ROCKETDNA LTD (RKT) - Autonomous Drones In Mining

Mine sites are drowning in tasks that are repetitive, risky, and time-heavy, yet the real value sits on the other side of the work: clean data that helps people make faster calls. We chat with Chris Clark, Managing Director and CEO of RocketDNA Limited, about how AI-driven autonomous drones are taking on aerial surveying, security and surveillance, and asset inspection for Tier 1 mining customers across Australia and Africa and what that means when the output is trusted enough to drive day-to-day decisions.

We break down RocketDNA’s latest momentum, including revenue growth and the milestone of first positive operating cash flow, and why management keeps coming back to recurring revenue as the foundation for a scalable ASX microcap business. Chris explains how the xBot® solution brings together autonomous drone hardware, remote operations, and two key software layers: the SiteTube visualisation platform and Skylink®, RocketDNA’s proprietary operating system for managing autonomous drone fleets at enterprise level.

Skylink® is where the conversation gets practical: access control, scheduling, demand planning, maintenance oversight, and the jump from running a handful of drones to operating fleets across multiple sites. We also dig into the leading indicators that show whether a platform is becoming “sticky” including flight mission growth and active software users and why land-and-expand economics can beat constant greenfield chasing when customers keep ordering more units to meet demand.

If you care about autonomous drone technology, mining digitisation, and the shift from hardware projects to software-backed recurring revenue, this one is for you. Subscribe, share it with a mate in resources or tech, and leave us a review, then tell us: where do you think autonomous drones deliver the biggest productivity win first?

Transcript

Andrew Musgrave

Welcome again to ASX Briefs. And today we welcome back Chris Clark, the Managing Director and CEO of RocketDNA Limited, an AI-driven autonomous drone data services provider delivering aerial, surveying, security, surveillance, and asset inspection solutions to Tier 1 mining customers across Australia and Africa. Chris, great to have you with me again and welcome back to the ASX Briefs podcast.

Chris Clark

Thanks, Andrew. Really, really great to be back.

Andrew Musgrave

Now, Chris, for listeners that may be new to RocketDNA, your customer base now spans Tier 1 miners, including Rio Tinto, BMA, South32, Newmont, Vault Minerals, and Seriti Coal across Australia and Africa. So, could you give us a brief overview of what the business does and how you serve those customers?

Chris Clark

Yeah, thanks, Andrew. RocketDNA is a drone technology company. Effectively, what we do is we deliver AI-driven drone technology services for the mining and other industrial sectors that really effectively allows customers to focus on the sort of the analytics and the jobs at hand. We remove the customers out of those dull, dirty, boring, dangerous sort of tasks and applications while allowing drones to conduct each one of those sorts of tasks automatically. This is really kind of done via deploying a fleet of hardware units, which are managed by our Skylink® operating system. The data is all collected fully autonomously and then has been visualized in our SiteTube visualization platform. This technology is deployed across Tier 1 miners across globally as well, really enabled by satellite connectivity. So, you're pretty much getting the information and the getting your minds digitalized in real time.

Andrew Musgrave

Looking now at the financials, Q1 revenue came in at $2.47 million, up 49% on the prior corresponding period. What is driving that year-on-year growth and how should investors read the flat quarter-on-quarter result?

Chris Clark

We already had a great couple of wins towards the end of the last year. And so, a lot of those new deployments have all come online. So that sort of that growth and the actualization of the contracts and that revenue is starting to flow through. It's really the flat quarter on quarter it's just a timing of the particular deployments. You know, we're really being as a microcap company, we're really focused on making sure that the these big enterprise customers have everything they need because it's not just about the hardware, it's about the integration piece and really getting that right and integrating this the software and getting very, very sticky because underlying and what's the most core part about this business is the recurring revenue opportunities. You know, the hardware is only one aspect, but you know, we've got the software, we've got the services. It's a really a blended approach. And effectively by taking the time to deploy these systems correctly, we build up this operating leverage which can you know add benefits to multiple departments, not just a surveying application, for example. You know, it goes across Geotech and Viros, mine management, and so the systems, you know, they scale really, really quickly.

Andrew Musgrave

And the company achieved its first positive operating cash flow this quarter: $62,000 in net operating cash flow, a $345,000 improvement on Q4. How significant is that milestone for the business and what drove it?

Chris Clark

Yeah, it's been it's been a really great one. Look, we're a growth story, and that's our what we're focused on is really scaling up and owning this market. But overall, it's this cash flow break-even, operating cash break-even really validates our overall operating model at the current scale, which it is. So, it really starts to give a lot more transparency and clarity to those who are doing the modelling and looking at the viability of the business long term. And it can just show that you know one contract, what it can do, you know, just in what you know, another 10 or 20 sort of units does to that bottom line. And so, I think that's really the sort of the exciting part, the sort of sensitivity and what the revenue possibly could be, looking at the total sort of market size. And so really the trick is really now for us is ensuring looking at that revenue blend again, driving that revenue growth, managing that recurring revenue mix, maintaining that cost discipline is you know, we really can't believe we've got the formula right. And so that's really kind of represents an overall inflection point for the business. And yeah, we we're really yeah, we're really grateful for all the great customers that we have and the positive cash flow that it represents going forward.

Andrew Musgrave

Alongside those numbers, you've also flagged a rising monthly recurring revenue. What proportion of the revenue is now recurring and where do you see that mix heading over the next few quarters?

Chris Clark

So, our predominant or primary product suite is really around our xBot® solutions. So, a lot of all that new recurring revenue is around all the xBot® solution, which encompasses the hardware, the autonomous drone hardware deploying the SiteTube and Skylink® add-on software on top of that, as well as the flights and operating remote operations layer within that. So, the mix is really kind of shifting steadily towards this majority recurring revenue portion as well, which is allowing us to have a much more predictable revenue base. It supports our investment in the growth, and you know where we see the blend of the business because you know the right mix around this is not just to have a pure hardware or pure services business. It's a technology company business supported by really strong software layers. And that allows us to integrate with customers wherever they need us because every single customer or every individual project is quite unique. And we're really focused on making sure that we're sticky, we're building a moat and we're maintaining our competitive edge.

Andrew Musgrave

Now, touching on Skylink®, a key milestone this quarter was the live deployment of the proprietary Skylink® operating system with a T1 mining customer. So, what does Skylink® do and why is it a step change for RocketDNA's operating model?

Chris Clar

Yeah, Andrew, Skylink's a game changer for our business. It's effectively a proprietary operating system for autonomous drone fleets. And it pretty much gives customers the confidence to scale their autonomous drone operations from five to a hundred. You know, no longer are we having conversations with customers about, you know, what does this technology do and where does it add benefit? We're now really having the kind of you know big strategic conversations where customers do believe like you know, these systems are going to become part of their infrastructure, as you will, like you know, I mean, like you have a server cabinet or any other kind of piece of IT technology on site. And so, it's about how do you manage that at enterprise level, ensuring not only these things all being maintained and serviceable, but you know, who has access, how's capacity managed and demand planning controlled and scheduled across your entire fleet? So, you're getting really complex requirements, you know, just to manage this. And so, this product doesn't exist anywhere in the world, and so it was actually built out of necessity for our own requirements, just to manage our own, you know, number of flight requests. We're getting in excess of you know 3,000 flights a month now. And so, you know, the way to be able to manage that and at the same time build an operating system that can also again increase our competitive advantage is really been something very, very special. And to add on to that, you know, what how better it is to even just have an existing customer, a tier one to really kind of build this product with as well, which validates the overall product and production and scale.

Andrew Musgrave

And with Skylink® being a scalable platform, how does that change the economics and the growth potential of the business?

Chris Clark: 08:06

Yeah, so we're looking it very much shifts from a per-site label model to networked operations. You know, where we've got remote operating centres here in Perth and Adelaide, but it effectively allows us to really leverage the one-to-many approval, so allowing a single remote operator to control multiple drones and across multiple sites from you know from a single location. And so, every little bit of gain adds to the marginal benefits or the margin overall for each mission that we do, as well as on top of the additional units that we deploy. And what we're starting to see is that Skylink® really provides that transparency so that customers can, as they the easier that you make it to request the flight, the more flights are being requested. And eventually it comes to a situation where there's no capacity or no slots left to request a mission. And so, customers are now you know ordering placing orders for more xBots® to be deployed just so they can complete or meet up with their basic demands.

Andrew Musgrave

During the quarter, you completed the deployment of xBot® units for customers such as BHP Mitsubishi Lives and Norton Goldfields. Can you give us a sense of the scale of operations now running across your customer base?

Chris Clark

Yeah. We're really starting to hit our straps there, Andrew. I think you know, every time you know you start up a new company, you build a new product line, you know, you're not only looking in the early stages of validating a product with a customer, but, you know, finding again that perfect operational sort of balance of what do you need and how do you deploy it and again get very much entrenched. So, you know, again, we're very grateful for the BMA opportunity. And as that scales up, that's really our flagship project within Australia. But adding on to that, we've really got some other key opportunities with Norton and Sibanye Gold, for example, who are just naturally expanding. So, while they maybe didn't start off as a single large deployment as BMA did in the beginning, you know, they're seeing the benefit across multiple sites that are they're spread across very remote areas. And they continue to keep ordering, not only expanding horizontally with new units, but also vertically within new applications and thus increasing the mission size. So, you know, each opportunity or each project and each site is a beach head for further deployments and scaling in flights, which keeps the deployed fleet just keeps building quarter on quarter.

Andrew Musgrave

And Australian xBot® flight missions were up 113% quarter on quarter, and active SiteTube software users were up 47%. What does that level of engagement tell you about how customers are embedding the platform into their operations?

Chris Clark

Yeah, the software is the is really the secret source that kind of brings it all together for us and again gives us the validation because the metrics that we're monitoring is yes, we're watching the number of actual hardware units that we're deploying onto site, but we're then also the other key KPIs are the number of flight missions requested as well as the number of engaged monthly active users. That's something that we're very quite intent on. We've probably got double the number of registered users, but it's really about the active users who are using this on a on a daily and monthly basis. And so, by monitoring that that makes it becomes sort of a self-fulfilling prophecy, right? Where the more the easier that you make it, customers to engage and use the data allows them then to request more data, which then drives the need for more units. And so, we're really seeing high engagement, not just on a monthly basis, but multiple times per day. And that then has a knock-on effect of flight mission growth, which that just keeps creating great and more engaging conversations around the operational integration that's happening with every single site. And that then has a more knock-on effect of more engagement, more different users from different departments and who then jump onto SiteTube who are making more and faster decisions on a more frequent basis. And these, all these leading indicators all come together, that just creates a much stickier platform and make makes it a lot harder to displace us.

Andrew Musgrave

Now on land and expand, what are the economics of deploying a second or third xBot® at an existing customer site versus winning a greenfield account?

Chris Clark

Yeah, I think every single customer is quite unique. So typically, the first deployment, you know, the customers will be focused on what they're currently doing now with drones. And it might take a while to do the initial sort of onboarding, the integration and sort of the training. But the second units come a lot a lot quicker, particularly at the same sites where you've got the same team and set up and everyone knows how to how to use the systems. And so, you know, subsequent deployments and additional users, all just a pure margin gain, you know, for us. And so, every installation is an incremental unit that gets deployed. Greenfield wins are a lot higher revenue in the beginning, but always sort of, you know, might start at a lower margin as there might be a higher sort of deployment cost. But over time, you know, we're signing up longer-term contracts with these customers. It's, you know, much, much better economics over the long the long term.

Andrew Musgrave

And finally, Chris, looking ahead to the June quarter, what are the operational and financial markers you're working to and what's the path to sustained cash flow positivity from here?

Chris Clark

Yeah, it's continued doing a lot more of the same, you know, sticking to the good the good balance of scaling up Skylink® within the tier ones and the benefits and the marginal, the margin improving efficiency that that will bring within our operations, continue to integrate further with the existing customers that we have, you know, to focus on those particular applications that will scale up user growth and encourage more xBot® deployments with within those existing bases, s well as really focusing on you know what makes sense for us, where do we see the value, targeting sustained operating cash flows, positive operating cash flows throughout the year as well, and being just overall very disciplined on that cost base. I think this all sort of enshrined in knowing that we are a recurring revenue business remains the overall priority and is really becomes our sort of north star. So, yeah, how we how we pull that all together through our blended revenue mix is what makes us very unique.

Andrew Musgrave

Okay, Chris. Well, it's been great to chat again to get an update on the company. So, thanks for that. And we look forward to further updates from RocketDNA in the coming months.

Chris Clark

Cheers, Andrew. Thanks very much.

Andrew Musgrave

That concludes this episode of ASX Briefs. Don't forget to subscribe, and we look forward to catching you on our next episode.