Sensor AI that generates real-time insights

SenSen Networks 4 April 2022 Initiation
Download PDF

SenSen Networks

Sensor AI that generates real-time insights

Initiation of coverage

Software & comp services

4 April 2022

Price

A$0.12

Market cap

A$78m

US$0.72/A$

Net cash (A$m) at 31 December 2021 (includes leases)

7.4

Shares in issue (December 2021)

650.3m

Free float

52%

Code

SNS

Primary exchange

ASX

Secondary exchange

OTCQB: SSNSF

Share price performance

%

1m

3m

12m

Abs

(4.3)

(26.7)

(47.6)

Rel (local)

(10.1)

(26.8)

(52.8)

52-week high/low

A$0.21

A$0.11

Business description

SenSen Networks, an Australian-based technology company, operates in the field of sensor artificial intelligence. By applying its SenDISA AI platform to physical space monitoring, it extracts real-time insights for customers. It provides solutions to customers in the smart city, gaming, retail and emerging market verticals.

Next events

Q322 results

TBD

Analysts

Ken Mestemacher, CFA

+44 (0)20 3077 5700

Max Hayes

+44 (0)20 3077 5700

SenSen Networks is a research client of Edison Investment Research Limited

SenSen (SNS) is an Australian-based company that applies artificial intelligence (AI) to problems that involve monitoring physical spaces. Its SenDISA product platform fuses together data from multiple sensors in real time, extracts what is relevant and then uses AI to help customers reduce costs and increase revenues. SenSen’s ongoing transition to a ‘pragmatic SaaS’ model with higher-margin recurring revenues, the Scancam acquisition and Land Grab strategy should help maintain its recent momentum of contract wins across multiple geographies and verticals, which we expect could lead to a reduction of the valuation gap.

Year end

Revenue

(A$m)

Adj EBITDA*

(A$m)

PBT**

(A$m)

EPS**

(c)

P/sales

(x)

Net cash***

(A$m)

06/20

3.8

(2.8)

(3.7)

(0.85)

20.7

0.7

06/21

5.5

(2.2)

(2.9)

(0.61)

14.1

3.9

06/22e

9.3

(6.6)

(9.7)

(1.67)

8.4

1.2

06/23e

16.4

(2.5)

(4.8)

(0.73)

4.8

(0.5)

Note: *Adjusted EBITDA excludes non-cash share-based payments. **PBT and EPS are normalised, excluding amortisation of acquired intangibles, other income, and exceptional items. ***Net cash is cash less debt and leases.

H122: Scancam acquisition and new contracts

SenSen reported A$3m revenues for H122, up 19% versus H121’s A$2.5m, primarily due to the Scancam acquisition. Annualised recurring revenue (ARR) rose to about A$5.3m in H122 from FY21’s A$4.1m. Notable were eight new contract wins with a minimum value of A$4.8m that will be recognised over the next few years. In its recent trading update, SenSen revised its FY22 revenue guidance to A$9.0–9.5m from A$11m, mainly due to the impact of flooding in Australia.

Fast-growing, global AI market: US$126bn by 2025

SenSen operates in the fast-growing, global AI market, which is expected to expand at about a 43% CAGR and reach US$126bn by 2025 (source: Tractica). As it executes its ‘Land Grab’ strategy, SNS should benefit as AI is increasingly used in verticals that involve monitoring physical spaces and as it expands its business across multiple geographies, including the Americas, Australia and New Zealand.

Building on its momentum across multiple verticals and geographies, we forecast SenSen revenues to grow at a 65% CAGR from FY21 (A$5.5m) to FY24e (A$25.0m). We forecast FY22 revenues to rise 69% to A$9.3m from FY21, then grow 76% in FY23 to A$16.4m. To fund its growth, SenSen raised A$10m via private placements in late 2021. We expect net income (reported) and free cash flow (including leases) to turn positive in FY24, reaching A$0.7m and A$3.1m, respectively.

Valuation: Higher growth should reduce the gap

SenSen is trading at 4.8x price/revenue for FY23e, a significant discount to its peers despite SNS’s higher forecasted growth rates. Using the average peer multiple of 7.2x price/revenue for FY23e implies a share price of A$0.18 or upside of 50%. If SenSen can maintain the momentum in new customer wins and success across geographies and verticals, we expect there could be a reduction in the gap.

Investment summary

Company description: Using AI to extract real-time insights

SenSen Networks is an Australian-headquartered technology company operating in the field of sensor AI in the B2B space, with offices in India, Singapore, Canada and the United States. What makes it unique is it applies AI to monitoring physical spaces in real time, with the focus on adding value by reducing customer costs and assisting them with improving services and increasing revenues. SenSen operates in four primary verticals: smart cities, casinos, retail gas stations and emerging markets. A key component of SenSen’s investment case is its ongoing transition to a ‘pragmatic SaaS’ business model, with a significant portion of contract revenue now coming from higher-margin, recurring software licence revenues. Its growth strategy can be described as a ‘land grab’, where it is winning business and demonstrating momentum across its multiple verticals and geographies.

Financials: Building on FY21’s and H122’s growth

SenSen reported A$5.5m in revenues in FY21, up 47% y-o-y, with H122’s revenues also up 19% y-o-y to A$3m. We expect revenues to grow 69% in FY22 to A$9.3m, with most growth occurring in the second half of the fiscal year from revenues from recent contract wins in November and December, recurring revenue and new contract wins, though affected by floods in Australia. We also see ARR reaching A$8.2m (in line with company’s guidance of A$8.0–8.4m) and revenue growth of 76% to A$16.4m in FY23e as SenSen advances across the smart city, gaming and retail verticals. Though its operating loss will likely increase in FY22e from investments in R&D and building out staff to support its growth, we forecast SenSen to reach operating profitability by FY24e, moving from an operating loss (EBIT) of A$2.9m in FY21 to a gain of A$1.0m in FY24e, driven by its ongoing transition to a SaaS business model with higher-margin, recurring revenues. A key performance indicator we are watching is that of new customer wins, as we want to see SenSen maintain its recent momentum in contract wins across multiple geographies and verticals.

Valuation: Trading at a discount to slower-growing peers

With elements of AI, vision analytics and SaaS in its business model, we have compared SenSen to three sets of peer groups: small cap AI, AI vision analytics, and small cap SaaS. In spite of a higher forecasted growth rate in the next several years, SenSen trades at 4.8x price/revenue multiple for FY23e, a 34% discount to the 7.2x average of its peer groups. If it traded at that peer multiple, SenSen would be worth A$0.18/share, an upside of 50%. Using a reverse DCF analysis, at its current trading price, we estimate that the market is only implying a revenue CAGR of less than 5.0% for SenSen (with EBITDA margins of 20% or less), considerably less than the c 43% growth rate that several research firms are projecting for the AI market itself.

Sensitivities: Lumpy revenues and assessing the long-term growth potential

The nature of its contracts and the timing of its revenue recognition and cash receipts can vary across periods, leading to lumpy revenues and making it difficult to forecast short-term results. It is challenging to forecast the size and timing and successful execution of opportunities available to SenSen, making quantifying the long-term potential difficult. If revenues and expenses are not what management expects, future cash or debt raises may be needed. Recent developments in the Australian gaming segment could also have an impact on its financial results.

Company description: Using AI to solve issues involving monitoring physical spaces in real time

As management describes it, SenSen is on the pointy end of AI, addressing the problems that customers face in monitoring physical spaces in real time and then using AI tools to solve them. SenSen’s horizontal technology platform SenDISA, which stands for ‘SenSen Distributed Intelligent Sensor Analytics Platform,’ first takes inputs from multiple sources, such as cameras, lidar, sensor networks, transaction data and GPS. It then fuses and analyses the data, using AI and software to determine and extract what is relevant, and then makes it available to customer enterprise platforms to assist them in making business decisions. The company’s expertise is in hardware selection, the development of suitable AI algorithms and choosing the appropriate processing platforms and architecture to provide the optimal solution to customers. Ultimately, its focus is on helping clients reduce costs, improve their services and grow revenues. For instance, in Brisbane, SenSen’s platform helps the city improve both employee safety and efficiency, increase parking enforcement revenues, and improve the availability of parking for its residents.

As noted before, a key component of SenSen’s investment case is its ongoing transition to a ‘pragmatic SaaS’ business model. We label this pragmatic because the decision to go with a SaaS model or not is based upon the needs of the client, whether it be a city council, gaming company or retail petrol shop.

Its growth strategy can be described as a ‘land grab’, where it is winning business and demonstrating momentum across its multiple verticals and geographies, as illustrated in Exhibit 1. The ‘land grab’ involves:

New contract wins. Importantly, each of its four verticals is relatively underpenetrated at the current time, providing plenty of room for SenSen to further penetrate these markets.

Expanding into new geographies, as demonstrated by its recent opening of a Las Vegas office that boosted sales in North America.

Organic growth at existing customers via upselling opportunities and extending its service offerings.

M&A to enter into new and adjacent verticals, such as where its recent acquisition of Scancam opened the retail gas station market.

Notably, these four prongs build on each other, as each new contract win provides more referenceability for potential customers, as well as scope for upsell each year, thus multiplying revenues year-on-year.

Exhibit 1: SenSen’s global footprint

Source: SenSen

Company background

SenSen Networks is an Australian-headquartered technology company operating in the field of sensor AI in the B2B space, with offices in India, Singapore, Canada and the United States. It was founded in 2007 and began trading on the Australian Stock Exchange in 2017 under SNS. In September 2020, SenSen received approval to list on the OTCQB market under SSNSF.

As shown in Exhibit 2, SenSen has a wide customer base, with customers from city councils, government entities, universities, gaming companies, hospitals and retail chains across the globe.

Exhibit 2: SenSen’s wide customer base

Source: SenSen

Revenues from around the globe

SenSen has historically operated in three regions: Australia and New Zealand (ANZ), Asia and North America. As shown in Exhibit 4, in FY21, it generated about 47% of its revenue in ANZ, 36% in North America and 17% in Asia. Since June 2021, SenSen has expanded into the UK with the Hippodrome Casino in London contract, increased its presence in Australia with the Scancam acquisition and concluded contract awards and extensions with Crown Melbourne, Brisbane City Council and Australia’s National Heavy Vehicle Regulator. The North America region is also expanding, contributing 36% of revenues in FY21 (16% in FY20) with the opening of a new headquarters in Las Vegas.

Exhibit 3: Revenue mix FY20

Exhibit 4: Revenue mix FY21

Source: SenSen, Edison Investment Research

Source: SenSen, Edison Investment Research

Exhibit 3: Revenue mix FY20

Source: SenSen, Edison Investment Research

Exhibit 4: Revenue mix FY21

Source: SenSen, Edison Investment Research

Acquisitions as gateways into adjacent verticals

Acquisitions are another key part of SenSen’s strategy, primarily used as gateways into adjacent verticals. Since late 2020, it has completed two key acquisitions: Snap Network Surveillance in December 2020 and Scancam Industries (announced in May 2021, closed in July 2021). The purchase of Snap Network, an Australian company considered by management to be a global leader in AI-powered multi-camera tracking software, was for A$1m in SenSen equity. Its solutions allow surveillance systems and operators to track individuals over large-scale video surveillance environments. By merging Snap’s AI powered multi-camera network technology with SenSen’s automated multi-operating technology, SenSen launched its new SenTRACK product with the capability to automatically detect and track people through entire surveillance networks. The acquisition provides SenSen inroads into several verticals, including US casino markets, airports and universities; airports and universities can be viewed as cities in themselves in that they share many of the same dynamics involving people, vehicles and objects. For instance, Snap’s software could be used for monitoring sensitive areas within airports or for providing security in dormitories.

The purchase of Scancam, Australia’s leading provider of AI solutions for fuel retailers such as BP, Ampol and Chevron, was for a mix of cash (A$1m upfront and up to A$4.1m in deferred consideration) and SenSen stock (A$5.5m in ordinary shares). Scancam’s technology is used to detect and intercept fuel theft in real time. Note that the acquisition was technically in FY22, so it was reflected in H122’s statements. The acquisition provides SenSen an entry into the fuel retail industry, and management expects it to add c A$2.2m in revenue in FY22, of which c A$1m is ARR.

Operating in four verticals

SenSen operates in the B2B space, serving businesses that serve the ultimate consumer. Within the B2B space, it focuses on four verticals (see Exhibit 5). Because the retail and emerging verticals are relatively new, historical financials primarily reflect the casino and smart cities solutions. As displayed in Exhibit 6, smart cities made up 87% of revenues in FY21, while casinos provided 13% of the total. SenSen’s strategy is to establish a foothold and then expand in verticals with significant total addressable markets (TAM), as shown in Exhibit 7.

Exhibit 5: Target verticals

Exhibit 6: Revenues by vertical, FY21

Source: SenSen

Source: SenSen, Edison Investment Research

Exhibit 7: SenSen target markets

Smart cities: Growing to 100+ cities across the globe

A smart city is one that uses technology to improve its services to constituents and increase operational efficiencies. These technologies can include software, AI, cloud computing, the Internet of Things, mobile applications and the digitisation of its systems, etc. In the smart cities vertical, there are 10,000 cities across the globe, and the development of smart city technologies and movement towards establishing smart cities provides a healthy tailwind for SenSen. Its goal is to expand from the current 35+ smart cities (each of which may involve multiple contracts) to 100+ in two to three years. In smart cities, the current focus of users is on making roads safer, improving regulatory enforcement, limiting congestion and making parking more available and easier to find.

Singapore: mobility in one of the world’s smartest cities. One key use case for SenSen’s solutions is for traffic control and mobility in Singapore, a city with almost one million vehicles, high population density and nearly constant traffic jams. Management explains that ‘A small change in the traffic around a popular location can snowball into gridlock if not dealt with quickly and smoothly.’ SenSen’s solutions monitor the flow of traffic at 70 traffic hotspots to identify blockages, issue alerts to law or traffic enforcement, recognise dangerous driving behaviours and, in some cases, automatically issue infringement notices to drivers who may be speeding or parking illegally. Moreover, SenSen’s solutions also monitor a premium resource in Singapore – parking spots – and work to make certain that as many people as feasible can use those spots.

Guarding schools, airports and business parks. Another use case involves security at highly sensitive facilities in the United States, such as student campuses, airports and business parks. SenSen has partnered with Milestone Systems to provide SNS’s SenTRACK AI surveillance solution to improve situational awareness and operating efficiencies at these facilities. Whether it be dormitories, lecture halls, sports complexes or libraries, many spaces need monitoring to ensure the safety of students, faculty, staff and visitors. SenSen’s solution integrates the cameras in a large multi-camera facility and makes it easier for operators to pursue targets between cameras throughout the campus and allows campus security to effectively respond to critical incidents.

Casinos: A large and untapped market

According to Statista, there are over 4,900 casinos worldwide, providing a large and untapped market for SenSen. Its goal is to grow the Casinos vertical from its current two (as of November 2021, which does not include the recent Hippodrome contract) to over 30 over two to three years, where the focus will be on developing real-time data insights to assist managers and owners to meet their compliance obligations and optimise table operations.

Retail: Reducing fuel theft in up to 1,000 petrol stations

SenSen’s move into Retail comes as a result of the Scancam acquisition, as discussed earlier. There are about 6,500+ fuel retail stores in Australia and New Zealand, and loss through theft is the largest problem, which management estimates to be over A$60m per year across Australia. Prior to bringing SenSen in, usually the only recourse for the store and for law enforcement was to manually replay the video and try to find when and where the theft occurred, though all after the fact. With SenDISA, customers can actually detect and intercept crime as it is happening and get the stolen funds or goods back to the retailer. In other words, the combination of cameras and AI would alert store employees that someone is stealing fuel or goods. SenSen’s target is to expand from 250 fuel stores (from Scancam) to over 1,000 in the next two to three years, including both petrol stations and the broader retail market.

Emerging technologies: Expanding into adjacent markets

The final vertical, Emerging technologies, relates to smart analytics software used across a variety of surveillance applications with the emphasis on detecting and tracking suspicious behaviour. According to HIS Market research, there are about one billion surveillance cameras across the globe, and SenSen’s goal is to grow its base by a factor of 10 from a 10k+ base. SenSen’s product, SenTRACK, evolved from Force Multiplier, Snap Surveillance’s lead product, and fits well with the requirements of SenSen’s various customer segments where there is a need to track individuals across large-scale camera networks. For instance, there are significant opportunities in an adjacent vertical, smart surveillance, for company logistics and inventory management, where monitoring a physical 3D space could significantly reduce costs.

Scaling well across a breadth of verticals

SenDISA also enables SenSen to scale well across verticals, as the need for physical space monitoring is an issue shared by many verticals. For instance, casinos, smart cities, airports, retail stores and universities must all address security and asset management, as they have the common issue of physical space monitoring. The benefit of SenDISA is that a solution for a customer in one vertical would be transferable to another vertical with little added work, and management describes this as ‘cross pollination’ where it can rapidly adapt solutions across verticals. Tools that work for a casino’s security and asset management in Australia would also be usable in a smart city in Chicago or a university in the UK. The same types of cameras and sensors would be used across each vertical, and once an AI is trained to monitor a location, it can detect movement, discern between individuals who should and should not be in a certain location at a given time, and then identify the latter and sound an alarm.

Furthermore, SenSen also uses a land and expand strategy to grow its business with existing customers and upsell additional services. Management’s approach is that SenSen starts with addressing one or more issues with a customer, with the thought that as the client sees the value of SenDISA, it would naturally lead to expanding the platform into other use cases. For instance, a casino would need help for parking management, security, customer loyalty tracking, gaming tables with chip tracking, etc. SenSen would start with parking management, and then expand it to the other use cases.

Sensor AI Platform: Fusing data from multiple sources

SenSen’s strategy is to work with public and private businesses to automate monotonous and laborious tasks. The company’s horizontal technology platform, SenDISA, takes inputs from multiple sources, such as cameras, sensor networks, transaction data and GPS, and then analyses and fuses the data to develop meaningful insights. A camera captures an image or video of an object of interest, and stores that as data. SenSen’s specialty is taking the data or video stream from a camera and converting it into something that people can use to ultimately automate their operations. Furthermore, SenSen’s core capabilities include fusing data from multiple types and numbers of cameras and sensors, like light sensors, video cameras, GPS, radar, temperature sensors, lidar, etc.

To fuse all that data from different sources together, SenSen developed a platform called SenDISA (see Exhibit 8). According to management, it is designed to capture and mesh together data from these disparate sensors and use AI and software to transform the data and make it available to enterprise applications for consumption by customers. Consider data that comes in from a camera; it is unstructured data that is not immediately usable by a customer and contains a mix of relevant and irrelevant content. SenDISA is designed to fuse together the data from all of the different cameras, sensors, etc, determine and extract what is relevant, and then communicate it to the customer’s enterprise software system.

Exhibit 8: SenDISA multi-sensor data fusion platform

Source: SenSen

SenDISA: A product platform with three critical layers

There are many definitions regarding what the term ‘platform’ means, so it is important to define what type of platform SenDISA is and what it is not. The first types of platforms are those developed by major cloud service providers, such as Google, Amazon and Apple, where they have created their own ecosystem and consumers, allowing them to deploy solutions across an opensource environment. For instance, Amazon’s AWS provides a platform and range of tools for companies to develop their own AI-powered applications. However, SenSen management sees these platforms as suitable only for a specific class of problems and believes they fall short of meeting a wide variety of enterprise applications.

In contrast, SenDISA is a product platform, where SenSen has developed different product lines from the same set of tools, algorithms and architecture. It delivers products at scale with highly reusable and flexible pieces, and SenDISA allows SenSen to build and deploy products in a rapid time frame. Management sees SenDISA as being a solution for physical space monitoring that is highly accurate and flexible, able to be used in a variety of situations (parking regulation, office security, casinos, smart cities, highways, etc) rather than being limited to one issue, as seen with platforms that other companies build.

The SenDISA platform consists of three critical components or layers – data fusion, AI algorithms and product software – that work together in order to provide clients with decision support:

Data fusion: the first of the three components or layers of SenDISA is data fusion, where the platform ingests and fuses data from multiple sensors, controls, etc. While the primary sensors that provide data tend to be video or camera, SenDISA is sensor and hardware agnostic, able to fuse data from sources as varied as Bluetooth, temperature, lidar and radar. Specifically, this first, physical layer either uses a generic hardware interface where one can plug in any type of sensor device, control, camera or even smartphone, or SenSen’s proprietary hardware if generic interfaces are not available. Moreover, this physical layer can connect with different parts, interfaces and even Cisco networks, making it hardware and network agnostic. SenDISA’s management believes its competitive advantage is that this data fusion layer can bring together inputs from multiple, varied sensors to begin creating solutions for clients.

AI layer: once the data comes in and is fused together, it goes through an AI layer that uses computer vision models to identify and detect certain types of target objects. Collected data from the data fusion stage is analysed by a machine learning model, which, once trained by SenSen, can identify objects of concern for a specific use case, such as where cameras at a petrol station will be able to determine potential fuel thieves by matching number plates to past instances, enabling owners to mitigate future fuel losses. For this to work, models must be trained on large volumes of sample data, which requires annotation so that the model can learn to make inferences on certain objects. To ensure optimal accuracy and consistency, two teams annotate the same sample data and then cross-reference before this is fed into the AI infrastructure. This continual development and refinement of machine learning models is key to SenDISA’s AI layer, for which management claims near 100% accuracy across various use cases.

Software layer: operating in parallel is SenDISA’s third, or software, layer. For example, if the sensor data is a series of images, wav and mpeg files, the software layer organises that data for use in downstream processes, using algorithms and inferences to discover items of interest in the data, such as objects or persons. It then sends this organised, usable output to the customer APIs, such as those on enterprise software stacks such as Oracle or cloud-based platforms operated by a Google or Amazon. However, this is not just a simple software stack or SenSen layer operating on its own; instead, the software layer and customer enterprise software become closely integrated, providing a seamless end-to-end solution to the client.

The computer vision AI market

Innovations in cloud technologies, mobile connected devices and IoT are proliferating the amount of data available to companies and are primary drivers of AI technology. Companies deploy AI to optimise the level of insight that can be extracted from the data, where its ability to generate quick, accurate analysis, without the need to scale labour and associated costs, provides clear benefits. This is particularly key across SenSen’s verticals, where, for example, a council would not be able to monitor a city in real time to the same scale without AI, due to factors like labour shortages and budgetary constraints.

Computer vision offers a significant market opportunity

AI’s advantage over traditional software is its ability to generate informative outputs from unstructured data, such as images, video and text, which forms over 90% of global data. Computer vision refers to a computer’s ability to analyse visual data, such as digital images or video, and is the largest subfield of AI with several applications across industries. This establishes a large addressable market; as yet there are only a handful of companies that have the full-stack capabilities to deploy effective computer vision solutions across verticals. Leading players in the space have significant levels of intellectual property, sophisticated data teams, an ability to attract and retain top AI talent (scientists, engineers, etc) and access to large amounts of data, establishing high barriers to entry.

An unsaturated market landscape

There are only a couple of publicly listed companies globally in the AI sensor analytics field, likely explained by both high barriers to entry and the large number of alternative applications for computer vision companies, such as healthcare diagnostics and autonomous vehicles. SenseTime is SenSen’s only listed peer with a similar business model, but unlike SenSen, SenseTime has a range of investment sensitivities such as its purported connection to human rights abuses (discussed later on). Other competitors include XY Sense, an Australia-based company that creates AI-powered workplace sensors, and US-based Rhombus Systems, which builds AI-powered video surveillance technology. This limited competition and unsaturated market provide scope for SenSen to capture share in both its existing and new verticals.

User privacy

User privacy has been a significant headwind to the adoption of computer vision technologies. For instance, Chinese artificial-intelligence company SenseTime Group, which listed via an IPO in Hong Kong, in late December 2021 had, shortly before listing, become subject to US sanctions, which, among other things, preclude US investors from investing in its stock. The US Treasury Department explained that SenseTime, as well as other individuals and entities, was connected to human rights abuse and repression in several countries around the globe, and US investors are prevented from investing in SenseTime. To avoid issues such as these, SenSen has developed sophisticated systems to completely protect user privacy. For instance, SenDISA can blur out facial recognition, identifications, licence plates, faces, etc. if that data is not needed for that customer’s use, as well meeting jurisdictional restrictions where the solution is installed. However, ultimately it is up to the customer to make ethical use of the technology.

A valuable and sticky solution

SenDISA’s solutions tend to be very ‘sticky,’ so customer retention is high. When SenDISA is installed at a customer’s location, the AI and software outputs are integrated into the customer’s enterprise server stacks, such as data lakes, etc. The solution is sticky in that once all the work has been done to integrate it into multiple systems, it would take substantial time, energy and money to remove or replace a multitude of sensors and equipment and then ‘unplug’ the software and AI outputs from all of those critical systems. It is not just data generation but the platform’s deep integration with the enterprise software and downstream systems that makes it sticky.

The customer retention rate is a key performance indicator for SenSen and according to management, its net retention rate is running at about 120%, greater than the 108% SaaS firm average reported by various firms (such Vista Point Advisors). The net retention rate takes into account the company’s ability to renew existing contracts, upsells and downsells. According to management, in its five-year history as a public company, it has rarely, if ever, lost a customer and its existing customers are buying more each year, thus generating a net retention rate of above 100%.

Protecting SenSen’s intellectual property

SenSen actively protects its IP, having developed a substantial and growing patent vault that has more than 60 entries. Its solutions were built upon this IP and the current patent portfolio covers 14 patent families, five of which are granted and the remaining pending. Each patent family consists of a set of related patents registered in the key jurisdictions where the related inventions will eventually be commercialised, such as in the United States, Canada, Australia, Macau and Singapore.

Financials: Significant growth across primary verticals

Business model: Shift towards pragmatic SaaS with high-margin, recurring revenue

A key component of SenSen’s investment case is its ongoing transition to a SaaS business model with a significant portion of contract revenue now coming from higher-margin, recurring revenues. Revenues can be broken into three buckets and are similar across verticals:

software licences (about 60% of revenue), which are the SaaS ARR and include edge analytics and back-office software;

hardware (about 20% of revenue), consisting of pre-packaged hardware solutions such as cameras, sensors, etc, and

professional services (upfront and ongoing, about 20% of revenue) consisting of technology trials, solution design services, software installation and configuration, software customisation services and user acceptance testing (UAT) support. The software licences tend to generate much higher gross margins than the hardware or professional services, as the cost of goods is smaller for the licences (since they have minimal hardware, capex or upkeep costs), and as the ARR grows, so should overall margins.

Historically, contracts followed what management calls a ‘capex’ model, where most of the revenue was upfront and was about hardware and equipment, with less recurring revenue. With its business model transition, SenSen has been shifting to an ‘opex’ model, where the contract revenue is spread across the length of the agreement as recurring, higher-margin revenue. To further remove barriers to customer adoption, management in some cases can amortise the upfront charges (including installation) across the contract so that minimal cash is required upfront by the customer. For instance, a retail customer may have paid A$20k upfront under the capex model, but now is only being charged A$2k upfront and paying A$100 per month more across the term of the contract. Ultimately, the goal is to make it an opex decision (with smaller initial amounts and contract charges spread across multiple years) for the customer rather than a capex one with a large upfront payment. With the transition to a SaaS model, the number of ARR customers (ie those who choose the opex model) is accelerating each year, and management estimates it will reach 36 in 2022 (see Exhibit 9).

Exhibit 9: Number of ARR customers by year

Source: SenSen, Edison Investment Research

However, not all customers choose to make the transition to an opex or SaaS type model and prefer the old capex model with most revenue upfront and less recurring licence revenue. That is why we describe SenSen’s model as a ‘pragmatic SaaS’, where pragmatism determines the choice of contract. In other words, customers have the option for the type of contract that best fits them rather than being forced into one type of model. For instance, some municipalities prefer the traditional capex model as that fits well with their budgeted capital spending process, while casino or retail customers may prefer a SaaS model. Overall, the trend is toward SaaS models, but there will be those who continue to choose the old-style contracts for pragmatic reasons.

As shown in Exhibits 10 and 11, this shift to pragmatic SaaS is already resulting increasing recurring revenue across all verticals and geographic areas, and we expect this to accelerate from FY22. ARR, one of SenSen’s key performance metrics calculated by multiplying the monthly recurring revenue (MRR) by 12, grew by 55% in FY20 and 102% in FY21, and management forecasts it to grow by about 100% in FY22 to A$8.0–8.4m (c A$0.65–0.70m MRR). For forecasting purposes, we take the midpoint of A$8.2m.

Exhibit 10: ARR by region, FY19–22e

Source: SenSen, Edison Investment Research

Exhibit 11: ARR expanding across each vertical, FY19–22e

Source: SenSen, Edison Investment Research

In Q222, SenSen reported a record quarter of new customer wins with eight new commercial contracts with more than A$4.8m of combined value that will be recognised over the next two to three years. Recent wins include a 36-month A$230k contract with Toowoomba Regional Council for automated parking enforcement, a A$666k contract with EG Australia for fuel service stations, a A$725k contract extension for casino solutions with Crown Melbourne and a contract with the Hippodrome Casino in London for A$430k.

We can also see an acceleration in contract wins over the last several months (see Exhibit 12) increasingly weighted towards recurring revenue. Note that A$4.5m (of this list below) is just the current value of these selected contracts, but the long-term value is likely much more. Many of SenSen’s contracts also have options for adding additional features and models as SenDISA shows its value by reducing costs, raising revenues and improving security, etc, which gives SenSen opportunities to both upsell and grow its ARR even further. Management estimates that customer spend will grow about 110–120% of the first year’s revenue per year due to that upsell, which means that the A$4.5m could expand to A$10–15m due to upselling, new solutions, extended business, etc. For instance, a key Australian smart cities customer signed a contract in 2018 with A$120k recurring licence and maintenance revenue. By 2021, its ARR had increased to c A$500k and is expected to reach A$1m by FY22e as it adds on new services and/or extends its current application to other regions of the city. Recurring revenue from just this one customer grew by a 70% CAGR, illustrating the upsell and growth potential for both existing and new customers.

Exhibit 12: Selected contract wins – renewals, extensions and new contracts

Date

Client

Description

Value

Duration

Feb 22

Toowoomba Regional Council

Automated parking enforcement

A$230k

36 months

Dec 21

TfNSW

Digital curbside management

A$437k

16 months

Dec 21

Queensland Rev. Office

Automated number plate recognition

A$192k

36 months

Dec 21

EG Australia

Fuel service stations

A$666k

36 months

Dec 21

Crown Melbourne

Contract extension for AI solutions (casino)

A$725k

30 months

Dec 21

Hippodrome Casino (London)

AI solutions for gaming floors

A$430k

36 months

Dec 21

Chicago Parking Meters

Digitising curbs

c US$1m

Multi-year

Dec 21

Sunshine Coast Regional Council

Automated parking enforcement

A$280k

36 months

Nov 21

Brisbane City Council

Environmental Mapping Technology

N/A

N/A

Oct 21

National Heavy Vehicle Regulator (Australia)

Monitoring Heavy Vehicle Compliance

A$552k

12 months +
24 months option

Source: SenSen, Edison Investment Research

Contract and engagement model

SenSen’s contracts tend to be three to seven years in length plus options to renew, and are awarded via several mechanisms, including tender processes, request for quotes, etc. As AI is new and contracts can reach multimillion dollar levels, deals with companies in the smart city and casino verticals will often first require a proof of concept (POC) and an enterprise software trial. These paid POCs and trials (about 70% are paid) typically last three to six months, giving SenSen time to understand the client’s needs, and once that POC or trial is successful, SenSen would usually then implement the full solution. The revenues from paid POCs and trials can vary widely, from A$5–20k for a smaller entity to A$150k+ for a larger city trial (eg Chicago) that may take a year. About 90% of successful POCs and trials are converted into full deployment, and it usually takes about 12–18 months in total to move from first contacting a potential client to the signed deal and full implementation.

Financial performance and forecasts

In FY20, SenSen delivered A$3.8m in revenue, up 1% on the previous year, while ARR grew 33% to A$2.0m. Despite the COVID-19 pandemic, SenSen generated A$5.5m in revenues in FY21, up 47% y-o-y. ARR continued its solid growth, with a step-off point in the month of June 2021 of A$4.1m.

Gross margins improved to 74% in FY20 (from 63% in FY19), though they fell back to 63% in FY21. Like revenues, margins can be lumpy, as they are affected by the timing and type of contracts signed each period, such as how many hardware ‘pods’ are needed for new installations. Overall, we recommend viewing margins across longer timeframes, as gross margin oscillations of ±5% across individual periods do not necessarily indicate a trend.

In FY21, growth was seen across both existing business verticals (SenSen now has four verticals), with smart cities up 42% and casinos climbing 88% as several new customers were added while others extended their commitments or increased orders. The ANZ region rose 17% with both multiple new customers and existing ones who added to or extended their contracts. North America increased 236%, boosted by the opening of the new regional headquarters in Las Vegas.

SenSen's recently released H122 results showed revenue of A$3.0m, growing 19% period-over-period (p-o-p) versus A$2.5m in H121, primarily driven by the Scancam acquisition, which added A$0.8m in revenues. ARR rose to about A$5.3m, and management highlighted eight new contract wins across its verticals with a minimum value of A$4.8m that will be recognised over the next few years. H122’s EBIT loss grew to A$6.9m, increasing from A$0.5m in H121, driven by SenSen’s growth strategy, which includes investments in sales and marketing staff, added R&D for new verticals and increased non-cash share-based expenses. We expect those current investments to support SenSen’s ongoing momentum over the next few years, as much of the growth it is enjoying now is from investments made in prior years.

SenSen recently revised its FY22e guidance from A$11m to A$9.0–9.5m revenue and A$8.0–$8.4m ARR, as floods in Queensland and New South Wales affected revenues from existing smart parking and curbside management customers, as well as the timing of project implementation and some anticipated new contracts in both the smart cities and retail verticals. There have also been delays in the roll out of anti-fuel theft technology in petrol stations due to floods combined with cautious sentiment from customers in this segment from global oil supply and price uncertainty. Importantly, no expected orders or contracts were lost and it is merely the timing of revenue recognition that was shifted to the next financial year. We use the midpoint of management’s guidance or A$9.3m as our FY22 revenue forecast, meaning SenSen will need to recognise about A$6.3m of revenue in H222. Revenues can be lumpy across periods and it is often timing differences that affect revenues and cash collection across individual periods. Much of the recent lumpiness in revenues and margins reflects the momentum in contract wins, and we expect to see such behaviour continue if SenSen continues its rapid growth. On the other hand, the ARR growth is not as affected by the timing of revenue recognition, and we expect to see it continue to grow steadily over our forecast period.

Exhibit 13 provides a bridge from H122’s A$3m to our FY22 estimate of A$9.3m, including A$2.5m from recent contracts, A$2.6m in recurring revenue and A$1.2m in new contracts expected to be signed.

Exhibit 13: Bridge from H122 to FY22e revenue

Source: SenSen, Edison Investment Research

We estimate revenues of A$16.4m in FY23e, up 76% from FY22e, and reaching A$25.0m in FY24e. We expect SenSen’s growth will come from each of its three primary verticals (see Exhibit 14); we do not forecast revenue from the (fourth) emerging markets vertical in the next several years due to its newness. Within this we forecast the customer base in smart cities and gaming to reach c 75 customers by FY24 as well as about 750 petrol service stations. Customer sizes range from small city, gaming or retail customers (less than c A$100k pa) to larger ones with revenues of A$800k+ pa.

Our key forecast assumptions for the three primary verticals are as follows:

Smart cities (87% of FY21 sales, 67% of H122 sales): revenues grow 13% in FY22e to A$6.3m, accelerating by 50% to A$9.4m in FY23e, driven by upselling and further optional services in existing customers as well as the addition of both large and small cities in North America and ANZ.

Casinos (13% of FY21 sales, 5% of H122 sales): revenues expand 18% in FY22e to A$0.9m, and more than double in FY23e to A$3.9m. This reflects expected strong expansion from the initial percent of total casino tables (eg 5% of Crown Melbourne’s, 9% of Solaire Philippines) to about 50%+ of tables in its three primary customers. Moreover, we see further expansion into casinos of varying sizes across the United States, ANZ, Asia, Europe and the UK.

Retail (0% of FY21 sales, 28% of H122 sales): we expect revenues to fall slightly from c A$2.3m in FY21 (when it was part of Scancam) to A$2.2m in FY22e due to delayed revenue recognition from the floods in Australia, then growing 39% in FY23e to A$3.1m. We assume growth may be achieved by capturing market share in ANZ by increasing the number of stations from c 250 in FY21e to about 750 by FY24e, as well as expanding services in existing stations such as security coverage in the retail shop.

SenSen’s transition to a ‘pragmatic SaaS’ business model with a larger portion of higher-margin, recurring revenues should have a meaningful impact on results across all three of its primary verticals (not including the new fourth vertical, emerging markets, as discussed above), as shown in Exhibit 15. We expect overall gross margins to grow steadily over the forecast period, from 63% in FY21 to 76% by FY24e. We expect adjusted EBITDA to turn positive by FY24e at A$3.4m, with a margin of 14%.

Exhibit 14: Revenue mix by primary vertical

Exhibit 15: Revenue, margin, and adjusted EBITDA progression

Source: SenSen, Edison Investment Research

Source: SenSen, Edison Investment Research

Exhibit 14: Revenue mix by primary vertical

Source: SenSen, Edison Investment Research

Exhibit 15: Revenue, margin, and adjusted EBITDA progression

Source: SenSen, Edison Investment Research

Balance sheet and cash flows

At the end of H122 (31 December 2021), SenSen’s assets were primarily cash (A$8.2m), goodwill from its acquisitions (A$5.6m) and intangible assets (A$2.7m). SenSen's debt is primarily a loan for A$0.45m, and we expect this loan to be paid off in about FY24, as the company builds up its cash position and generates positive free cash flow. Major cash inflows and outflows in H122 (aside from the usual customer receipts and payments to suppliers and employees) included A$9.7m (net) from the share issuance (discussed below), a A$1.5m inflow from government grants, A$0.8m proceeds from borrowing and a A$1.3m repayment of debt. At this time, SenSen does not expect to need further capital raises nor raise significant amounts of debt to fund general operations. Management expects that any capital infusions or additional debt financing would be for acquisitions, expansions into new verticals or other special situations.

In addition to the two acquisitions in FY21 (discussed earlier), there were also two capital raises: one in FY21 and one in 1H22. In January 2021, SenSen raised A$7.15m to accelerate revenue and extend delivery capabilities to global customers, especially in the United States. In late calendar 2021 (fiscal H122), it held a successful placement targeting A$10m from both institutional and individual investors, with the plan to use the proceeds for investing in sales and marketing, fund R&D and technology and to fund working capital.

We expect SNS operating cash flows to improve from FY21’s net cash consumption of A$3.4m, driven by improving sales and gross margins and reach positive levels by FY24. We expect capex to remain within a range of A$0.3–0.4m (A$0.1m in FY21), excluding acquisitions.

Valuation: Little growth implied in undervalued stock

It is difficult to value a firm that is several years away from profitability, so we use price/revenue multiples as a way to determine a relative valuation for SenSen. Its business model has elements of AI, vision analytics and SaaS, and there are few, if any, competitors that cover such a wide range of services. As a result, one way to value SenSen is to compare it to three groups of peers – small cap AI, AI vision analytics and small cap SaaS (see Exhibit 16). The three groups currently trade at an average of 10.2x price/revenue FY1e, a 22% premium to SenSen’s 8.4x, and 7.2x price/revenue FY2e, 51% above SenSen’s 4.8x. Moreover, as shown in Exhibit 17, our estimates for SenSen’s revenue growth in FY22e and FY23e (69% and 76%, respectively) are considerably larger than the market’s estimates for competitor growth in both years. Part of the gap in valuation and growth estimates could be due to SenSen rising off a smaller revenue base and being earlier in its life cycle than competitors. If SenSen were valued at the peer multiples, it would trade at about A$0.16–0.18/share.

Exhibit 16: Price/revenue multiple versus peer groups

Exhibit 17: Growth estimates for FY1e and FY2e

Source: Edison Investment Research. Note: Multiples are medians for peer group. Pricing as of 29 March 2022.

Source: Edison Investment Research, company websites, Refinitiv. Note: Peer forecasts are consensus, SenSen forecast is Edison’s. As of 29 March 2022.

Exhibit 16: Price/revenue multiple versus peer groups

Source: Edison Investment Research. Note: Multiples are medians for peer group. Pricing as of 29 March 2022.

Exhibit 17: Growth estimates for FY1e and FY2e

Source: Edison Investment Research, company websites, Refinitiv. Note: Peer forecasts are consensus, SenSen forecast is Edison’s. As of 29 March 2022.

We believe a reverse DCF is a way to determine the market expectations for SenSen. Our reverse analysis in Exhibit 18 assumes a constant revenue growth and EBITDA margin for FY24e–31e, 10.5% WACC and 3% terminal growth, and suggests that at a A$0.12 share price, the market is implying low revenue growth rates of no more than 5.0% and EBITDA margins of 20% or less. Both the growth rates and margins are considerably less than what we believe SenSen could achieve.

Exhibit 18: Reverse DCF analysis: What does the current share price imply? (A$/share)

 

 

EBITDA margin (%) FY24–31e 

 

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Revenue growth
(FY24–31e)

0.0%

0.09

0.11

0.14

0.16

0.19

0.21

2.5%

0.10

0.13

0.16

0.19

0.22

0.25

5.0%

0.12

0.15

0.19

0.22

0.26

0.29

7.5%

0.14

0.18

0.22

0.26

0.30

0.34

10.0%

0.16

0.21

0.26

0.31

0.36

0.40

12.5%

0.18

0.24

0.30

0.36

0.42

0.47

15.0%

0.21

0.28

0.35

0.42

0.49

0.55

17.5%

0.25

0.33

0.41

0.49

0.57

0.65

20.0%

0.28

0.38

0.47

0.57

0.66

0.75

Source: Edison Investment Research

Sensitivities

Lumpy revenues – as demonstrated in H122 and in our estimates for H222e, the timing of revenue recognition verses cash receipts can be quite different due to the nature of SenSen’s contracts. Cash may be received in one period but the underlying revenue, which is tied to the customer’s acceptance certification, may not be recognised until later periods. As a result, revenues can be lumpy from period to period, creating uncertainty and making it challenging to forecast short-term results.

Quantifying the long-term growth potential – in this note, we consider the multiple growth and margin improvement opportunities available to SenSen. Significant execution on one or more of these opportunities, such as the move to SaaS and higher-margin opex contracts, could transform SenSen’s business and financial profile. However, it is difficult to quantify the size of these opportunities or predict their timing. Actual growth could be faster or slower than our estimates depending on how long they take to materialise.

General economic and political risks – SenSen’s business and customers may be impacted (positively or negatively) by general economic and political risks across the globe. For example, in its March 2022 trading update, management noted the impact on the roll out of anti-theft technology in petrol stations due to floods in Australia combined with cautious sentiment from customers in this segment from global oil supply and price uncertainty.

Net cash levels – management expects to generate sufficient cash so that future stock or debt raises would be unnecessary, except in cases of future M&A activity. If the timing of revenues and expenses are not as expected, then cash inflows may be insufficient and future capital raises may be needed, thus diluting existing shareholders or increasing debt levels.

Gaming segment – our report assumes that SenSen’s casino customers maintain their gaming licences. If one were to lose their licence, such as the risk from Crown Resort’s recent Chinese scandal, it could have a detrimental impact on the revenue SNS generates from them. Furthermore, Australia’s Crown Resort’s recently agreed to a US$6.3bn takeover from Blackstone, and this change of control could negatively affect SenSen’s business from this large customer.

Exhibit 18: Financial summary

$000AUD

FY20

FY21

FY22e

FY23e

FY24e

Year end 30 June

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

3,764

5,533

9,338

16,417

24,940

Cost of Sales

(997)

(2,030)

(2,863)

(4,763)

(5,907)

Gross Profit

2,766

3,503

6,474

11,654

19,034

Other Income

1,539

2,807

3,600

3,960

4,356

Operating Expense (not incl. share-based payments)

(7,567)

(9,112)

(17,760)

(19,466)

(21,381)

Share-based payments (non-cash)

(290)

(72)

(2,500)

(1,500)

(1,000)

Adjusted EBITDA

(2,807)

(2,243)

(6,557)

(2,450)

3,419

Operating Profit (before amort. and except.)

(3,534)

(2,785)

(9,507)

(4,675)

1,685

Intangible Amortisation*

-

(83)

(675)

(675)

(675)

Exceptionals

(18)

(6)

(3)

(2)

(2)

Operating Profit (EBIT)

(3,552)

(2,874)

(10,186)

(5,352)

1,008

Net Interest

(138)

(142)

(163)

(98)

(98)

Other

-

-

-

-

-

Profit Before Tax (norm)

(3,672)

(2,927)

(9,671)

(4,774)

1,586

Profit Before Tax (reported)

(3,690)

(3,016)

(10,349)

(5,450)

910

Tax

(15)

(6)

(62)

(33)

(182)

Other

-

-

-

-

-

Profit After Tax (norm)

(3,687)

(2,933)

(9,733)

(4,806)

1,404

Profit After Tax (reported)

(3,705)

(3,022)

(10,411)

(5,483)

728

Average Number of Shares Outstanding (m)

436

484

584

655

665

EPS - normalised (c)

(0.85)

(0.61)

(1.67)

(0.73)

0.21

EPS - reported (c)

(0.85)

(0.62)

(1.78)

(0.84)

0.11

Dividend per share (c)

-

-

-

-

-

Gross Margin (%)

73.5%

63.3%

69.3%

71.0%

76.3%

EBITDA Margin (%)

N/A

N/A

N/A

N/A

13.7%

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

6.8%

BALANCE SHEET

Fixed Assets

790

2,168

9,324

8,488

7,643

Intangible Assets

-

1,300

8,303

7,628

6,953

Tangible Assets

353

391

545

383

213

Other

437

477

476

476

476

Current Assets

4,706

8,022

6,052

4,313

6,947

Stocks

803

241

875

875

875

Debtors

744

979

960

960

960

Cash & cash equivalents

2,463

5,176

2,021

282

2,916

Other

696

1,625

2,196

2,196

2,196

Current Liabilities

(4,498)

(3,640)

(6,800)

(8,980)

(9,122)

Creditors

(1,095)

(750)

(2,000)

(2,500)

(2,700)

Short term borrowings

(1,313)

(861)

(450)

(450)

-

Lease Liabs

(235)

(306)

(300)

(300)

(300)

Other

(1,856)

(1,723)

(4,050)

(5,730)

(6,122)

Long Term Liabilities

(276)

(244)

(1,899)

(1,348)

(801)

Long term borrowings

-

-

-

-

-

Lease Liabs

(197)

(138)

(60)

(60)

(60)

Other long term liabilities

(79)

(106)

(1,839)

(1,288)

(741)

Net Assets

721

6,305

6,676

2,473

4,666

Minority Interests

-

-

-

-

-

Shareholder equity

721

6,305

6,676

2,473

4,666

CASH FLOW

Operating Cash Flow

(2,884)

(3,250)

(10,470)

(1,044)

3,928

Net Interest

(42)

(127)

(163)

(98)

(98)

Tax

(101)

(31)

(62)

(33)

(182)

Capex

(100)

(253)

(340)

(300)

(300)

Acquisitions/disposals

-

-

(1,127)

-

-

Equity financing

3,329

7,043

9,682

-

-

Dividends

-

-

-

-

-

Other**

288

(667)

(675)

(264)

(714)

Net Cash Flow

490

2,714

(3,155)

(1,739)

2,634

Opening net debt/(cash) w/o Leases

(648)

(1,150)

(4,315)

(1,571)

168

HP finance leases initiated

-

-

-

-

-

Exchange rate movements

-

-

-

-

-

Other

12

451

411

-

450

Closing net debt/(cash) w/o Leases

(1,150)

(4,315)

(1,571)

168

(2,916)

Closing net debt/(cash) w/ Leases

(718)

(3,871)

(1,211)

528

(2,556)

Source: SenSen, Edison Investment Research. Note: *Amortisation of acquired intangibles (patents). **Includes repayment of leases, proceeds from/repayment of borrowings, etc.

Contact details

Revenue by geography (FY21)

Level 1
9 Harper Street

Abbotsford, Melbourne VIC 3067
Australia
+61 3 9417 5368
https://sensen.ai/

Contact details

Level 1
9 Harper Street

Abbotsford, Melbourne VIC 3067
Australia
+61 3 9417 5368
https://sensen.ai/

Revenue by geography (FY21)

Management team

Executive chairman and CEO: Subhash Challa, PhD

Executive director, COO, and company secretary: David Smith

Subhash founded SenSen in 2007 as a spin-off from the University of Technology Sydney where he was professor of Computer Systems from 2004–07. He has a significant background and experience in data fusion specialising in the analysis and fusion of video and sensor data. Born and raised in Hyderabad, India, Subhash received his PhD from Queensland University of Technology, Brisbane, Australia in 1999, and part of his PhD studies were conducted at Harvard University in 1997. He left his career in academia to join SenSen full time in 2012 and led the development of the company’s video-IoT platform SenDISA and pioneered applications in diverse market segments. He has co-authored more than 150 papers and is co-author of the reference text, ‘Fundamentals of Object tracking.’

Prior to joining SenSen in 2017, David was an investment banker for more than 20 years, working on both the capital markets and M&A globally. He was regularly ranked as one of the top 10 Australian investment bankers in annual surveys and raised more than A$4bn for corporate clients. With a background in advising companies across all sectors, including technology, industrials and resources, David has been involved in the evolution of numerous emerging companies into multi-billion-dollar enterprises. He is also a non-executive director of RAW Capital Partners Holdings, a UK-based international asset management business. David received his B Econ. from the University of Sydney in 1995 and a Dip Management – Exec MBA from Australian Graduate School of Management, Sydney, in 2002.

CFO: Jon Cook, CA, GAICD

Executive director, Retail & Leisure Division: Heather Scheibenstock

Jon has served as CFO since 2020 and has over 20 years’ experience as an executive director, CFO and senior finance executive. Before SenSen, he held senior finance positions at several firms including James Hardie Industries, Palisade Investment Partners and KPMG. He began his career with KPMG and worked in the audit, private business, risk advisory and transaction services divisions. He graduated from Macquarie University with a B Commerce, majoring in both accounting and business law. He is a member of the Chartered Accounts Australia and New Zealand (CA) and is a graduate of the Australian Institute of Company Directors (GAICD).

Heather Scheibenstock has extensive experience in corporate leadership and in the gaming industry. She has served as a non-executive director and sub-committee chair, with a board portfolio encompassing ASX-listed public companies, crown land trust, disability and health-related non-profits. She formerly served on the board of Ainsworth Game Technology, and has served in leadership roles with firms such as Solaire Resorts, Australian Gaming & Entertainment and Echo Entertainment Group/The Star. She is a graduate of the University of Technology Sydney, the Australian Institute of Company directors and a fellow of the Australian Institute of Corporate Governance.

Non-executive director: Zenon Pasieczny

Zenon is an experienced venture capital investor and early backer of SenSen, helping it grow from an R&D focused start-up to its current role as an industry leader. He is closely involved in SenSen’s strategic marketing and delivery of global communication messages to clients, partners and the media. He completed his MBA from Maastricht School of Management, with a distinction in international business.

Management team

Executive chairman and CEO: Subhash Challa, PhD

Subhash founded SenSen in 2007 as a spin-off from the University of Technology Sydney where he was professor of Computer Systems from 2004–07. He has a significant background and experience in data fusion specialising in the analysis and fusion of video and sensor data. Born and raised in Hyderabad, India, Subhash received his PhD from Queensland University of Technology, Brisbane, Australia in 1999, and part of his PhD studies were conducted at Harvard University in 1997. He left his career in academia to join SenSen full time in 2012 and led the development of the company’s video-IoT platform SenDISA and pioneered applications in diverse market segments. He has co-authored more than 150 papers and is co-author of the reference text, ‘Fundamentals of Object tracking.’

Executive director, COO, and company secretary: David Smith

Prior to joining SenSen in 2017, David was an investment banker for more than 20 years, working on both the capital markets and M&A globally. He was regularly ranked as one of the top 10 Australian investment bankers in annual surveys and raised more than A$4bn for corporate clients. With a background in advising companies across all sectors, including technology, industrials and resources, David has been involved in the evolution of numerous emerging companies into multi-billion-dollar enterprises. He is also a non-executive director of RAW Capital Partners Holdings, a UK-based international asset management business. David received his B Econ. from the University of Sydney in 1995 and a Dip Management – Exec MBA from Australian Graduate School of Management, Sydney, in 2002.

CFO: Jon Cook, CA, GAICD

Jon has served as CFO since 2020 and has over 20 years’ experience as an executive director, CFO and senior finance executive. Before SenSen, he held senior finance positions at several firms including James Hardie Industries, Palisade Investment Partners and KPMG. He began his career with KPMG and worked in the audit, private business, risk advisory and transaction services divisions. He graduated from Macquarie University with a B Commerce, majoring in both accounting and business law. He is a member of the Chartered Accounts Australia and New Zealand (CA) and is a graduate of the Australian Institute of Company Directors (GAICD).

Executive director, Retail & Leisure Division: Heather Scheibenstock

Heather Scheibenstock has extensive experience in corporate leadership and in the gaming industry. She has served as a non-executive director and sub-committee chair, with a board portfolio encompassing ASX-listed public companies, crown land trust, disability and health-related non-profits. She formerly served on the board of Ainsworth Game Technology, and has served in leadership roles with firms such as Solaire Resorts, Australian Gaming & Entertainment and Echo Entertainment Group/The Star. She is a graduate of the University of Technology Sydney, the Australian Institute of Company directors and a fellow of the Australian Institute of Corporate Governance.

Non-executive director: Zenon Pasieczny

Zenon is an experienced venture capital investor and early backer of SenSen, helping it grow from an R&D focused start-up to its current role as an industry leader. He is closely involved in SenSen’s strategic marketing and delivery of global communication messages to clients, partners and the media. He completed his MBA from Maastricht School of Management, with a distinction in international business.

Principal shareholders

(%)

Equity Plan Services Pty Ltd.

21.9

HSBC Custody Nominees (Australia) Ltd – A/C 2

6.2

Adaptalift Investments Pty Ltd

5.0

Mr Subhash Challa

4.4

Saphet Capital Management Pty Ltd

3.4

Rainrose Pty Ltd

3.2

AA & J Schmidt Holdings Pty Ltd

1.6

Mr Francis Alan Alexander Whitaker

1.6


General disclaimer and copyright

This report has been commissioned by SenSen Networks and prepared and issued by Edison, in consideration of a fee payable by SenSen Networks. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by SenSen Networks and prepared and issued by Edison, in consideration of a fee payable by SenSen Networks. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues

You may be interested in