Last close As at 05/08/2026
AUD0.02
— 0.00 (0.00%)
Market capitalisation
AUD55m
Research: TMT
Vection Technologies’ Q124 and AGM update shows continued top-line momentum driven by an established partner strategy. Now embedded with leading players across diverse verticals, management sees an opportunity to convert low-margin, one-off transactions into large, multi-year contracts in FY24. Expanding use cases and commercialisation is driving rapid market growth, underpinning secular tailwinds. To bolster its outlook, the company introduced several efficiency measures in the period, which it expects to enhance margins and cash flows more visibly in H2.
Written by
Vection Technologies |
Established strategy to drive scalable growth |
Q124 and AGM update |
Software and comp services |
12 December 2023 |
Share price performance
Business description
Next events
Analysts
Vection Technologies is a research client of Edison Investment Research Limited |
||||||||||||||||||||||||||||||||||||||||||||||
Vection Technologies’ Q124 and AGM update shows continued top-line momentum driven by an established partner strategy. Now embedded with leading players across diverse verticals, management sees an opportunity to convert low-margin, one-off transactions into large, multi-year contracts in FY24. Expanding use cases and commercialisation is driving rapid market growth, underpinning secular tailwinds. To bolster its outlook, the company introduced several efficiency measures in the period, which it expects to enhance margins and cash flows more visibly in H2.
Year end |
Revenue (A$m) |
Adj EBITDA* |
PBT** |
EPS** |
EV/sales |
P/sales |
Net cash*** |
06/21 |
3.5 |
(0.2) |
(2.5) |
(0.27) |
7.6 |
6.8 |
2.2 |
06/22 |
18.9 |
1.4 |
(7.0) |
(0.67) |
1.4 |
1.3 |
10.8 |
06/23 |
26.3 |
1.5 |
(11.2) |
(1.05) |
1.0 |
0.9 |
0.7 |
Note: *Adjusted EBITDA is normalised, excluding non-cash payments, exceptional items and interest revenue. FY22 figure re-stated. **PBT and EPS are normalised, excluding exceptional items and interest revenue. ***Includes debt, financial leases and term deposits.
No signs of momentum slowing
Vection’s AGM update showed continued momentum, with total revenue up 88% yo-y to A$6.9m (+76% organically) in the first four months of FY24. This top-line improvement drove an 86% increase in Q1 cash receipts to A$8.2m and a 30% rise in total contract value (TCV). We note that Q1 is seasonally the weakest quarter due to European exposure concentrated during holiday periods, so management believes there is room for further momentum over the remaining three quarters of FY24. To bolster its financial outlook, the group is enacting several efficiency measures across the business. Although revenue and cash flows grew, Vection reported a A$4.0m free cash outflow in Q124 (Q123: A$1.6m outflow), emphasising the need for planned cost reduction efforts to enhance margins going forward.
Partner strategy to drive long-term value
Vection’s established partner strategy is accelerating, with 66% of Q1 TCV generated from partners. Multi-year relationships with advisers, tech leaders and notable players across verticals provide access to larger contract opportunities and enhanced visibility with key players and can augment Vection’s technology. Currently a large share of these transactions are one-off and low-margin but have the potential to convert into large, multi-year agreements in FY24. Longer-term opportunities hold promise, such as the Lunar City joint venture targeting the space industry – management expects market revenues could reach US$1tn by 2030. More broadly, global spending on extended reality is forecast to grow by 36% annually to US$100bn by end-2026 (source: Statista), driven by expanding use cases and growing commercialisation, underpinning tailwinds for Vection. This is shown by partner Marotta applying Vection’s technology for hypersonic flights.
Valuation: Scaling on lower cost to drive upside
With Vection’s partner deals gaining momentum, converting initial projects into larger contracts presents significant upside for revenue and earnings growth, alongside operating efficiencies. Success here may catalyse stock appreciation.
Exhibit 1: Financial summary
A$000s |
2021 restated |
2022 |
2023 |
|
Year end 30 June |
AAS |
AAS |
AAS |
|
PROFIT & LOSS |
||||
Revenue |
|
3,471 |
18,894 |
26,299 |
Variable Cost of Sales |
(849) |
(11,454) |
(19,280) |
|
Gross Profit |
2,622 |
7,440 |
7,019 |
|
Operating Expenses* |
(3,993) |
(10,453) |
(11,356) |
|
Adjusted EBITDA |
|
(209) |
1,385 |
1,465 |
Non-Cash Payments |
(230) |
(1,892) |
(1,860) |
|
EBITDA |
|
(439) |
(508) |
(395) |
D&A |
(658) |
(958) |
(1,217) |
|
Operating Profit (Normalized) |
|
(2,285) |
(5,907) |
(7,625) |
Exceptionals/Other |
(26) |
(44) |
(212) |
|
Operating Profit/(Loss) (EBIT) |
|
(2,259) |
(5,863) |
(7,414) |
Net Interest and financial expense |
(171) |
(1,070) |
(3,554) |
|
Profit Before Tax (norm) |
(2,456) |
(6,977) |
(11,179) |
|
Profit Before Tax (AAS) |
|
(2,430) |
(6,933) |
(10,968) |
Tax |
(77) |
(168) |
(55) |
|
Profit After Tax (norm) |
|
(2,533) |
(7,144) |
(11,234) |
Profit After Tax (AAS) |
|
(2,506) |
(7,100) |
(11,023) |
P/(L) from discontinued operations |
(36) |
N/A |
N/A |
|
Minority interest |
(137) |
(419) |
(202) |
|
Net income (norm, to Vection Technologies equity holders) |
(2,533) |
(7,144) |
(11,234) |
|
Net income (AAS, to Vection Technologies equity holders) |
|
(2,543) |
(7,100) |
(11,023) |
Average Number of Shares Outstanding, basic, millions |
931 |
1,071 |
1,071 |
|
EPS - normalised, basic (AUS cents) |
|
(0.27) |
(0.67) |
(1.05) |
EPS- AAS, basic, to Vection Technologies equity holders (AUS cents) |
(0.24) |
(0.62) |
(0.98) |
|
Gross Margin (%) |
75.5% |
39.4% |
26.7% |
|
EBITDA Margin (%) |
N/A |
N/A |
N/A |
|
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
|
BALANCE SHEET |
||||
Fixed Assets |
|
18,273 |
17,785 |
16,419 |
Intangible Assets |
17,338 |
17,028 |
15,463 |
|
Tangible Assets |
240 |
293 |
550 |
|
Right of Use Assets |
632 |
424 |
322 |
|
Other |
63 |
41 |
84 |
|
Current Assets |
|
13,063 |
22,419 |
25,683 |
Cash |
7,084 |
14,869 |
11,359 |
|
Receivables |
4,879 |
6,208 |
13,647 |
|
Inventories |
1,084 |
1,341 |
676 |
|
Other |
17 |
N/A |
N/A |
|
Current Liabilities |
|
11,272 |
8,475 |
19,382 |
Trade and other payables |
3,615 |
6,974 |
10,969 |
|
Provisions and Other |
6,405 |
30 |
16 |
|
Employee benefits |
36 |
78 |
72 |
|
Lease liabilities |
168 |
195 |
211 |
|
Borrowings |
1,047 |
1,199 |
8,114 |
|
Long Term Liabilities |
|
4,637 |
3,751 |
3,529 |
Employee benefits |
333 |
433 |
544 |
|
Lease liabilities |
530 |
286 |
165 |
|
Borrowings |
3,175 |
2,415 |
2,194 |
|
Other |
599 |
616 |
627 |
|
Net Assets |
|
15,428 |
27,977 |
19,191 |
Minority Interest |
(117) |
(479) |
(711) |
|
Shareholder's Equity |
|
15,545 |
28,457 |
19,902 |
CASH FLOW |
||||
Operating Cash Flow (before interest, tax, etc.) |
|
(2,251) |
(1,092) |
(7,392) |
Net Interest |
(50) |
(50) |
(28) |
|
Tax |
(24) |
(104) |
(58) |
|
Capex |
(66) |
(164) |
(403) |
|
Purchase of intangibles |
(1,330) |
(1,838) |
(2,677) |
|
Acquisitions/disposals |
2,305 |
(21) |
(7) |
|
Equity financing |
7,221 |
12,127 |
N/A |
|
Lease payments |
(96) |
(80) |
(3) |
|
Change in net cash |
5,708 |
8,777 |
(10,568) |
|
Opening net debt/(cash), not incl. leases |
|
(735) |
(2,862) |
(11,255) |
Exchange rate movements |
(280) |
(383) |
365 |
|
Other |
(3,301) |
0 |
N/A |
|
Closing net debt/(cash), not incl. leases |
|
(2,862) |
(11,255) |
(1,052) |
Closing net debt/(cash), incl. leases and other marketable securities |
(2,164) |
(10,774) |
(676) |
|
Source: Edison Investment Research, company accounts
|
|
Research: Investment Companies
Baillie Gifford China Growth Trust (BGCG) invests in China, focusing on innovative, rapidly growing companies best positioned to benefit from China’s still favourable long-term economic outlook and the structural trends that should drive equity markets for years to come. Key portfolio themes include e-commerce, food delivery, domestic brands, semiconductors, robotics and automation, and renewable energy. The trust’s relaunch in September 2020 coincided with a series of challenges for the Chinese economy, investor confidence and the growth companies BGCG favours, so performance has lagged the benchmark. However, the operational performance of most of BGCG’s holdings is strong, their prospects are very positive, and the trust’s managers believe that it is only a matter of time until confidence returns and share prices more accurately reflect these robust fundamentals.