Beonic Ltd

for our FY26 results presentation and FY27 preview. Joining me on the call representing Bionic is we have our chairman Mike McConnell. Mike is joining us from California. As you can see in Mike's bio, he's a very experienced chairperson and director. We also have Mark Thompson. Mark Thompson is currently joining us from Tokyo. He is in Tokyo right now presenting to one of our very large airport customers, Narita Airport. Narita Airport is a long-standing Bionic customer. They happen to be a top five airport globally for service quality, and therefore I think it makes perfect sense that they are one of our customers. And Mark is over there presenting our new Vision product. I'm just going to hand over to Mike, who wants to provide some opening remarks.

Thanks, Billy. Welcome, everyone, and thank you for joining us today. I'll open with a couple comments to talk about what has roughly been a three-year transformation at Bionic. Transformations are difficult, especially when facing both capital and operating scale limitations. The four key elements of our specific transformation have been leadership, strategy, cost structure, and our balance sheet. Let me comment briefly on each of these. Leadership. Billy was hired a little under three years ago, and since then, Approximately 50% of the employer employee group is new and importantly nearly every c-suite position including Mark Thompson who's with us today This represents enormous change in a very short period of time for any business One indicator that this has gone well is our internal net promoter score over this time period has risen from negative 7 to 52 next strategy Focus is a force multiplier. We've oriented to airport and retail and re-architected the tech stack, eliminating a lot of tech debt and harmonizing on one scalable platform. Additionally, Bionic Vision represents a significant strategic product response in our market to seamlessly deliver incremental value to our customers. Importantly, this product and approach gives us the right to win in a very, very large global market. 3. We have to right-size the cost structure and embed, through the use of metrics and data, a cost discipline in all that we do. Because of our scale, this was and is a foundational and necessary reset. We will continue to instrument the business to be operating cash flow break-even or better by being focused, smarter, and efficient. 4. And finally, as most of you know, our balance sheet and capitalization was thin, to say the least. Fixing this naturally occurred in phases. The historical debt obligations were strangling the company and unsustainable. Transformations cost money, particularly those with long-serving employees. Tech debt doesn't disappear on its own. I would like to thank our shareholders, old and new, and in particular our major shareholder, Thorny, for their support over the last 18 months. Taken together and based on my experiences, this team has done a remarkable job navigating all of which I just mentioned, while at the same time assessing and upgrading the employee set, setting a go-forward tone and culture, assessing and re-architecting the tech stack to a modern, scalable platform, and notably securing and implementing the biggest contract in the company's history. Further, I'd be remiss if I did not thank my board colleagues, Bob Alexander and Kirstie Rankin. Thank you for your wisdom and support to all of us throughout this process. In a moment, Billy will speak to our go-forward focus on sales acceleration. The building blocks are in place and as evidenced by our FY25 guidance, which you will see today, we forecast double-digit growth in ARR this coming fiscal year. Again, thank you for your time. And with that, I'll turn it over back to Billy.

Thank you, Mike. No question that Bionic was not in great shape in FY23. There have been too many historical acquisitions that had not been fully integrated, causing an enormous amount of technical debt and also cultural debt and process debt. and financial debt. There was insufficient operating leverage to fully enjoy SaaS margins as you would expect of a business of this type. And in spite of having an installed base that's quite impressive, over 10,000 venues at that time, it still wasn't able to reach any sort of operating leverage. So the first critical data point that I want to draw attention to as was announced in today's results is an $8.9 million EBITDA swing from FY24 to FY26. to a $4 million EBITDA result in FY26. It's a data point that I'm very proud of and I think it is by far the clearest signal of the work that's been done right across the business. We've enjoyed a 17.2% EBITDA margin and 78.4% gross margins across the company. We're also operating cash flow positive. We're expecting further improvement in margins in FY27 and those are from ongoing improvements in our operating leverage. The secured facility of 4.3 million AUD was retired on time in January 2026. Since FY23 there's been a clear trajectory in the numbers and the results that we're seeing today. In spite of having pretty flat revenues and if anything gone backwards slightly since 23, resulting from the churn of unprofitable or low margin revenues, including some acquisitions that were previously made with Cosley and Blix, both of which were executed in FY24. We're projecting top line growth in FY27 of around 9% year on year and margin improvement to just shy of 80% gross margin. Also producing $20 million of ARR by the end of FY27. It's worth noting that Bionic's gross margin is already within the top tier of SaaS businesses with a 75% to 80% range, where Salesforce is currently at 77%. So we feel, again, very proud of that. It's an incredible achievement. I want to spend a little bit of time just talking about the Bionic business and the addressable market. In the opening slide, I referred to Bionic's target customer as the retail venue, store, mall, or airport. And in many ways we see those values as being actually quite similar. It is a huge fragmented and compounding base of customers at 18.9% a year. That's retail broadly. There is no scaled incumbent and our rivals serve one sensor or one type of venue only. Fragmentation is an opportunity for a business like ours. We are 80 people, very agile and quick to move. So let me just talk a little bit about how the IONIQ platform actually works. We collect data from sensors, and I'm going to hand over to Mark who can go into a little bit more detail. We collect data from sensors such as people counting sensors, which are quite ubiquitous in retail store environments, LIDARs, fast spinning laser devices that create a three dimensional view of the physical space, Wi-Fi and more recently CCTV. We unify all of that sensor data along with third party data and our own AI and we add that to the operator's parameters, their roles, their thresholds, their service levels. And we present that data back to the customer in a way that I'm going to show you at the very end of the presentation, along with a series of instructions to them regarding things like staffing, specific performance thresholds, breaches of those thresholds, both historical, real-time and projected. I want to bring some life to that in a couple of ways. So, for instance, in a very large retail chain that we support, we provide store-by-store performance benchmarks that they can then use to give feedback to the store management of any particular high-performing or low-performing store. We normalize their performance data, including till receipts, for things like footfall and other factors. In airports, we balance staffing against certain targets, such as queue times, to avoid over-servicing queues. In an airport, a 12 to 15 minute queue is a very bad thing for the passenger. But a one minute queue or less is a terrible thing for the airport because the cost to serve goes through the roof and we want to help them avoid that. They want to meet their service level ambitions and we help them balance those conditions. That's particularly the case for instance in our US airport customers where they have to pay the TSA 190 US dollars an hour for the time they spend supporting that airport and we can allow them to send direct messages to the TSA to flex that staffing level up and down based on known conditions provided by Bionic. In a mall environment we provide evidence to help rent adjustments for tenants. So we provide supporting information and we also provide predictions and we measure the throughput of places like bathrooms and almost any public space that allow our customers to set cleaning schedules to actual traffic conditions as well as closed loop NPS. Again, that avoids expensive over servicing of those facilities. All up, when dwell time is up in a retail context and the cost to serve the passenger, shopper, visitor is down, those venues make more money. And that's what they come to Bionic for. Let me just hand over to Mark, who's going to provide a bit more context.

Thanks, Billy. So a core objective over the last year was really to unify the technology behind the Bionic platform. This transformation has led to a single spatial data pipeline and a unified customer experience. This allows us to take data from any sensor and calculate any metric for different industries and all our customers. We know that LiDAR whilst working incredibly for complex environments like airports is just too expensive for our retail. and our new platform allows us to use their existing hardware, primarily security cameras, to generate the same level of value as we can for LiDAR for robots. You want to just move to the next slide? So whilst Bionic has a long history in computer vision and computer vision systems, It's really the recent advancements in AI that have really allowed us to develop the next generation camera solution, which we call Beyond Vision. It was built in six months. It is now live with customers and it's capable of generating both the flow analytics, which is the core value of our platform, but also incredible advanced analytics such as retail funnel conversion and queue abandonment. so we have it live in an existing retail chain in Australia and yeah as well as counts we're looking at queues we're looking at POS where we have staff at POS and we can calculate the ratios between staff members and queuing customers and we can look at the abandonment from those queues so people that join the queue but leave because it's too busy or too long as well so we've had huge interest across our whole portfolio of customers both retail airports airports are also interested in vision because it allows them to expand into areas such as the retail areas as well as the security and immigration areas that which is where we support traditionally and that's why I'm here in Narita they are interested in a hybrid solution they are interested in looking at lidar metrics for the uh for the immigration areas but also really looking at how we can use vision like across the whole airport to bring an incredible amount of value to them for an optimized amount of cost so super excited uh we are ready to hit the round uh hit the ground running and get this shipped and scaled uh for the next 12 months thanks mark

I want to congratulate Mark for having built a tremendous technology team. The R&D function at Bionic is, I believe, world class and the products that they're shipping, the features that they're shipping for our existing base of over 10,000 customer venues is a proof point of that. Let me just dwell a little bit on why airports. So for a long time now we have talked about airports as being a very attractive target customer base and we're thinking increasingly about airports really as just malls with very high friction at the entrance and our job is to help manage that friction to achieve the maximum possible retail dwell time at the minimum possible cost to serve. airports already operate very high yielding mall sites over 3.3 times revenue per square meter of yield meaning they're high functioning they've got a captive audience and oftentimes with holiday shoppers or holiday travelers they're ready to spend but airports are increasingly dependent on non-aeronautical revenue so over 40% of their all-out revenue is non-aeronautical that is largely from the retail mall and quick service restaurants and there is an incredible amount of pressure on airports to grow their footprint to accommodate increasing flows of passengers which tend to double every 10 years or so and so it is our experience across individual stores malls and also those airport entries that give us incredible level of defensibility globally. We face no single competitor who operates across those sectors and we face no single competitor who can work across the range of devices that we operate and especially and in particular legacy devices meaning existing technology that's been installed. So I want to talk again about the team that we've assembled. I'm very proud of this team. We've done a really good job in three years. We've worked super hard. Alongside our Chief Operating Officer, John Rankin, who's been in the business since 2016, but who will exit in November this year. We do have an incredible bench of talent. We have one remaining open role in this leadership team, which is the VP of Marketing. And the VP of Marketing will work alongside our agency, The Garden, to build a Bionic brand to be recognized as a retail strategy leader that it is. Many of you, some of the investors who might consider themselves long suffering from back in the Skyfy days will have realized that the business transition from Skyfy to Bionic, but in truth, much of the market did not. We were forced to rebrand the business when confronted with a trademark issue in the UK over the use of the word sky. and we made a snap decision or that snap decision was made in 2023 to rebrand Bionic and it was done very hastily and a lot of the value of Skyfire was left behind. That is job number one for our new VP of Marketing. Although in addition to attracting a great suite of talented leaders to the business, we have also entirely rebalanced our spend to focus on product-led growth. Increasing R&D as a percentage of labor spend from 23% to almost 50%, albeit the overall labor costs are lower for the business as a whole. The balance sheet is being cleaned up and we now have no secure debt. We are cash flow positive from operations and that is a $1.4 million turnaround based on FY25. Also, where the transformation really shows up is in margin and earnings growth. where only a 5.5% increase in revenue resulted in a 53% swing in earnings growth. So for FY27, our guidance is that exit ARR of around $20 million, and that is 15% up year on year. Revenue up 9% to $25.3 million. This is guidance, whilst improving EBITDA margin to 19%. There are contributions from our new Vision product, which also has an incredibly healthy pipeline, has made a very fast start in a short amount of time. The Morocco deal that Mike mentioned was our biggest deal ever signed. Plus improved customer retention that also supports that guidance. From FY23 to FY26 has been a really challenging journey for the business. Umar is a leaner, stronger business and it's my assertion that we are poised to have our best year yet in FY27. We have a tremendous team in place that I've told you about today, an unrivaled customer base and a product offering that is unmatched by any competitor all the way across retail and this is the largest commercial arena in the world. I want to thank you for joining the call today and provide an opportunity now to ask any questions that you may have. If you'd like to use the chat window to ask any questions, please feel free to do that now. I can start by asking a question that was asked prior to the beginning of the call, which was, do you think investors who have supported the company over a long period will ever see a return on their investment? And if so, when? That's a tough question. So, look, I hope having watched the presentation, this question was asked prior to the presentation, I hope having watched this presentation, you might share my confidence that the business has truly turned a corner. It has been a tremendous journey of transformation over the last three years and that we are now very much through operating leverage, through margins, we're now seeing a very healthy business emerge. and it is my assertion that FY27 will be the best year yet and I truly hope that our investors feel the same way. Whether or not those investors will see a return on their investment, that's very hard to predict and I'm not about making long-term predictions, but I'm very confident in where we are at today. I have many questions coming through. on the chat. Let me ask this one. What are your medium term goals for the business? In fact, a number of people have asked a very similar question. Can it be 50 to 100 million dollars in revenue over the next five years? Look, internally, we very much have strong ambitions for the business that are not misaligned with your suggestion of 50 to 100 million dollars in revenue. Long term predictions are very hard to make, but based on our suggestive transformation that it is now largely complete and that in FY27 we'll enjoy a 9% increase in revenue as well as further improvements in margin. Again, it's my assertion that we are well on our way. Someone has asked about the pipeline of forthcoming opportunities. We talk about a $37.1 million qualified pipeline and over $6 million of which is in the Vision product. We also have very, very large deals that we don't tend to consider qualified pipeline until we're in the final selection process of an RFP. But I think there's two ways to think about pipelining a business like ours. 10,678 venues in 58 countries means by far our greatest opportunity at the lowest acquisition cost is for us to sell to our existing base of customers. And so it has been a strategy of ours since the consolidation of our platforms into a single spatial stack that we build features primarily to sell to our existing base of customers. You can do the math. With over 10,000 venues and the amount of revenue that we have today, around $23 million, the average revenue per user and average revenue per venue is relatively low. But we have a billing relationship and a technology relationship with those venues, and they are primed for us to upsell and expand those venues with new technology features such as NPS, such as Vision, and such as the other products that we're shipping. So I feel very good about the pipeline for new logos, but I also feel incredibly good about our ability to both retain and expand the existing customers that we have on the platform. Mark or Mike, if you have any thoughts that you want to contribute at any time, please feel free just to jump in. Question is, do you anticipate a revenue split between the first half and second half of FY27? FY27 to some extent is about the people that we've hired recently to help post transformation accelerate the business from a sales and marketing point of view there's going to be a lag no question we have our new VP our global VP of sales joining us in mid-October Pete Mycock very experienced sales leader and no question he's going to take around till Christmas time to hit the ground and actually start to have an accelerating effect. I'm very confident he'll make a big difference to the business. He will take over from the good work that John Rankin has done to build pipe. We have many customers already in consideration. But there will be a lag. So I expect H1 to be softer than H2. As such, yes, I expect a revenue split between first and second half, but I do expect to see acceleration through the middle of the year. There's a question. I'm going to hand over to Mark and apologies because you can't see this question, but what are the benefits you are now seeing come through from the unified platform?

So for a stock, it is a consolidated technology platform, so it is easier, faster for us to work on, to ship new features on. We don't have to replicate functionality in different parts of the system. from a team acceleration perspective it's it's providing us to just go faster which is amazing with more confidence it is also allowing us to add new spatial sensors to the uh to the offering without adding additional work into the core platform itself so vision is an amazing example of this sort of like right from the start we've done a lot of work on standardizing the spatial platform for LiDAR. And then when we made the decision to put our foot down with Vision, there was a very quick inflection point where we knew that we could just use all the existing single stack that we've used for LiDAR, which is incredible. So a lot of the Vision platform was already built because we've already built a single stack LiDAR platform, which is incredible. And that just allows us to look forward and look at other sensors that we can add to the platform to add more utility thermal sensors, door sensors, all those kinds of sensors can now be run through the single stack and be available to everybody. So prior to having a single stack there was a lot of technology that was specifically related to Wi-Fi or specifically related to people counters or LiDAR and delivering value to each one of those customer sets multiple pieces of work, and now that's all a single piece of work. We've unified the design system, we've unified our reporting platform, the way we do maps, so any feature we now add for an airport on a 3D map is now available to the collective shopping mall in a precinct. So yeah, it's just allowing us to deliver very much, much quickly, much more quickly than we were able to before.

Thanks Mark. We've got some tremendous questions. I want to make sure that we can get to as many of them as possible. Any questions that we don't get to will be answered after the call and I'll communicate with individuals directly or I'll communicate with general interest questions to the entire group of participants. While I'm talking, I will just share a view of the platform on the screen. Hopefully it's not too distracting for you. But I just wanted to say that when we talk about, and this is Adelaide at 5.04 a.m. this morning, Adelaide Airport very interested in driving people through to those retail environments as smoothly as possible and maintain an accurate insight on service levels. The unification of all of the data types and sensor types mean that regardless of how the data was collected, it can be presented in this spatial UX as if it came from anywhere. And so that's one of the great benefits of unification. So one of the questions that was asked were, how much will the North Africa deal contribute to ARR in FY27 versus FY26? There are two additional airports plus expansion opportunities that will provide no less than around $400,000 of additional ARR in FY27 versus FY26. and the opportunity could be significantly higher. The program in North Africa was designed to ready that country for upcoming FIFA World Cup 2030 and so they've got some very large infrastructure projects going on in that area. How does airport revenue compare to fast food retail devices installed to perform the same job? Now, I think this is a great question and speaks to the varying degrees of investment capability that each of our customers have and each of those sectors have. People counting in retail is largely commoditized to the extent that it counts individuals across a line and gives a store manager a sense of footfall. What the Bionic product does though is that Plus provides data on dwell time, interaction with certain merchandised items, queue time, service levels and abandonment. And the reason I'm making sure you clearly hear the word abandonment is that our product is unique in its ability to identify the loss of potential customers through abandonment at Q. And we think this is a very powerful product. And so retailers will approach a product like Bionic with a view that it is a largely commoditized people counting product set. until we demonstrate the broad set of capabilities that include offering such as abandonment. As you can imagine, the costs involved in attracting shoppers to retail are mostly baked in, and so avoiding abandonment is incredibly valuable. Airports, on the other hand, have 10-year projects in mind that involve cross-funding capital investment in larger footprints, as well as driving up non-aeronautical revenues and maximizing the value of that dwell time to make the most possible money from holiday shoppers. So they each approach the use case very differently with differently deep pockets. But on the whole, when they witness the benefits of the Bionic product, although it achieves different objectives, it is very valuable. Let's talk about cyber security and again Mark I'm just going to hand over if you don't mind just a minute or less just on the efforts in cyber security and the non PII related product that we provide.

Yes, certainly I think cyber security has Been a core part of how we think about the only vision you know, obviously is Capturing people's faces and that's another kind of stuff has been somewhat controversial in With some other businesses across Australia certainly with the Bunnings incident and Our vision product involves deploying a device within the venue to process the video so the raw footage never leaves the venue, we don't do any facial recognition at all all we are interested is in anonymous person identification and being able to track that person through an environment exactly as you see here there's no PII you know like on any of these little blue people that are sort of like walking through Adelaide that they are just identified as a person that's moving through the environment so we have a dedicated security team we've had it reviewed in terms of ISO 27001 GDPR at the Californian standards so our vision product respects all those certifications and obligations I mean like fundamentally security is at the core of the entire platform not just vision and we have a whole program of work to make sure that we are not just protecting PII through encryption and arrest and through transmission but also many different measures to monitor the behaviors within our platforms identify any anomalies we work with CrowdStrike, Inventor and other hugely respected third parties in the security space to ensure we deliver the highest levels of security progress across the platform not just vision

Thank you Mark. Someone has asked how often do shops within airports join the system? I think what can be almost more interesting is that we have those individual stores as existing customers across their entire retail chain who also happen to exist within our mall customers and also happen to exist within our airport customers and so quite often the truth is customers like David Jones or JB Hi-Fi are where We service those customers right across the network and in some cases that happens to also exist within our mall customers and also within our airport customers and so that's where we see that crossover, but we actively encourage our mall and airport customers to offer the Bionic product as a cross-sell to their retail customers such that they can observe the entire funnel and so they can see the food traffic that exists within the airport. They can witness cross-shop behavior. And then as those customers near the store, does their merchandising entice them in and are they able to convert them at point of sale? We provide all of that conversion funnel data, but we love our customers to self-service and observe that themselves and build those models themselves. In the case of the Adelaide environment that I showed you, The Adelaide customer is able to set rules around specific zones and then use that data to measure the movement of customers from one place to another and so you can imagine in a retail environment that's very powerful.

I would just add to that that the Bionic Vision product allows that opportunity to be much more viable for a boss going forward as well because it's a lower cost solution. It is an active discussion with Adelaide. I'm not sure if you noticed that there's a lot of data insecurity, but the shopping area behind us is quite quiet. And that sparked a conversation about how do we use Vision to pull data from those areas without any additional existing hardware installation. It's a conversation I'm having with Narita on Monday as well. So certainly that is a prime opportunity, and Vision really allows us to push into it.

Someone has asked the US federal government recently discussed providing funds to airports. Have you heard anything about that from existing or pipeline customers? We certainly have. We see our airport customers benefiting from investments in infrastructure across the US that is often either federal or state specific but we do see our customers with money to burn in as a result of federal funding and in particular there are certain states that are very interested in driving more tourism by way of better airport experiences and so they certainly look to Bionic to improve those experiences Someone has asked, talk about the monitor hardware that you sell into shops and airports to get the data feed if time allows. Is it self-designed? Okay, so let me just broaden that question a little bit. The way we present our information back to airports is done in a number of ways. Now, we can be passenger-facing, meaning given the passenger's accurate expectations around time in queue, oftentimes will dramatically improve queuing experiences. And so we provide that information in a large number of airport environments. We take historical norms, real time data and make predictions on queue time. For instance, GFK in Terminal 4, the international terminal, as you disembark the air train, you're provided with wayfinding information that is provided by us based on real-time queue and predicted queue information. So that's the screens scenario. We also provide reports to leadership. We have an airport customer who each day will begin the day by looking at yesterday's Bionic data to figure out whether or not adjustments in staffing are required based on any given service level reach. Then we have, so that's the retrospective. Then we have in real time, the screen that I showed you with the three-dimensional movement of people is viewed in real time by many of our airport customers in their network operations center. So in a very large room with a number of screens showing areas all across the airport, The Bionic screen will be one of those screens that they view for real-time information as a proxy for the the traveler experience There are other ways that I think it's difficult to get to it now because the time that we have available Let me see if I can pick just one more question before we finish up. I do want to thank everyone for the questions that have been asked. They've been incredibly insightful and it's useful for us to get a sense of what our investors are interested in. Can you give some case studies of the value added to a retailer and an airport in terms of dollars and ROI? I would direct you to The Bionic website which actually the garden our agency is in the process of rebuilding that will increasingly feature case studies and white papers from our existing vast install base of customers But in particular, you will already see white papers there from a couple of existing customers showing specific ROI. Reach out to me directly if there is anything in particular that you want to see. But we have lots and lots of evidence of how Bionic will help transform a business both from an experience and a profitability perspective. We have reached the end of our webinar. I want to thank everyone for joining us today. Please stay in touch with the business. You can reach out directly to me, billy.tucker at bionic.com. I want to thank Mike and Mark for their contributions and also for the rest of the Bionic team for the incredible hard work that's been done over the past three years of this business transformation. Thank you, everyone. Join us again soon. Thanks again.