based?
Matt Macfarlane: Yeah. So, we've got clients on five different continents. They're spread all around the world. There are over a billion cameras globally. And this is a market that's growing at 16 per cent per annum. So, you imagine 160 million cameras being installed each year. It's a phenomenally huge market, and that means, of course, there's a lot of competitors dealing with this space, but it also means that the opportunities for us really are global opportunities. And most of our revenue is made outside of Australia because of that.
Tim McGowen: And, of course, the Aussie dollar's been falling recently, so currency's become an issue. How has that impacted icetana?
Matt Macfarlane: Oh, it's a good thing for us. Most of our revenues, probably 60 per cent of our revenues, are coming in in US dollar form. So, a lower Aussie dollar helps our bottom line nicely.
Tim McGowen: And, Matt, last time we spoke, we spoke about the placement to Macnica, a Japanese group. The share price has rallied strongly from about 3 cents to about 6 cents. Can you talk us through the deal and what that means and just follow up on that?
Matt Macfarlane: Yep. So, there were three key reasons. One was technical endorsement. They're a very technical organisation. So, it was great to have them understand our product, work with us for a couple of years. They can see the potential for that product to expand within the Japanese market and beyond. Number two was distribution capability. So, Macnica have a presence not just in Japan, but a substantial presence in Brazil, in Taiwan, in Korea, in Europe. And we're planning to leverage that to expand our product distribution capabilities. And the third reason, of course, is it's always nice to get a bit of fresh capital into the business, so that will help us progress into the future. That fresh capital is not just the money that's come in now, though. It also has opened up a substantial shareholder who is interested in our growth. And if we need to raise additional capital into the future, it's the type of shareholder where we could go back to and say, "Look, we are raising growth capital now. Are you interested in taking a slightly larger stake?" It's great to have those types of shareholders on the register.
Tim McGowen: And they took a 14 per cent stake in that placement exclusively to them. Is that the role they're going to play moving forward, introducing you to new business?
Matt Macfarlane: Absolutely. So, together with that placement, there was an agreement around exclusivity of distribution rights within Japan. I don't sign exclusivity lightly. So, there are performance targets attached to that for them to bring in certain targeted growth in revenues. And they're very, very committed to making sure that happens.
Tim McGowen: In your last quarterly, you mentioned the launch of a new product. Can you give us a little bit of colour on that?
Matt Macfarlane: Yeah. So, this has been two years in the making, this new product. We decided a couple of years ago that we would, from the ground up, start rebuilding icetana using modern contemporary architecture. And that process has been super challenging. It's been delayed a few times. But I'm extremely happy that we are now commercially launched. We've got our first few clients getting onto the product. They're excited about it. We've got great initial feedback. It's easier to deploy, so I can get a product up and running within hours with a client instead of… it used to be months waiting for the hardware to be delivered. It starts operating within 24 hours instead of waiting for two weeks for things to be showing. And it all operates from a browser. So, whilst we are not necessarily operating within the cloud, we can offer cloud service, but most customers like to keep their surveillance streams, let's say, completely contained and behind a firewall, because the last thing you want is your surveillance cameras all appearing on the nightly news.
Tim McGowen: And you're in an industry with strong thematics. What's the next three to six months look like?
Matt Macfarlane: So, we are going to stay very focused in our space, which is in the anomaly detection behavioral analytics space. We've got a banked up list of customers who are really interested in the new product, that we've been putting off until that's ready to roll out. We're now actively going back to them and getting them up and running. Our goal is to sign a whole bunch of customers for fairly small deployments to start with, but all of those customers with substantial growth opportunities. So, the next six to nine months are going to be crucial for us to get a clear product market fit with the new product and expand upon that rapidly. While we're doing that, we are not just being lazy back in the development side of things. The product isn't completely done. There are substantial enhancements we can add to the product that gives us new opportunities for revenue growth.
Tim McGowen: Matt Macfarlane, thanks for your time.
Matt Macfarlane: Thanks very much. Great to be here.