1 00:00:00,320 --> 00:00:03,360 Speaker 1: Welcome to Shared Lunch, brought to you by shares Ease. 2 00:00:03,760 --> 00:00:07,320 Speaker 1: In today's episode of Shared Lunch, we're in Sydney with 3 00:00:07,520 --> 00:00:10,559 Speaker 1: CEO of drone Shield Old Egg Voneck. 4 00:00:10,920 --> 00:00:13,320 Speaker 2: If a drone is today seen around an airport, you 5 00:00:13,360 --> 00:00:15,840 Speaker 2: have to shut down all flights or nor flights taking off, 6 00:00:15,880 --> 00:00:19,080 Speaker 2: norf flights landing, and that's a huge disruption. But that's 7 00:00:19,120 --> 00:00:21,400 Speaker 2: actually not the worst scenario. We are the only public 8 00:00:21,400 --> 00:00:23,440 Speaker 2: list of counter dron company in the world, so there 9 00:00:23,480 --> 00:00:25,200 Speaker 2: are plenty of lists of drone companies, but if you 10 00:00:25,239 --> 00:00:27,760 Speaker 2: want to have exposed to counter drome, there's really not 11 00:00:27,760 --> 00:00:30,080 Speaker 2: a lot of option. Over time, I think the civilian 12 00:00:30,160 --> 00:00:32,599 Speaker 2: sector has become probably half a viral revenue. So if 13 00:00:32,600 --> 00:00:36,199 Speaker 2: you think about drones disrupting airports, conducting cyber threats to 14 00:00:36,320 --> 00:00:39,800 Speaker 2: data centers, we're creating energy infrastructure threats. 15 00:00:40,000 --> 00:00:42,520 Speaker 3: And visiting involves the risk you might lose the money 16 00:00:42,520 --> 00:00:45,919 Speaker 3: you start with. We recommend talking to a licensed financial advisor. 17 00:00:46,640 --> 00:00:50,519 Speaker 3: We also recommend rereading product disclosure documents before deciding to invest. 18 00:00:50,760 --> 00:00:53,120 Speaker 3: Everything you're about to see and here is current at 19 00:00:53,159 --> 00:00:53,960 Speaker 3: the time of recording. 20 00:00:55,000 --> 00:00:57,600 Speaker 1: Before we get started, I want to acknowledge the Gadigol 21 00:00:57,680 --> 00:01:02,240 Speaker 1: people of the Eura nation, the traditional custodians of the land, 22 00:01:02,560 --> 00:01:06,320 Speaker 1: water and sky from where we're filming today, and pay 23 00:01:06,360 --> 00:01:10,920 Speaker 1: respects to elders past and present. Hi there, Olegg, and 24 00:01:11,080 --> 00:01:13,720 Speaker 1: welcome to the show. I want to start a bit 25 00:01:13,920 --> 00:01:17,559 Speaker 1: about your backgrounds because you have a really interesting backstory, right, 26 00:01:18,120 --> 00:01:20,240 Speaker 1: Can you tell me a little bit about how you 27 00:01:20,319 --> 00:01:22,200 Speaker 1: came to be the Sea of Drone Shield. 28 00:01:22,480 --> 00:01:25,240 Speaker 2: So I came to New Zealand as a team with 29 00:01:25,560 --> 00:01:29,039 Speaker 2: my mom. We were escaping Russia just as Pultin was 30 00:01:29,120 --> 00:01:32,080 Speaker 2: just coming to power, and my mom didn't want me 31 00:01:32,160 --> 00:01:34,120 Speaker 2: to be in Church now what it had been at 32 00:01:34,160 --> 00:01:37,679 Speaker 2: the time, or Ukraine as of now with a compulsitory 33 00:01:37,720 --> 00:01:41,240 Speaker 2: military conscription. And so we ended up in New Zealand 34 00:01:41,240 --> 00:01:43,800 Speaker 2: because basically that's one country that would take us as 35 00:01:43,840 --> 00:01:48,120 Speaker 2: part of the skilled migrant program. We lived in social 36 00:01:48,200 --> 00:01:50,720 Speaker 2: housing in New Zealand, and so when I was going 37 00:01:50,760 --> 00:01:53,080 Speaker 2: through my math's degree, because it just happened to like maths, 38 00:01:53,120 --> 00:01:54,560 Speaker 2: I was like, oh, man, like I need to get 39 00:01:54,560 --> 00:01:57,320 Speaker 2: out of my social housing situation, and so finance and 40 00:01:57,360 --> 00:01:59,800 Speaker 2: investment banking seemed like the thing to do for that. 41 00:02:00,240 --> 00:02:02,760 Speaker 2: So I ended up doing an economics add on to 42 00:02:02,880 --> 00:02:06,080 Speaker 2: my maths degree, and first became a trade and then 43 00:02:06,120 --> 00:02:08,760 Speaker 2: a banker. But after about ten years as a banker, 44 00:02:08,800 --> 00:02:10,960 Speaker 2: I kind of started to question why I was doing 45 00:02:11,000 --> 00:02:14,639 Speaker 2: the old nighters and the hours and the intensity involved. 46 00:02:14,880 --> 00:02:17,440 Speaker 2: And so just around that time, I was introduced to 47 00:02:17,520 --> 00:02:20,840 Speaker 2: these two American defense scientists who had the idea of 48 00:02:20,880 --> 00:02:23,280 Speaker 2: a drome detection business. So I was the first employee 49 00:02:24,560 --> 00:02:28,640 Speaker 2: and we listed the business in mid twenty sixteen on 50 00:02:28,760 --> 00:02:31,880 Speaker 2: twenty million valuation, raised seven million dollars, and then I 51 00:02:31,919 --> 00:02:33,639 Speaker 2: went to the US for a couple of years, and yeah, 52 00:02:33,680 --> 00:02:34,520 Speaker 2: the rest is history. 53 00:02:34,960 --> 00:02:38,440 Speaker 1: I'm interested to understand why Drone Shield, What was it 54 00:02:38,520 --> 00:02:42,200 Speaker 1: about the business all those years ago that excited you. 55 00:02:42,639 --> 00:02:46,000 Speaker 2: So Interestingly, it was actually the fund that connected me 56 00:02:46,480 --> 00:02:49,680 Speaker 2: with the two engineers. So what I find is that 57 00:02:49,800 --> 00:02:52,519 Speaker 2: ultimately it's not even so much the organizations that you're 58 00:02:52,560 --> 00:02:55,600 Speaker 2: part of, but people inside of those organizations that you trust. 59 00:02:55,680 --> 00:02:58,280 Speaker 2: And so I knew the guy was running the New 60 00:02:58,360 --> 00:03:01,920 Speaker 2: York Fund who originally came across the two engineers and 61 00:03:01,919 --> 00:03:05,000 Speaker 2: connected with them, and the fund became our largest shareholder 62 00:03:05,040 --> 00:03:07,400 Speaker 2: for the first several years. And so just the idea 63 00:03:07,440 --> 00:03:09,880 Speaker 2: of having them as my largest sharehold, and I actually 64 00:03:09,919 --> 00:03:12,799 Speaker 2: really respected the guy who was running it. Really gave 65 00:03:12,840 --> 00:03:15,240 Speaker 2: me a lot of confidence because when you're in these situations, 66 00:03:15,480 --> 00:03:17,560 Speaker 2: kind of early stage startups, you really need to have 67 00:03:17,560 --> 00:03:19,799 Speaker 2: a high degree of trust. So that was the thing 68 00:03:19,840 --> 00:03:20,080 Speaker 2: for me. 69 00:03:20,639 --> 00:03:24,200 Speaker 1: Drone Shield has come into focus a lot in recent months, 70 00:03:24,280 --> 00:03:27,519 Speaker 1: but this is by no means an overnight success, right. 71 00:03:27,600 --> 00:03:31,520 Speaker 1: The business was founded in twenty and fourteen and listed 72 00:03:31,919 --> 00:03:35,760 Speaker 1: in two thousand and sixteen. Can you tell us what 73 00:03:35,840 --> 00:03:39,000 Speaker 1: is the premise behind Drone Shield? What does drone Shield 74 00:03:39,080 --> 00:03:39,560 Speaker 1: actually do. 75 00:03:40,160 --> 00:03:43,000 Speaker 2: Drone Shield does detection and take down of small drones 76 00:03:43,080 --> 00:03:46,560 Speaker 2: used in nefarious applications. So, for example, we have hundreds 77 00:03:46,560 --> 00:03:49,920 Speaker 2: of systems deployed in Ukraine sensing and taking down Russian 78 00:03:49,960 --> 00:03:53,920 Speaker 2: drones when they attacking Ukrainian civilian or military targets, but 79 00:03:54,120 --> 00:03:56,360 Speaker 2: really were deployed in about fifty countries around the world. 80 00:03:56,400 --> 00:03:58,960 Speaker 2: So the US has been our largest customer across the 81 00:03:59,280 --> 00:04:03,960 Speaker 2: Department of Homeland Security agencies, law enforcement intelligence, but also 82 00:04:03,960 --> 00:04:06,720 Speaker 2: over time, I think the civilian sector will become probably 83 00:04:06,760 --> 00:04:09,160 Speaker 2: half of our revenue. So if you think about drones 84 00:04:09,200 --> 00:04:14,200 Speaker 2: disrupting airports, conducting cyber threads to data centers, creating energy 85 00:04:14,200 --> 00:04:16,720 Speaker 2: infrastructure threads, because a drone can really be seen as 86 00:04:16,720 --> 00:04:19,160 Speaker 2: a surveillance platform and an attack platform as well as 87 00:04:19,160 --> 00:04:23,599 Speaker 2: a cyber attack platform. So we are protecting sensitive assets 88 00:04:23,600 --> 00:04:26,120 Speaker 2: against small drones doing all of those activities. And it's 89 00:04:26,120 --> 00:04:28,880 Speaker 2: a hardware and software business, so what you're seeing is 90 00:04:28,920 --> 00:04:32,120 Speaker 2: basically handheld, vehicle based and fixed side families of solutions, 91 00:04:32,360 --> 00:04:34,960 Speaker 2: so hardware but with software that we're regularly up there 92 00:04:35,000 --> 00:04:38,120 Speaker 2: in the quarterly basis. So that's the SaaS revenue part 93 00:04:38,120 --> 00:04:41,440 Speaker 2: of the business, and that gets deployed across thousands of 94 00:04:41,880 --> 00:04:43,080 Speaker 2: products out in the field. 95 00:04:44,040 --> 00:04:47,640 Speaker 1: You mentioned about your government customers. I'm interested to know 96 00:04:47,680 --> 00:04:50,320 Speaker 1: a little bit more about these. I imagine that when 97 00:04:50,360 --> 00:04:54,400 Speaker 1: you're speaking to these customers and trying to negotiate a deal, 98 00:04:54,440 --> 00:04:58,320 Speaker 1: it's quite tricky, right, But once you consummate those deals, 99 00:04:58,800 --> 00:05:01,320 Speaker 1: you would expect that they're they're quite sticky, right. So 100 00:05:01,640 --> 00:05:04,440 Speaker 1: can you tell me a bit more about these customers 101 00:05:04,640 --> 00:05:07,080 Speaker 1: and how you see the opportunity with some of them 102 00:05:07,120 --> 00:05:07,799 Speaker 1: going forward. 103 00:05:08,600 --> 00:05:12,200 Speaker 2: Selling to military has quite a large degree of obscurity, 104 00:05:12,240 --> 00:05:14,840 Speaker 2: and a lot of it is deliberate. You can't, for example, Google, 105 00:05:15,080 --> 00:05:16,800 Speaker 2: how do I sell counter dro on to the US 106 00:05:16,839 --> 00:05:19,279 Speaker 2: Department of Defense and outcomes a little email and a 107 00:05:19,279 --> 00:05:20,839 Speaker 2: phone number. You just call them and hey, I have 108 00:05:20,920 --> 00:05:23,960 Speaker 2: some process sell So it's a multi year process to 109 00:05:24,000 --> 00:05:27,799 Speaker 2: set it correctly, especially for Nascent products. Right, So, first 110 00:05:27,800 --> 00:05:29,840 Speaker 2: time we've front a lot of these customers, they're like, 111 00:05:30,279 --> 00:05:32,840 Speaker 2: small drones are toys. That's what I buy kids for Christmas? 112 00:05:32,839 --> 00:05:35,359 Speaker 2: Why do I bother? But advantage of being early was 113 00:05:35,360 --> 00:05:37,599 Speaker 2: that just as our customers started to look at counter 114 00:05:37,720 --> 00:05:41,400 Speaker 2: dron solutions, well we're there and develop those relationships over time. 115 00:05:41,440 --> 00:05:44,200 Speaker 2: And like you said, Jackie, unlike the selling to the 116 00:05:44,200 --> 00:05:46,719 Speaker 2: consumer space, selling to the governments is very much a 117 00:05:46,800 --> 00:05:49,680 Speaker 2: long term trust game. So you build that relationship and 118 00:05:49,680 --> 00:05:52,240 Speaker 2: then customers respond by giving you a lot of feedback. 119 00:05:52,279 --> 00:05:54,640 Speaker 2: So you build your tech roadmap in accordance to what 120 00:05:54,680 --> 00:05:56,800 Speaker 2: the customer says, here are the things I'm looking for. 121 00:05:56,880 --> 00:05:58,919 Speaker 2: Here's a data from your own sensors, so use that 122 00:05:59,000 --> 00:06:01,640 Speaker 2: to make better products, and then customers respond by buying 123 00:06:01,640 --> 00:06:03,839 Speaker 2: more of your products. So once you're in, you're really 124 00:06:03,880 --> 00:06:06,680 Speaker 2: deeply embedded. Now, customers usually try to deal with two 125 00:06:06,720 --> 00:06:08,839 Speaker 2: or three supplies for any one particular thing, just to 126 00:06:08,880 --> 00:06:13,800 Speaker 2: have some redundancy but that trust relationship set with supplies 127 00:06:13,839 --> 00:06:17,040 Speaker 2: globally is really important. And also what often happens with 128 00:06:17,040 --> 00:06:18,760 Speaker 2: a lot of our customers will say will be their 129 00:06:18,800 --> 00:06:20,960 Speaker 2: second counter drone company in the sense that the first 130 00:06:20,960 --> 00:06:25,280 Speaker 2: ones would usually be very kind of snake oil that 131 00:06:25,360 --> 00:06:27,000 Speaker 2: say hey, approach can do this, this and this, and 132 00:06:27,880 --> 00:06:29,880 Speaker 2: customers look at that and they end up buying maybe 133 00:06:29,880 --> 00:06:31,960 Speaker 2: a few and they're like, oh, this product just doesn't work. 134 00:06:32,160 --> 00:06:34,119 Speaker 2: So then they end up often turning to drone Shield. 135 00:06:34,120 --> 00:06:36,400 Speaker 2: It's like, Okay, now finally the product actually does what 136 00:06:36,480 --> 00:06:38,560 Speaker 2: we are looking to do. But also for a lot 137 00:06:38,560 --> 00:06:41,360 Speaker 2: of customers we have deployed from the very very early 138 00:06:41,480 --> 00:06:44,039 Speaker 2: days and they're still continue to buy probably ninety percent 139 00:06:44,080 --> 00:06:49,440 Speaker 2: of our solutions. Our sales are to repeat customers. So 140 00:06:49,520 --> 00:06:51,240 Speaker 2: I guess in terms of the future, we say, now 141 00:06:51,240 --> 00:06:53,919 Speaker 2: we're deployed in about fifty countries around the world, then 142 00:06:54,040 --> 00:06:57,039 Speaker 2: gradually our customers are buying more. So the market situation 143 00:06:57,560 --> 00:06:59,800 Speaker 2: is really small. So if you think about the military 144 00:06:59,839 --> 00:07:02,880 Speaker 2: is only really started in mass looking at procurement maybe 145 00:07:02,920 --> 00:07:04,960 Speaker 2: three years ago, since the start of the Ukraine War, 146 00:07:05,320 --> 00:07:08,000 Speaker 2: and now they're saying, okay, well, future of conflict will 147 00:07:08,000 --> 00:07:11,640 Speaker 2: be drones and counter drone solutions, and we have very 148 00:07:11,640 --> 00:07:13,760 Speaker 2: little of it, so we have to buy quite a bit, 149 00:07:13,800 --> 00:07:16,960 Speaker 2: and the civilian sector is basically zero market situation. So 150 00:07:17,360 --> 00:07:19,880 Speaker 2: no airport around the world unfortunately has a fully deployed 151 00:07:19,880 --> 00:07:23,680 Speaker 2: counterdron system, So all of that wave acquisitions are still coming. 152 00:07:24,040 --> 00:07:26,800 Speaker 1: What are the key products that you have, What do 153 00:07:26,880 --> 00:07:30,280 Speaker 1: they do? How are they different to what else is 154 00:07:30,320 --> 00:07:30,920 Speaker 1: on the market. 155 00:07:31,560 --> 00:07:34,840 Speaker 2: So radiofrequency is the key technology we use. So drone 156 00:07:35,000 --> 00:07:38,080 Speaker 2: communicates its location and what it sees with its camera 157 00:07:38,200 --> 00:07:41,600 Speaker 2: to then user, and then user sends to the drone 158 00:07:41,680 --> 00:07:44,200 Speaker 2: where to go, and we can listen to that traffic 159 00:07:44,440 --> 00:07:47,600 Speaker 2: in terms of both way communication and triangulate real time 160 00:07:47,640 --> 00:07:50,800 Speaker 2: location of the drone and often also location of the pilot. 161 00:07:51,200 --> 00:07:53,600 Speaker 2: So these are the core technologies. Are f radio frequency 162 00:07:53,600 --> 00:07:57,800 Speaker 2: for detection and defeat, but also we add secondary modalities, 163 00:07:57,920 --> 00:08:01,360 Speaker 2: so you think of radars, cameras, acoustics. We actually started 164 00:08:01,800 --> 00:08:04,200 Speaker 2: ten eleven years ago as an acoustics based business before 165 00:08:04,200 --> 00:08:06,680 Speaker 2: we moved to radio frequency. And then for the defeat 166 00:08:06,680 --> 00:08:08,880 Speaker 2: you can have things like cybers, so we've added that 167 00:08:08,960 --> 00:08:12,280 Speaker 2: as a secondary technology. Hyph power microwaves, which basically like 168 00:08:12,320 --> 00:08:15,000 Speaker 2: a real life version of matrix or your fry circuits 169 00:08:15,000 --> 00:08:18,040 Speaker 2: and any electronic item that moves towards you like a drone, 170 00:08:18,200 --> 00:08:20,840 Speaker 2: And so we do integration of all of that, So 171 00:08:20,880 --> 00:08:23,280 Speaker 2: we're both a product maker as well as integrate or 172 00:08:23,280 --> 00:08:27,280 Speaker 2: third party technologies in a multisensor solution. And on that 173 00:08:27,320 --> 00:08:29,320 Speaker 2: a lot of people say, well, what about fiber optic 174 00:08:29,400 --> 00:08:32,480 Speaker 2: drones and AI control drones. And what we're finding is 175 00:08:32,520 --> 00:08:35,840 Speaker 2: that ourf is very much a backbone of the drone 176 00:08:36,160 --> 00:08:40,640 Speaker 2: communications drone connection and for those unusual situations, that's when 177 00:08:40,679 --> 00:08:44,000 Speaker 2: our secondary modalities like creators or high part microwave would 178 00:08:44,040 --> 00:08:44,760 Speaker 2: kick in, you. 179 00:08:44,800 --> 00:08:49,240 Speaker 1: Know, very sophisticated hardware and software, and you can do 180 00:08:49,400 --> 00:08:52,839 Speaker 1: a lot of damage to drones. Are these harmful at 181 00:08:52,880 --> 00:08:54,280 Speaker 1: all to humans? 182 00:08:54,640 --> 00:08:58,200 Speaker 2: Everything we do is completely harmless to humans. So it 183 00:08:58,320 --> 00:09:03,079 Speaker 2: works on drones by basically confusing them with one exception 184 00:09:03,080 --> 00:09:05,240 Speaker 2: of high power microwave where you fry the circuit, but 185 00:09:05,280 --> 00:09:08,520 Speaker 2: even that is harmless to humans. So that's a deliberate strategy. 186 00:09:08,600 --> 00:09:10,920 Speaker 2: So one we're finding that if you're doing a kinetic 187 00:09:11,000 --> 00:09:15,400 Speaker 2: solution like bullets or missiles, it's either not cost symmetrics. 188 00:09:15,400 --> 00:09:17,559 Speaker 2: So the problem with drones, it's costs the symmetry game. 189 00:09:17,640 --> 00:09:19,760 Speaker 2: So you're thinking of a two hundred dollars drone a 190 00:09:19,800 --> 00:09:22,079 Speaker 2: five million dollar tank if you start and it can 191 00:09:22,080 --> 00:09:23,640 Speaker 2: blow up of a million dollar tank. Now, if you 192 00:09:23,679 --> 00:09:26,640 Speaker 2: start shooting fifty thousand dollar missiles like two hundred dollar drones, 193 00:09:26,679 --> 00:09:29,199 Speaker 2: you will very quickly run out of fifty thousand dollars missiles. 194 00:09:29,440 --> 00:09:31,280 Speaker 2: And then if you're thinking of bullets, the problem is 195 00:09:31,320 --> 00:09:33,960 Speaker 2: in a lot of settings it's just not practical. So firstly, 196 00:09:33,960 --> 00:09:36,560 Speaker 2: in Ukraine, drones often go very high and then dive 197 00:09:36,640 --> 00:09:38,920 Speaker 2: down on targets, so very hard to actually shoot at, 198 00:09:39,160 --> 00:09:41,960 Speaker 2: especially for objects which are dinner played size, moving one 199 00:09:42,000 --> 00:09:44,640 Speaker 2: hundred kilometers an hour. And then you imagine a swarm 200 00:09:44,679 --> 00:09:47,120 Speaker 2: of them coming from different directions, so very very difficult. 201 00:09:47,280 --> 00:09:49,240 Speaker 2: But then besides, in a lot of situations you can't 202 00:09:49,240 --> 00:09:52,240 Speaker 2: physically shoot down a drone. You imagine here in Sydney 203 00:09:52,360 --> 00:09:54,760 Speaker 2: you have the Navy Guden Island Base. I can assure 204 00:09:54,800 --> 00:09:56,520 Speaker 2: you they will not be using machine guns in the 205 00:09:56,559 --> 00:09:59,640 Speaker 2: middle of Sydney Harbor for just about any situation. Right 206 00:10:00,000 --> 00:10:02,760 Speaker 2: when you think about the civilian sector like stadiums, airports, 207 00:10:03,000 --> 00:10:05,640 Speaker 2: so having products which are completely harmless for humans is 208 00:10:05,679 --> 00:10:08,200 Speaker 2: really important for mass adoption, which is what Drone Shield does. 209 00:10:08,960 --> 00:10:12,839 Speaker 1: Interested to understand how you use AI in your technology 210 00:10:12,840 --> 00:10:15,880 Speaker 1: and then also related to that, how you work with 211 00:10:16,000 --> 00:10:21,479 Speaker 1: your customers in terms of getting data that supports the software. 212 00:10:22,040 --> 00:10:25,240 Speaker 2: We realized about five years ago that counter dron is 213 00:10:25,280 --> 00:10:27,920 Speaker 2: going to be an AI game because drones started to 214 00:10:28,080 --> 00:10:31,520 Speaker 2: develop exponentially. So back when we started, there might have 215 00:10:31,559 --> 00:10:34,680 Speaker 2: been maybe five common dron models. Now you have unlimited 216 00:10:34,720 --> 00:10:37,840 Speaker 2: amount of drone protocols that essentially coming on market. So 217 00:10:37,880 --> 00:10:40,280 Speaker 2: in the early days we had a manual like call 218 00:10:40,320 --> 00:10:45,360 Speaker 2: it radiofrequency fingerprint library type approach where in the radiofrequency 219 00:10:45,360 --> 00:10:47,960 Speaker 2: domain you're saying, right, a drone sounds a bit like this, 220 00:10:48,080 --> 00:10:50,320 Speaker 2: I match it against a non signature and if there's 221 00:10:50,360 --> 00:10:52,400 Speaker 2: a match, it's an alert. But the problem is you 222 00:10:52,440 --> 00:10:55,520 Speaker 2: need now to have a sensor recognizing the software recognizing 223 00:10:55,800 --> 00:10:57,880 Speaker 2: a drone that it has never seen before and for 224 00:10:57,920 --> 00:11:00,920 Speaker 2: that AI. So it's pretty well the problem with AI 225 00:11:01,200 --> 00:11:04,200 Speaker 2: is writing algorithms is the relatively simple part. The hard 226 00:11:04,240 --> 00:11:08,600 Speaker 2: part is maintaining enormous databases for the AI engines to 227 00:11:08,640 --> 00:11:11,679 Speaker 2: train on. So five years ago we started basically collecting 228 00:11:11,720 --> 00:11:14,719 Speaker 2: what is now the largest drone signal library of its 229 00:11:14,800 --> 00:11:21,760 Speaker 2: kind in the world, so drone signals in Japan and US, Europe, Ukraine, 230 00:11:22,160 --> 00:11:25,520 Speaker 2: Australian so on. And now we have thousands of devices 231 00:11:25,559 --> 00:11:28,480 Speaker 2: out there in the field, including very large number that 232 00:11:28,600 --> 00:11:32,200 Speaker 2: with customers consent, actually remit the data from the sensors 233 00:11:32,600 --> 00:11:36,000 Speaker 2: back to us every time the customer connects those sensors 234 00:11:36,040 --> 00:11:39,440 Speaker 2: to the Internet, which means our data engineering teams can 235 00:11:39,520 --> 00:11:42,440 Speaker 2: then update our data sets, look for edge cases, and 236 00:11:42,480 --> 00:11:45,800 Speaker 2: the algorithm becomes smarter. Now what we're super excited about 237 00:11:45,880 --> 00:11:47,880 Speaker 2: is what we're looking to do to the AI engine 238 00:11:47,960 --> 00:11:51,920 Speaker 2: next year. People think of AI as large language models 239 00:11:51,960 --> 00:11:54,560 Speaker 2: basically chat GPT, but in the military setting, you can't 240 00:11:54,559 --> 00:11:56,440 Speaker 2: connect to the cloud all the time. You need to 241 00:11:56,440 --> 00:11:59,640 Speaker 2: be completely what's in your hands, So we call it 242 00:11:59,720 --> 00:12:03,240 Speaker 2: mic AI. So we develop hardware and software for AI 243 00:12:03,320 --> 00:12:06,480 Speaker 2: to specifically walk on tiny devices in a palm of 244 00:12:06,520 --> 00:12:08,679 Speaker 2: your hand. And now you make in that fully self 245 00:12:08,760 --> 00:12:11,000 Speaker 2: learned as you go. That means that even if drone 246 00:12:11,040 --> 00:12:14,280 Speaker 2: technology evolves literally on a daily basis, the device will 247 00:12:14,320 --> 00:12:14,840 Speaker 2: learn with it. 248 00:12:15,400 --> 00:12:18,560 Speaker 1: You've spoken about some of your government clients, but there's 249 00:12:19,000 --> 00:12:23,000 Speaker 1: very broad application for your products, right and there's a 250 00:12:23,040 --> 00:12:27,320 Speaker 1: civilian or commercial market for your products across airports, etc. 251 00:12:28,080 --> 00:12:30,680 Speaker 1: Can you talk to me a bit about what this 252 00:12:30,800 --> 00:12:34,120 Speaker 1: opportunity is with these types of clients and how you 253 00:12:34,160 --> 00:12:35,160 Speaker 1: see that going forward. 254 00:12:35,800 --> 00:12:38,920 Speaker 2: So, drones can easily disrupt airports, as we're now seeing 255 00:12:38,920 --> 00:12:42,480 Speaker 2: in Europe with lots of drone flights around Scandinavia and 256 00:12:42,640 --> 00:12:45,600 Speaker 2: other areas, because if a drone gets ingested into the 257 00:12:45,679 --> 00:12:48,080 Speaker 2: engine of a plane, you will likely blow out the 258 00:12:48,120 --> 00:12:51,160 Speaker 2: engine and with it potentially down the whole airline, and 259 00:12:51,240 --> 00:12:53,960 Speaker 2: not to talk about even cracking of windscreen of the 260 00:12:53,960 --> 00:12:57,200 Speaker 2: airplanes or damaging the body the fuselage of the airplane 261 00:12:57,640 --> 00:12:59,800 Speaker 2: and so with it. If a drone is today seen 262 00:12:59,840 --> 00:13:02,240 Speaker 2: around an airport, you have to shut down all flights, 263 00:13:02,280 --> 00:13:04,640 Speaker 2: so no flights taking off nor flights landing, and that's 264 00:13:04,679 --> 00:13:07,840 Speaker 2: a huge disruption. But that's actually not the worst scenario. 265 00:13:07,880 --> 00:13:10,080 Speaker 2: The worst scenario is if you actually have the aircraft 266 00:13:10,840 --> 00:13:13,319 Speaker 2: coming down because of the drone strike. So, if you 267 00:13:13,360 --> 00:13:16,680 Speaker 2: think about now data centers, drones land on the roofs 268 00:13:16,720 --> 00:13:19,160 Speaker 2: of data centers and use proximity to hack into the 269 00:13:19,240 --> 00:13:23,560 Speaker 2: data center networks conduct cyber attacks. We have seen energy 270 00:13:23,600 --> 00:13:26,920 Speaker 2: infrastructure getting attacked by drones. So you think of oil wells, 271 00:13:26,960 --> 00:13:30,800 Speaker 2: for example, highly flamable situation. Now a drone can create 272 00:13:30,840 --> 00:13:32,920 Speaker 2: a lot of damage in those scenarios. So whether it's 273 00:13:32,920 --> 00:13:35,040 Speaker 2: an activist or a terrorist or even a child, it 274 00:13:35,040 --> 00:13:37,680 Speaker 2: doesn't really matter. You're trying to keep all these drones 275 00:13:37,720 --> 00:13:40,680 Speaker 2: away from your energy infrastructure. And there's a lot of 276 00:13:40,760 --> 00:13:46,000 Speaker 2: other scenarios stadiums with potential terrorism attacks, or even sports 277 00:13:46,000 --> 00:13:51,440 Speaker 2: teams using drones to film events and go around the 278 00:13:51,760 --> 00:13:54,520 Speaker 2: TV presenter rights and so on. So there's a huge 279 00:13:54,520 --> 00:13:56,840 Speaker 2: amount and we think it's about US thirty billion dollar 280 00:13:56,920 --> 00:13:59,920 Speaker 2: totally addressable market in the civilian space on top of 281 00:14:00,120 --> 00:14:03,000 Speaker 2: roughly thirty billion dollar tam in the military space. 282 00:14:03,720 --> 00:14:10,319 Speaker 1: So significant market opportunity, right, But I guess the market 283 00:14:10,400 --> 00:14:15,480 Speaker 1: for counter drone solutions is still somewhat nascent, although that's evolving. 284 00:14:16,280 --> 00:14:19,760 Speaker 1: How do you see the competitive landscape and what would 285 00:14:19,800 --> 00:14:22,280 Speaker 1: you say? You've alluded to some of it, but what 286 00:14:22,320 --> 00:14:24,800 Speaker 1: would you say are your key points of difference? 287 00:14:25,480 --> 00:14:29,600 Speaker 2: We have unique technical and commercial differentiators. On the technical front, 288 00:14:29,680 --> 00:14:33,160 Speaker 2: we're there just before anybody else ten or eleven years ago, 289 00:14:33,240 --> 00:14:35,680 Speaker 2: and we through out the whole time had the largest 290 00:14:35,720 --> 00:14:41,480 Speaker 2: engineering team in the market deliberately looking at counter dron technology. 291 00:14:41,560 --> 00:14:44,640 Speaker 2: So when other people had five engineers, we had fifteen. 292 00:14:44,680 --> 00:14:46,760 Speaker 2: When others had fifteen, we had fifty. Today we have 293 00:14:46,800 --> 00:14:50,560 Speaker 2: over three hundred engineers here in Sydney working full time 294 00:14:50,720 --> 00:14:53,080 Speaker 2: on the counter dron solution and we have really high 295 00:14:53,640 --> 00:14:57,160 Speaker 2: agility culture. And Australia makes great engineers if you think 296 00:14:57,200 --> 00:15:01,440 Speaker 2: of both software so you're at lessons and or even hardware. 297 00:15:01,440 --> 00:15:04,480 Speaker 2: If you think about med tech medical technology devices, Australia 298 00:15:04,480 --> 00:15:06,960 Speaker 2: has great reputation with that. So you think about cock clear, 299 00:15:07,320 --> 00:15:10,480 Speaker 2: you think about road microphones, and so we're drawing and 300 00:15:10,560 --> 00:15:12,880 Speaker 2: all the talent we import talent, So Sydney is a 301 00:15:12,880 --> 00:15:15,680 Speaker 2: great place to bring talent from overseas. One of our 302 00:15:15,720 --> 00:15:18,760 Speaker 2: competitors is a Danish company that is literally in the 303 00:15:18,880 --> 00:15:22,440 Speaker 2: Arctic Circle. Now why you're on mind, would anybody come 304 00:15:22,480 --> 00:15:24,880 Speaker 2: to Ourctic circle unless you're there to work. So Sydney's 305 00:15:24,880 --> 00:15:27,240 Speaker 2: a great place to actually host talent as well. So 306 00:15:27,480 --> 00:15:30,320 Speaker 2: we're quite proud of the engineering team we've assembled. So 307 00:15:30,480 --> 00:15:33,560 Speaker 2: as a result, we're able to detect further, defeat further, 308 00:15:34,000 --> 00:15:37,640 Speaker 2: a bit more effective products, meet other customer technical requirements. 309 00:15:37,680 --> 00:15:41,280 Speaker 2: We talked about the largest AI data set that anybody has, 310 00:15:41,320 --> 00:15:45,320 Speaker 2: which basically means way even more effective than others when 311 00:15:45,360 --> 00:15:49,800 Speaker 2: it comes to commercial differentiators. So as those trusted relationships 312 00:15:49,800 --> 00:15:52,320 Speaker 2: within customers. So we've been again been there for years. 313 00:15:52,560 --> 00:15:54,680 Speaker 2: Our products were doing what it says in the TIN, 314 00:15:55,240 --> 00:15:58,920 Speaker 2: and customers, often in the military space, form those deep 315 00:15:59,240 --> 00:16:03,440 Speaker 2: trusted relationships and they give you information their requirements, and 316 00:16:03,520 --> 00:16:07,080 Speaker 2: most of our sales contrary to what people think, I'm 317 00:16:07,120 --> 00:16:09,720 Speaker 2: not actually tendered. So when you work in the national 318 00:16:09,720 --> 00:16:13,680 Speaker 2: security reasons, you often have sol source to your sales 319 00:16:13,720 --> 00:16:15,760 Speaker 2: because otherwise, if you tender, you have to reveal your 320 00:16:15,800 --> 00:16:18,320 Speaker 2: specifications like you think you're putting out tender and saying, okay, 321 00:16:18,440 --> 00:16:20,440 Speaker 2: I want to detect a drown five kilometers away if 322 00:16:20,440 --> 00:16:22,840 Speaker 2: you have, for example, American military base, So Johnny's a 323 00:16:22,880 --> 00:16:25,280 Speaker 2: be right. If I can do a drone that can 324 00:16:25,760 --> 00:16:28,120 Speaker 2: do surveillance from six kilometers, then I'll be fine. So 325 00:16:28,160 --> 00:16:30,800 Speaker 2: because of that, customers tend to do sole source awards, 326 00:16:31,800 --> 00:16:34,000 Speaker 2: and so because of that, we would tend to be 327 00:16:34,040 --> 00:16:34,840 Speaker 2: really well placed. 328 00:16:34,960 --> 00:16:39,880 Speaker 1: Usually with the customers that you're speaking to, how much 329 00:16:39,920 --> 00:16:42,760 Speaker 1: knowledge do you think that they have the importance of 330 00:16:42,800 --> 00:16:45,760 Speaker 1: your products? Is there much of an education process. 331 00:16:45,920 --> 00:16:47,800 Speaker 2: In the beginning, it was quite a lot of education, 332 00:16:47,880 --> 00:16:51,160 Speaker 2: which also contributed to pretty long sales cycles, so maybe 333 00:16:51,360 --> 00:16:53,640 Speaker 2: five seven years ago it could be up to two 334 00:16:53,720 --> 00:16:56,520 Speaker 2: years from the first handshake to a sale, and a 335 00:16:56,560 --> 00:16:58,880 Speaker 2: lot of it was driven by explaining to customers what 336 00:16:58,920 --> 00:17:02,120 Speaker 2: a counter drawn system can do. But now, thankfully, customer 337 00:17:02,200 --> 00:17:05,199 Speaker 2: knowledge gets much better because most of our customers are 338 00:17:05,480 --> 00:17:08,120 Speaker 2: repeat purchases and they're just buying more of the same 339 00:17:08,200 --> 00:17:11,159 Speaker 2: because they have such low level of deployment. And so 340 00:17:11,280 --> 00:17:13,679 Speaker 2: because of that, we're finding that, yes, you still need 341 00:17:13,720 --> 00:17:15,879 Speaker 2: to do some training, and the technology evolves all the 342 00:17:15,880 --> 00:17:18,440 Speaker 2: time as well, but you're not studying from zero, which 343 00:17:18,480 --> 00:17:22,399 Speaker 2: really helps shortened sales cycles to and generally just for 344 00:17:22,520 --> 00:17:25,520 Speaker 2: us to conduct sales to audiences who already understand. So 345 00:17:25,560 --> 00:17:27,840 Speaker 2: this is in the military market. Civilian market is probably 346 00:17:27,840 --> 00:17:30,280 Speaker 2: one step behind in the sense that they're a bit 347 00:17:30,320 --> 00:17:33,639 Speaker 2: earlier to the adoption cycle, so they're still learning. But 348 00:17:33,760 --> 00:17:35,520 Speaker 2: the good thing if you can sell to the military, 349 00:17:35,880 --> 00:17:38,600 Speaker 2: the performance criteria for the civilian sector are usually lower. 350 00:17:38,640 --> 00:17:41,240 Speaker 2: Now the price points often also tend to be lower, 351 00:17:41,320 --> 00:17:44,760 Speaker 2: although not for airports or data centers, who are usually 352 00:17:44,800 --> 00:17:48,639 Speaker 2: pretty well funded. If you now look at stadiums at prisons. 353 00:17:48,960 --> 00:17:52,800 Speaker 2: Prisons especially are very very tight with funding, but they 354 00:17:52,800 --> 00:17:55,680 Speaker 2: have really huge drone problems. So you think about drones 355 00:17:55,720 --> 00:17:59,960 Speaker 2: delivering drugs, weapons, cigarettes, escape kits, right to prison windows, 356 00:18:00,359 --> 00:18:03,000 Speaker 2: Amazon style, we say, look, don't even bring the drone down. 357 00:18:03,240 --> 00:18:05,200 Speaker 2: We'll tell you where the pilot is going to arrest 358 00:18:05,200 --> 00:18:07,080 Speaker 2: the pilot. That's probably a better solution for you. So 359 00:18:07,080 --> 00:18:07,720 Speaker 2: things like that. 360 00:18:07,800 --> 00:18:12,159 Speaker 1: Across those alternative commercial areas. Where are you saying the 361 00:18:12,200 --> 00:18:15,560 Speaker 1: biggest opportunity at the moment, Is it with stadiums, Is 362 00:18:15,560 --> 00:18:17,159 Speaker 1: it prisons? Is it airports? 363 00:18:17,320 --> 00:18:20,840 Speaker 2: Data centers and airports they're probably two our biggest customer 364 00:18:20,880 --> 00:18:23,159 Speaker 2: sets right now, and they're fairly centralized, so there are 365 00:18:23,160 --> 00:18:26,480 Speaker 2: only a few really big names in the data centers globally. 366 00:18:26,480 --> 00:18:29,960 Speaker 2: And also airports tend to be fairly centralized. So for example, 367 00:18:30,000 --> 00:18:32,879 Speaker 2: in the US, every airport, unlike in Australia, is actually 368 00:18:32,960 --> 00:18:36,000 Speaker 2: government owned and they take very strict guidance from FAA 369 00:18:36,040 --> 00:18:38,320 Speaker 2: in the US, which is the agency regulating the air 370 00:18:38,320 --> 00:18:42,480 Speaker 2: traffic safety. So once fa finally issues recommendation to deploy 371 00:18:42,560 --> 00:18:44,399 Speaker 2: counter drone systems, and we think there's going to be 372 00:18:44,400 --> 00:18:47,240 Speaker 2: a few systems being recommended, we think that were really 373 00:18:47,240 --> 00:18:50,160 Speaker 2: commence deployment at their large scale. And similarly elsewhere around 374 00:18:50,200 --> 00:18:51,679 Speaker 2: the world, we spend a lot of time talking to 375 00:18:51,720 --> 00:18:55,280 Speaker 2: regulators saying, hey, here is speaking of education, here is 376 00:18:55,320 --> 00:18:58,479 Speaker 2: the realm of possible. You really need to have all 377 00:18:58,600 --> 00:19:01,800 Speaker 2: the airports in your domain having counter drone systems, and 378 00:19:01,800 --> 00:19:03,480 Speaker 2: then the regulators talk to the airports. 379 00:19:03,720 --> 00:19:10,080 Speaker 1: You mentioned. The regulatory environment quite sophisticated and complex as 380 00:19:10,080 --> 00:19:17,399 Speaker 1: you look across different jurisdictions. Multiple government agencies regulate airspace. 381 00:19:18,000 --> 00:19:21,480 Speaker 1: How do you go about navigating some of the challenges there? 382 00:19:22,200 --> 00:19:26,680 Speaker 2: There are multiple regulations, like, for example, airspace who owns 383 00:19:26,680 --> 00:19:30,200 Speaker 2: the airspace? So for example, just because quantus aircraft might 384 00:19:30,240 --> 00:19:32,600 Speaker 2: be flying over your house every morning, you can't get 385 00:19:32,640 --> 00:19:35,200 Speaker 2: just annoy it and shoult it down. So drones technically 386 00:19:35,280 --> 00:19:38,280 Speaker 2: enjoying the same privilege, right, So what it practically means 387 00:19:38,400 --> 00:19:42,480 Speaker 2: is detection usually has a lot greater ability in terms 388 00:19:42,480 --> 00:19:45,280 Speaker 2: of everybody being able to sense drones. But then when 389 00:19:45,280 --> 00:19:47,679 Speaker 2: it comes to the defeat, it really becomes domain of 390 00:19:48,160 --> 00:19:51,160 Speaker 2: government agencies to take down the drones, which is still 391 00:19:51,160 --> 00:19:53,400 Speaker 2: a very large market for US. So if you think 392 00:19:53,440 --> 00:19:57,560 Speaker 2: about the military's law enforcement, intelligence, homeland security, but even 393 00:19:57,600 --> 00:20:01,119 Speaker 2: for customers that cannot like for examp, state and local 394 00:20:01,240 --> 00:20:03,159 Speaker 2: law enforcement in the US, and by the way that 395 00:20:03,240 --> 00:20:06,320 Speaker 2: legislation is changing to enable them, we think soon to 396 00:20:06,359 --> 00:20:09,320 Speaker 2: defeat drones as well. We can indicate often location of 397 00:20:09,359 --> 00:20:11,960 Speaker 2: the pilot to them, which would still be legal for them, 398 00:20:12,000 --> 00:20:14,520 Speaker 2: and then they'll go and apprehend the pilot. So you 399 00:20:14,640 --> 00:20:16,000 Speaker 2: kind of work around it, and a lot of your 400 00:20:16,080 --> 00:20:18,960 Speaker 2: job is also educating the customers legally on what they 401 00:20:19,480 --> 00:20:22,959 Speaker 2: cannot do too. Airports often would have law enforcement offices 402 00:20:23,000 --> 00:20:25,960 Speaker 2: as part of airport's security, so even if airport itself 403 00:20:26,000 --> 00:20:29,159 Speaker 2: cannot take down drones, Australian Federal Police being inside of 404 00:20:29,200 --> 00:20:30,480 Speaker 2: Sydney Airport will be able to. 405 00:20:31,280 --> 00:20:34,679 Speaker 1: We've seen a number of announcements recently in terms of 406 00:20:34,720 --> 00:20:40,080 Speaker 1: investments in R and D facilities in South Australia and Virginia. 407 00:20:40,200 --> 00:20:42,440 Speaker 1: Can you talk to me a bit more about what 408 00:20:42,480 --> 00:20:46,360 Speaker 1: your plans are there and how that will transform your 409 00:20:46,359 --> 00:20:49,040 Speaker 1: ability to scale and service your customers. 410 00:20:49,359 --> 00:20:52,080 Speaker 2: We operate in about fifty countries around the world, so 411 00:20:52,240 --> 00:20:55,199 Speaker 2: that means we want to both capture talent on a 412 00:20:55,200 --> 00:20:58,960 Speaker 2: global basis. So Adelaide as well recognized as Australia's capital 413 00:20:58,960 --> 00:21:02,240 Speaker 2: of electronic warfare and a lot of Australia defense companies 414 00:21:02,280 --> 00:21:05,560 Speaker 2: are based in Ittalyaide, so we've been historically taking people 415 00:21:05,600 --> 00:21:07,960 Speaker 2: from Adelaide and moving them to Sydney and today the 416 00:21:08,000 --> 00:21:10,600 Speaker 2: form part of our Sydney engineering team. But also we 417 00:21:10,640 --> 00:21:13,280 Speaker 2: feel that our new office will be able to capture 418 00:21:13,280 --> 00:21:17,080 Speaker 2: a lot of additional talent to feed into our overall 419 00:21:17,119 --> 00:21:20,639 Speaker 2: engineering solution. Now, when it comes to manufacturing, we have 420 00:21:20,680 --> 00:21:23,000 Speaker 2: a number of initiatives. So today we are moving from 421 00:21:23,480 --> 00:21:26,600 Speaker 2: five hundred million annual production capacity, so five hundred million 422 00:21:26,640 --> 00:21:29,200 Speaker 2: dollars a year to about two point four billion by 423 00:21:29,280 --> 00:21:31,879 Speaker 2: end of next year, so about five x increase and 424 00:21:31,960 --> 00:21:35,040 Speaker 2: adds through significant expansion in Sydney, so we're moving from 425 00:21:35,119 --> 00:21:38,119 Speaker 2: current four hundred square meter space to three thousand square 426 00:21:38,119 --> 00:21:42,320 Speaker 2: meter facility. Our two contract manufacturers are expanding as well 427 00:21:42,359 --> 00:21:45,240 Speaker 2: as new contract manufacturers, one in the US and one 428 00:21:45,240 --> 00:21:48,800 Speaker 2: in Europe, and that will assist with localizing. So a 429 00:21:48,800 --> 00:21:51,120 Speaker 2: lot of our customers are saying hey, like, for example, 430 00:21:51,160 --> 00:21:54,119 Speaker 2: in Europe, we have all these programs, but they require 431 00:21:54,160 --> 00:21:57,200 Speaker 2: sixty five percent local content, and so having a European 432 00:21:57,240 --> 00:22:01,159 Speaker 2: contract manufacturer achieves that too Australian I and then similarly 433 00:22:01,160 --> 00:22:03,320 Speaker 2: in the US, you can really do much more if 434 00:22:03,320 --> 00:22:06,240 Speaker 2: you can say, hey, it's American jobs and American made 435 00:22:06,440 --> 00:22:07,720 Speaker 2: and so that's what we're seeking to do. 436 00:22:08,320 --> 00:22:12,760 Speaker 1: You mentioned the use of contracts manufacturing. What would you 437 00:22:12,800 --> 00:22:17,200 Speaker 1: say the advantages of using that and do you foresee 438 00:22:17,240 --> 00:22:20,639 Speaker 1: that that might change as the business grows and evolves. 439 00:22:21,280 --> 00:22:23,920 Speaker 2: So we do both our own manufacturing as well as 440 00:22:23,960 --> 00:22:27,479 Speaker 2: contract manufacturing. So advantages of contract manufacturing is these are 441 00:22:27,520 --> 00:22:31,240 Speaker 2: people who are highly experienced in large volume game our 442 00:22:31,320 --> 00:22:34,520 Speaker 2: experiences in rapid innovation, which are fairly different skill sets. 443 00:22:34,520 --> 00:22:38,560 Speaker 2: And also contract manufacturers tend to operate on fairly modest margins, 444 00:22:38,600 --> 00:22:41,399 Speaker 2: so under ten percent, while we're as a business operate 445 00:22:41,440 --> 00:22:44,520 Speaker 2: and roughly sixty five percent gross profit margins. So more 446 00:22:44,560 --> 00:22:47,320 Speaker 2: of your own manufacturing you do more. Essentially, you're reducing 447 00:22:47,320 --> 00:22:50,040 Speaker 2: your overall blended gross margin, which is not what our 448 00:22:50,080 --> 00:22:54,120 Speaker 2: investors would like to see. But also importantly underneath both 449 00:22:54,200 --> 00:22:59,880 Speaker 2: out for call it like heavy grade industrial stuff, so metal, fabrication, plastics, injection, 450 00:23:00,040 --> 00:23:02,320 Speaker 2: A C and C machining and so on, and a 451 00:23:02,320 --> 00:23:04,439 Speaker 2: lot of these companies have really grown with us. We 452 00:23:04,520 --> 00:23:06,560 Speaker 2: love working with them. We normally try to have two 453 00:23:06,640 --> 00:23:09,720 Speaker 2: or three supplies for every part and bill of materials, 454 00:23:09,760 --> 00:23:13,120 Speaker 2: so you're basically baking recipe for every product is normally 455 00:23:13,119 --> 00:23:15,679 Speaker 2: about two hundred line items, and so we go to 456 00:23:15,760 --> 00:23:18,280 Speaker 2: these fifty manufacturers for a lot of these line items, 457 00:23:18,359 --> 00:23:21,879 Speaker 2: and then they're the ones investing into heavy capex and 458 00:23:22,800 --> 00:23:25,560 Speaker 2: getting better in the process and then servicing other customers, 459 00:23:25,560 --> 00:23:27,719 Speaker 2: not just drone shield even for a lot of them, 460 00:23:27,760 --> 00:23:30,840 Speaker 2: we might be a significant customer and driving local jobs. 461 00:23:31,359 --> 00:23:34,680 Speaker 1: So you've had a record breaking first half of twenty 462 00:23:34,720 --> 00:23:40,920 Speaker 1: twenty five, significant improvement across all key financial metrics versus 463 00:23:40,960 --> 00:23:43,720 Speaker 1: the prior corresponding period. Can you taught me through some 464 00:23:43,760 --> 00:23:44,920 Speaker 1: of the financial results. 465 00:23:45,680 --> 00:23:48,720 Speaker 2: So firstly, we're now profitable and our aim is to 466 00:23:48,800 --> 00:23:56,680 Speaker 2: continue being consistently operating cash profitable and cashlow positive going forward. 467 00:23:56,760 --> 00:24:00,399 Speaker 2: And that revenue is very much underpinned by not just 468 00:24:00,440 --> 00:24:04,000 Speaker 2: geopolitics what you're seeing in the news, because often larger 469 00:24:04,080 --> 00:24:07,000 Speaker 2: orders are not necessarily reactions to what's been happening at 470 00:24:07,040 --> 00:24:10,960 Speaker 2: airports or military based the previous week, but processes that 471 00:24:11,000 --> 00:24:14,200 Speaker 2: go for months that eventuate with very large orders and 472 00:24:14,280 --> 00:24:17,040 Speaker 2: in tens of millions, and hopefully some and hundreds of 473 00:24:17,440 --> 00:24:21,320 Speaker 2: millions of dollars. So our customers are looking for mass 474 00:24:21,320 --> 00:24:23,680 Speaker 2: deployment of counter drome equipment. So they've been looking at 475 00:24:23,680 --> 00:24:26,400 Speaker 2: this problem now for about three years since the start 476 00:24:26,440 --> 00:24:28,000 Speaker 2: of the Ukraine War, and a lot of them now 477 00:24:28,040 --> 00:24:30,880 Speaker 2: have limited amount of equipment. They're saying right now time 478 00:24:30,960 --> 00:24:34,080 Speaker 2: for mass deployment, and dron Shield is really well positioned 479 00:24:34,440 --> 00:24:37,040 Speaker 2: on the global stage in terms of us versus some 480 00:24:37,080 --> 00:24:39,879 Speaker 2: of our competitors, and we talked about the differentiators, and 481 00:24:39,920 --> 00:24:43,200 Speaker 2: we don't really compete much with defense primes because they 482 00:24:43,240 --> 00:24:45,760 Speaker 2: tend to find counter drome with its rapid innovation, is 483 00:24:45,760 --> 00:24:48,520 Speaker 2: not really their game. Most of our competitors tend to 484 00:24:48,520 --> 00:24:52,719 Speaker 2: be in mid tier private equity backed rollups, and so 485 00:24:52,840 --> 00:24:55,199 Speaker 2: we find that we are pretty confident with our market 486 00:24:55,240 --> 00:24:57,840 Speaker 2: share as our customers are starting to really go into 487 00:24:57,880 --> 00:24:58,639 Speaker 2: mass procurement. 488 00:24:59,280 --> 00:25:02,440 Speaker 1: Can you talk me through those sort of early years 489 00:25:02,680 --> 00:25:06,240 Speaker 1: as a listed company and how you've evolved, how the 490 00:25:06,280 --> 00:25:07,840 Speaker 1: business has evolved since then. 491 00:25:08,760 --> 00:25:12,639 Speaker 2: In nine years, we've gone from twenty five million market 492 00:25:12,680 --> 00:25:16,080 Speaker 2: cap to sx two hundred as we stand today. And 493 00:25:16,160 --> 00:25:18,840 Speaker 2: in the early years the issue was you essentially always 494 00:25:19,280 --> 00:25:21,879 Speaker 2: come raised because you're making no revenue to speak of, 495 00:25:22,040 --> 00:25:24,000 Speaker 2: you need to have heavy investment in R and D 496 00:25:24,480 --> 00:25:27,040 Speaker 2: and you might have cash flow runway, maybe for another 497 00:25:27,119 --> 00:25:31,480 Speaker 2: six months, and that's pretty stressful. If you can go 498 00:25:31,520 --> 00:25:34,280 Speaker 2: through years of having three to six months of cash 499 00:25:34,320 --> 00:25:36,800 Speaker 2: in the bank, whatever happens to you afterwards is not 500 00:25:36,840 --> 00:25:40,280 Speaker 2: really that stressful, right. So, and then as you scale up, 501 00:25:40,320 --> 00:25:42,679 Speaker 2: you're still very much in retail business because when you 502 00:25:42,720 --> 00:25:46,080 Speaker 2: are a tiny company, institutions don't tend to invest because 503 00:25:46,400 --> 00:25:48,840 Speaker 2: there's not enough liquidity for them to get in or 504 00:25:49,000 --> 00:25:51,720 Speaker 2: get out. And even if institutions participate as part of 505 00:25:51,720 --> 00:25:53,840 Speaker 2: your capital raises, they often tend to leave within the 506 00:25:53,880 --> 00:25:57,000 Speaker 2: first couple of months of participating in the placement. So 507 00:25:57,040 --> 00:25:58,800 Speaker 2: for us, the game was how do you make the 508 00:25:58,880 --> 00:26:02,280 Speaker 2: registered more institution. We're now seeing there's a lot of 509 00:26:02,480 --> 00:26:06,480 Speaker 2: not just Australian but also international investors and we're squarely 510 00:26:06,520 --> 00:26:09,640 Speaker 2: on their radar because we're now large enough, liquid enough, 511 00:26:09,640 --> 00:26:11,960 Speaker 2: and we are the only public listed counter dron company 512 00:26:11,960 --> 00:26:13,680 Speaker 2: in the world. So there are plenty of lists of 513 00:26:13,720 --> 00:26:15,840 Speaker 2: drone companies, but if you want to have exposed to 514 00:26:15,920 --> 00:26:18,080 Speaker 2: counter drome, there's really not a lot of options to 515 00:26:18,760 --> 00:26:20,600 Speaker 2: go to and it's super exciting. So I was in London, 516 00:26:20,680 --> 00:26:23,280 Speaker 2: for example, for DSCI, the largest defense show in the world, 517 00:26:23,600 --> 00:26:25,520 Speaker 2: about a month ago when we met with a number 518 00:26:25,520 --> 00:26:28,600 Speaker 2: of UK fund managers and they've been exposed to our 519 00:26:28,640 --> 00:26:32,000 Speaker 2: story for the very first time and they absolutely loved it. 520 00:26:32,040 --> 00:26:34,480 Speaker 2: But even twelve months ago would have been too small, 521 00:26:34,560 --> 00:26:36,800 Speaker 2: too liquid for a lot of them. So we're now 522 00:26:36,800 --> 00:26:39,760 Speaker 2: in this virtual cycle where finally we're becoming investable by 523 00:26:39,800 --> 00:26:41,040 Speaker 2: a lot of very large funds. 524 00:26:41,160 --> 00:26:44,360 Speaker 1: That's right. Certainly the inclusion into the ASX two hundred 525 00:26:44,880 --> 00:26:47,720 Speaker 1: industry with the September quarterly rebalance has put you on 526 00:26:47,760 --> 00:26:50,600 Speaker 1: the radar of a lot of big fund managers. 527 00:26:50,920 --> 00:26:52,600 Speaker 2: That's right. Yeah, So we've gone from a SX three 528 00:26:52,680 --> 00:26:54,760 Speaker 2: hundred to two hundred in space for twelve months and 529 00:26:54,800 --> 00:26:57,080 Speaker 2: now scaling to see how quickly we can get to 530 00:26:57,080 --> 00:26:58,320 Speaker 2: hopeful air sex one hundred. 531 00:26:59,040 --> 00:27:01,639 Speaker 1: So if we think about the the drones that your 532 00:27:02,680 --> 00:27:08,280 Speaker 1: products are taking down, what's the dynamic with the drone manufacturers? 533 00:27:08,280 --> 00:27:10,800 Speaker 1: Do you think and I suppose you're watching each other 534 00:27:10,880 --> 00:27:14,120 Speaker 1: quite carefully in terms of how the technology is evolving. 535 00:27:14,160 --> 00:27:15,840 Speaker 1: What's your experience been there? 536 00:27:16,440 --> 00:27:18,800 Speaker 2: I remember where this defense show, which is how you 537 00:27:18,840 --> 00:27:21,120 Speaker 2: really meet a lot of the industry, and the Hotel 538 00:27:21,280 --> 00:27:24,560 Speaker 2: Ceo Ortel, being one of two main Chinese dron makers, 539 00:27:24,600 --> 00:27:26,960 Speaker 2: came to our standard and they're like, drone shield, we're 540 00:27:26,960 --> 00:27:30,000 Speaker 2: really closely watching you. So it's very much a catamouse 541 00:27:30,040 --> 00:27:33,600 Speaker 2: game where dron manufacturers maybe five ten years ago, we're 542 00:27:33,600 --> 00:27:36,840 Speaker 2: prioritizing how do you make your drone fly the furthest 543 00:27:36,920 --> 00:27:39,840 Speaker 2: and not crash into trees, and carry the most payload, 544 00:27:39,880 --> 00:27:42,480 Speaker 2: have the best camera. Now it's all of that, plus 545 00:27:42,800 --> 00:27:45,959 Speaker 2: how do you avoid drone shield. So for that they're 546 00:27:46,119 --> 00:27:49,560 Speaker 2: looking at really sophisticated techniques and it's pretty astounding. So 547 00:27:49,640 --> 00:27:53,080 Speaker 2: you can buy a twenty thousand dollars Ortel drone off 548 00:27:53,080 --> 00:27:54,880 Speaker 2: the shelf, and twenty thousand dollars may sound like quite 549 00:27:54,880 --> 00:27:56,639 Speaker 2: a lot, but in the military domain, it's actually not 550 00:27:56,840 --> 00:28:01,200 Speaker 2: that much, and it would have electronic warfare communication techniques 551 00:28:01,200 --> 00:28:03,520 Speaker 2: inside of it that five years ago would be classified 552 00:28:03,560 --> 00:28:05,800 Speaker 2: military secret, which is insane. And now you can buy 553 00:28:05,800 --> 00:28:08,159 Speaker 2: this as a family drone. And the reason they do 554 00:28:08,200 --> 00:28:10,800 Speaker 2: this is because they are basically thinking, well, this is 555 00:28:10,800 --> 00:28:12,919 Speaker 2: going to be deployed in the war zone eventually, and 556 00:28:12,960 --> 00:28:16,640 Speaker 2: this needs to have hardened techniques to avoid detection and defeat. 557 00:28:16,840 --> 00:28:18,440 Speaker 2: And for us this is great. I mean, we want 558 00:28:18,480 --> 00:28:21,400 Speaker 2: the Chinese and the Russians and Iranians to keep innovating 559 00:28:21,480 --> 00:28:25,000 Speaker 2: because if draw manufacturers would stop innovating, then the whole 560 00:28:25,040 --> 00:28:28,560 Speaker 2: industry would just collapse. Our gross margins would collapse, and 561 00:28:28,600 --> 00:28:31,280 Speaker 2: so we want to stay in front of everybody else. 562 00:28:31,320 --> 00:28:34,240 Speaker 2: By the nature of drones themselves innovating. But it's a 563 00:28:34,240 --> 00:28:37,160 Speaker 2: bit like a fence. People can climb over fences, kind 564 00:28:37,160 --> 00:28:40,160 Speaker 2: of holds through fences, but you still build them because 565 00:28:40,200 --> 00:28:42,320 Speaker 2: that takes care of most of your threats. So we're 566 00:28:42,320 --> 00:28:44,800 Speaker 2: better than any other counter drong company and we'll continue 567 00:28:44,800 --> 00:28:48,600 Speaker 2: getting better. So software updates every three months, hardware refreshers 568 00:28:48,600 --> 00:28:52,080 Speaker 2: every three to four years, huge engineering team being really agile, 569 00:28:52,240 --> 00:28:55,080 Speaker 2: and so on. So we set draw manufacturers, Yeah, let's 570 00:28:55,080 --> 00:28:56,840 Speaker 2: do this. We will love this competition. 571 00:28:57,160 --> 00:29:00,640 Speaker 1: So you just keep redesigning the fence. I suppose that's. 572 00:29:00,520 --> 00:29:02,680 Speaker 2: Right, the new defense technology sector. 573 00:29:03,000 --> 00:29:07,560 Speaker 1: Yes, what would you say your definition of success looks 574 00:29:07,640 --> 00:29:10,760 Speaker 1: like for drone shield? Is there an ambition or a 575 00:29:10,800 --> 00:29:13,760 Speaker 1: milestone in mind where when you achieve that, you'll be 576 00:29:13,800 --> 00:29:17,080 Speaker 1: able to reflect and say we've done it, We've made it. 577 00:29:17,800 --> 00:29:19,760 Speaker 2: Well, success for us has been a journey, right, So 578 00:29:20,040 --> 00:29:23,120 Speaker 2: all the time, when we're a ten person company with 579 00:29:23,240 --> 00:29:26,920 Speaker 2: only six months cash runway, success was just to survive 580 00:29:27,000 --> 00:29:29,760 Speaker 2: for the next twelve months. Now, we just had our 581 00:29:30,080 --> 00:29:32,800 Speaker 2: largest contract yet, the sixty two million dollar contract with 582 00:29:32,880 --> 00:29:36,840 Speaker 2: European Defense Ministry earlier in the year, and we've delivered 583 00:29:36,880 --> 00:29:40,640 Speaker 2: it in record time, within about two months. So the 584 00:29:40,680 --> 00:29:44,040 Speaker 2: next bracket of size we've been hundreds of millions of dollars, 585 00:29:44,040 --> 00:29:46,520 Speaker 2: and we have opportunities in our pipeline matching that that 586 00:29:46,560 --> 00:29:50,640 Speaker 2: we're actively working on. There are new generations of technology. 587 00:29:50,720 --> 00:29:55,280 Speaker 2: We talked about the operations scaling, so opening our outsource 588 00:29:55,400 --> 00:30:00,360 Speaker 2: factories in the US and Europe, expanding in Australiament. I 589 00:30:00,440 --> 00:30:03,280 Speaker 2: think about the business as sales, tech and operations, So 590 00:30:03,320 --> 00:30:06,160 Speaker 2: each one has its own milestones, and then there's overall 591 00:30:06,200 --> 00:30:09,560 Speaker 2: operational milestone as the organization marshals forward. How do you 592 00:30:09,600 --> 00:30:12,440 Speaker 2: make sure that in a company, not just top ten 593 00:30:12,440 --> 00:30:14,880 Speaker 2: per cent of the employees contribute, but all four hundred 594 00:30:14,920 --> 00:30:17,920 Speaker 2: are humming along and contributing at the max pro activity? 595 00:30:17,960 --> 00:30:20,480 Speaker 2: How do you keep your workforce engaged? So all of 596 00:30:20,480 --> 00:30:22,600 Speaker 2: these things are a measures of success for us. 597 00:30:23,160 --> 00:30:26,200 Speaker 1: Thank you ol egg for joining us, and thanks everyone 598 00:30:26,280 --> 00:30:27,840 Speaker 1: for tuning in leisure