Ava Risk Group is in the business of protecting critical infrastructure and high-value sites from physical threats. It does this through smart fibre optic sensors, high-security access systems, and intelligent perimeter lighting and detection technologies. Its customers are governments, utilities, and large organisations that need to secure important assets.

The business has evolved a lot in recent years. It divested its logistics-focused services division (at a pretty incredible ROI, although the profits were essentially all paid out to investors rather than retained) and shifted focus to its in-house developed fibre-optic sensing tech.

This technology turns fibre optic cables into smart sensors that detect movement, digging, or climbing along a perimeter. It sends light through the cable and analyses microscopic changes in the reflected signal to classify activity in real time. (For the physics nerds: it uses Rayleigh backscatter and interferometry, with machine learning layered on top to turn raw signal data into actionable insights.)

The result is low power, high durability, and the ability to monitor long distances from a single system. Better yet, it can often be deployed over existing fibre infrastructure, avoiding the cost and disruption of new trenching.

That’s a big advantage over traditional perimeter security methods like fence-mounted vibration sensors, buried coaxial cables, or cameras, which usually require power at the sensing edge, have limited range, and are more prone to false alarms from weather or wildlife.

Alongside its core sensing business (Detect), Ava operates two other divisions: Access and Illuminate.

Access is all about high-security access control. Think biometric readers, encrypted smart locks, and secure systems for things like government buildings and prisons. Ava picked up this capability in 2014 through the acquisition of BQT Solutions. While Detect covers the perimeter, Access handles the internal entry points (doors, gates, restricted areas).

Then in 2022, Ava bought GJD Manufacturing, a UK-based business with expertise in perimeter lighting and detection. GJD makes things like motion sensors, ANPR cameras (for reading number plates), and IR and white-light illuminators -- hardware often used with CCTV to boost visibility and deterrence. Crucially, GJD tech allows you to trigger lighting or alarms in real time based on detection events, which ties in perfectly with Ava’s sensing capability. More recently, GJD released a LoRa-based wireless platform that can connect up to 500 devices without running cables, which is a big plus for complex sites.

Together, Detect, Access, and Illuminate make Ava a multi-layered security solutions provider. Think integrated systems that can detect, verify, and control access across some of the world’s highest-risk environments.

All of this sounds pretty compelling, but for a while Ava was really just a collection of standalone technologies. After the services divestment, it had some great IP but lacked cohesion. The segments operated more like parallel businesses. There wasn’t a unified go-to-market strategy. Internal systems and processes were a mess.

Then came Mal Maginnis. He joined as CEO in January 2023 and brought decades of defence and security experience. His job: get the machine working. That meant aligning products with customer use cases, building the sales and delivery backbone, and putting in place the systems needed to scale. Since then, Ava has become a much more focused business with a clearer strategy.

These changes take time. But it seems to be working. Revenue has grown steadily, hitting $30.2 million in FY24 (up from $28.6m in FY23) with FY25 forecast between $37 and $41 million.

More importantly, the quality of revenue is improving. Annual Recurring Revenue (ARR) hit $2.4 million in H1 FY25, up 20% year-on-year. The company returned to positive EBITDA in the latest half, with a $1.7 million profit (a $2.6 million turnaround). Cash flow has stabilised, and a $4.3 million equity raise has help strengthen up the balance sheet.

A key thing to note is that the internal systems have now been overhauled, commercial reporting sharpened, and the go-to-market model rebuilt. The sales team, especially in North America and EMEA, has been beefed up. The business is now focused on high-value verticals like border security, transportation, telecommunications, and energy infrastructure.

Cross-selling and bundling are now at the core of the strategy. The aim is to combine sensing, locking, and lighting into end-to-end solutions. That makes deployment easier and the value proposition stronger. Existing customers and distribution channels are being used to expand into Europe, North America, and the Middle East. The product set has been mapped to real use cases (eg borders, transport, utilities) allowing Ava to pitch for larger, more complex jobs.

In short, Ava’s shifted from clever tech to real-world commercially viable solutions. The product suite is far more integrated, and we’re beginning to see early signs of faster top line growth and expanding operating margins.

And that's the key part of the thesis -- after two years of investing in internal systems, commercial teams, and product dev (which did weigh on margins), Ava now has the foundations for scale. Management believes the current cost base can support much higher revenue and we’re seeing early signs of operating leverage. H1 FY25 revenue was up 20% year-on-year, margins improved, and the business returned to EBITDA positive. It's a start, but we need to see this continue.

The hope is that earnings growth begins to outpace revenue growth, especially as recurring revenue lifts and more big contracts land. That growth is underpinned by a stronger product offering, growing list of reference sites, and deeper enterprise and government relationships. Larger customers bring longer sales cycles, but once Ava gets in, the revenue is stickier and more repeatable.

Meanwhile, recurring revenue is building. Multi-year support, monitoring, and upgrade contracts are adding predictability and smoothing cash flow.

This is the latest management guesstimate from February 2025:

This shows the business moving from modest top-line growth in FY24 toward a more profitable, scalable model over the next 12–24 months.

At 10.5 cents per share, Ava has a diluted market cap of about $30.5 million and an enterprise value of ~$27.9 million. That puts it at around 7× forward EBITDA on the low end of FY25 guidance. But that’s a little misleading because the business is subscale and right on the edge of breakeven. The cost base has been engineered to handle a lot more revenue. If that growth materialises, operating margins should expand meaningfully. If not, well, the economics would remain pretty average..

At scale, this should be a business delivering 10–15% net margins (at least). And that’s the bet: that Ava can grow into its cost base and scale profitably. If that happens, the upside is big in percentage terms. Even more so from a stock price perspective if success brings multiple expansion.

In that case, the stock is ridiculously cheap.

Of course, the risks are real. If growth stalls or costs creep back in, shares will likely languish under 10cps. But there does seem to be real asymmetry here -- more upside than downside.

The market clearly isn’t pricing in much success. Which, i suppose, is the opportunity.

So why the ‘meh’ valuation by Mr Market? Part of it is liquidity. Ava trades under $100k a day, which limits institutional participation and depresses multiples. But also, there’s a fair bit of market fatigue. Ava’s been talking up its potential for a while, and while revenue has grown, earnings haven’t really followed through..yet. The unexpected capital raise in FY24 probably dented confidence in the company’s ability to fund itself.

That’s why the next 6 to 12 months matter. The hard stuff has largely been done; internal systems, sales capability, product integration. Now Ava needs to execute. That means growing revenue and lifting margins in a visible, sustained way.

If Ava even gets close to its FY26 targets, a 25 cent share price looks entirely reasonable. Maybe more, if there’s real revenue momentum. If it doesn’t deliver, the stock likely goes nowhere.

So why to a lean towards an optimistic stance? Because business transformation takes time, usually longer than markets are willing to wait. Ava’s spent the last two years doing the boring but important work. That phase looks done. Now we’re seeing early signs of execution: revenue is rising, margins are improving, and EBITDA is in the black.

I’m also patient (stubborn? naive?) But what I see is forward momentum. Contracts with Telstra and UGL aren’t speculative pilots, they’re commercial validation. Moreover, the order book is growing and ARR is rising. They seem to reliably convert the sales backlog into cash flows.

I think there’s also a tailwind here. Whether it’s border control, energy infrastructure, or general geopolitical instability, the need for scalable, intelligent perimeter protection is only going up. Ava’s well-positioned to benefit.

So yes, it’s a bit of a turnaround story. And one I was admittedly too early with. But it’s a turnaround that’s showing signs of working.

Strong IP. Streamlined and rebuilt operations. Improving fundamentals. Potential for meaningful operating leverage. And a valuation that barely reflects any of it.

That’s the setup.