Thanks @Strawman for asking @Wini about AER. Good update today that backs up the thought that things are going ok.

Renewal of major contract with one of Australia’s largest insurance providers for a five-year term (3year fixed + 2 year option).

Acquisition of two new customers through the recent partnership with Tomorrow.io

Climatics contract with one of Australia’s largest supermarket operators renewed and expanded into New Zealand

Additionally, an environmental consulting firm with previous experience using the platform has entered a 12-month contract with Climatics.

This new client further substantiates the increasing recognition and trust in the platform within the environmental sector, underscoring the solutions' effectiveness and reliability in that industry.

The expansion into New Zealand demonstrates the increasing demand for accurate historical climate data, which is crucial for effective risk management and operational planning, and the value clients place on the Climatics platform to assist them in operational decisions.

Not a lot of news in the latest Quarterly Activities Statement. $300K outflow before the R&D rebate. It appears that further work has been necessary to satisfy potential big clients including boosting the back end processing power of the Climatics platform to meet proposed new reporting requirements coming as early as 2024. Earthquake alerts (post event) might have a higher profile following the recent Victorian quakes. Revenue growth has been slow but the company continues to do the ground work to build the necessary scale to be FCF+ve

Cashflows from operating activities were $1,094,194, including R&D rebate of $389,457

Customer receipts for the quarter were $684,021(unaudited)

Revenue for the quarter was $897,573.81

Cash and cash equivalents at the end of period were $2,581,492

Earthquake (post event) alerts introduced

Expansion of our sales and programming teams, foundations in place for further growth over the coming FY

Further customers are scheduled to be onboarded within Q1 2024 and leading up to the next hail season.

Climatics is well placed to provide the physical risk reporting requirements that companies may need to meet the new reporting requirements which are expected apply as soon as 2024 for large businesses. 

Monetisation is based on calls through the API based on number of assets, perils, and location.

With a heatwave across most of the country this week and further weather events on the East coast AER should be in a good position to continue growth. Heatave alerts are a new product along with radar rainfall alerts. Climatics receives positive feedback from government, industry and academia. Increased costs with an additional sales manager and expanded developer team. $173K outflow and $2.5M cash. Little movement in the SP and limited liquidity.

Sales & Marketing Revenue growth continued during Q2, with the team adding $22,955/month in Annual Recurring Revenue (ARR) for the quarter. This follows on from the additional $22,120/month of ARR added in Q1 2023.

The Company’s increased ARR is attributed to new product launches, product updates, and broader market penetration due to enhanced sales and marketing activities.

New customers include major retail, automotive, insurance, aged health care and freight customers.

New products launched in Q2 include Heatwave Alerts, radar-derived rainfall alerts and Hail Tracker.

To support the Company’s increasing flow of business enquiry and continued revenue growth, the Company is expanding its sales team with the recruitment of an additional Sales Account Manager. The Sales Account Manager will manage the Company’s existing portfolio of clients, seek further revenue growth from additional product and service offerings and manage any potential customer churn.

Over the next quarter, Aeeris will further implement new technologies and improvements to its existing suite of products. The Company’s GIS Platform is expected to benefit from significant enhancements and updates, including improved hail technologies.

The Company’s Climatics platform is Australia’s most comprehensive historic severe weather and all hazards database covering 11 major perils. The service continues to add new customers backed up by a rapidly growing sales pipeline. Climatics is now being employed by large enterprises helping them to mitigate risk and meet new regulatory requirements. Under consistent enhancement based on user feedback and requirements, some major initiatives are currently underway with the development of the Climatic Futures API incorporating unique CMIP6 projections data. The CMIP6 data will complement existing Climatics data, providing the most in-depth physical risk data across 11 hazards in Australia. The addition of this data is expected to expand the reach of potential users, businesses and sectors of Climatics. Climatics was presented to the scientific community at the 2022 Australian Atmospheric and Oceanographic Societies Annual conference in Adelaide during late November 2022. The overwhelmingly positive feedback from climate risk members of the government, industry and academia ensured continued scientific integrity and robustness of the platform.

Operations The continuation of the effects of wet climatic drivers saw a busier quarter than usual due to increased weather events. October ended up the second wettest on record across Australia, and the highest on record for large parts of Murray-Darling and Victoria. This led to significant flooding across large parts of eastern Australia. Whilst not as wet as October, November continued with significant rainfall across parts of Australia and ended up being the 10th wettest November on record. Ongoing floods from October were bolstered by the additional November rainfall and moved downstream in the Murray-Darling leading to further major flooding along with a flash flood disaster in Eugowra NSW. Throughout December, the country was further battered combining floods, giant hail events, damaging winds and a cyclone. TC Ellie caused havoc across parts of the Northern Territory and North Western Australia. 2022 ended up being Australia’s ninth wettest year on record. During this period the EWN Spatial Risk Operations team continued to provide clients with 24/7 service ensuring all forecasts and alerts provided them with advanced notification of these events, limiting asset damage and destruction whilst keeping employees safe. The wet climatic indicators across Australia continue to weaken with forecasts showing this should continue throughout 2023. Many long-term climate models are suggesting a flip from wet to dry conditions by next summer with El Nino taking over. Interestingly, statistics show El Nino’s normally occur immediately after a 'triple dip' La Nina (where La Nina occurs 3 years in a row).

IT Operations: The upgrading of the Company’s network and cloud infrastructure continued during the quarter with major improvements and new capabilities realised. With the continuing increase in clients accessing the Company’s products, the team continue to provide the quickest and most accurate services in the industry. The Spatial Alert and Risk Platform (SARP) with managed IIS development is complete and alert engines now fully web-based, meeting the Company’s development schedule. Updates are underway across the GIS platform with planned additions being programmed including our hail data, not found anywhere else in Australia. To allow for continued growth and development, the team has expanded with additional developer resources being on-boarded.

Business Activities and Expenditures Payments made to related parties during the quarter were directors’ fees and consultancy expenses. Other expenditures include additional IT to expand SARP capabilities, Climatics features (CMIP6 inclusion) and mobile apps in support of flood mitigation. SMS costs remain high but both recoverable and profitable. 

21/11/22 AGM Investor Presentation

An interesting update from AER at their AGM. The ARR graph does a pretty good job of summing up the business over the last few years:

Yes, that is not a mistake the business has tacked on more ARR in the last 5 months than the last 5 years combined. After years developing their products and building towards commercialisation, the obvious question now is whether this momentum can be sustained. Commentary on that was positive, citing a growing pipeline and strong conversions.

The big blue sky for the business continues to be their Climatics product which has now been updated to Version 2.0 and launched with the first customer. The product is aimed as an audit worthy analysis for the physical climate risk for business assets. There is a chance the analysis of physical climate risk becomes entrenched in regulation, but until then it wouldn't surprise me if many large businesses incorporate it into their ESG analysis given the focus on the space. Hopefully AER has some first mover advantage and they can leverage their blue chip customer base to establish themselves.

I have had a pending sell order for AER fro some time which hasn't been executed.

I see that there has been zero volume for this company for some time, and there is no ASX announcement for them other than one for a General Meeting posted (19/10/2022). According to SM there is currently 12 holders of AER, yet there has not been any comment on what is happening.

Is anyone able to shed any light on what is happening????

Could Google position itself as a leading competitor of AER? The company recently created a bushfire layer map, stating the following:

'As summer heats up across the country, Australians may turn to Google for updates on fire conditions so they can stay informed, plan travel and in some cases, make critical and life-saving decisions.'

The new layer consolidates reliable fire-related information and presents them on the new layer - this might be a useful feature for many, particularly noting some of the complexities with bushfires across the country (regional vs metropolitan vs parks etc).

Pretty interesting. I initially considered the Australian Government as AER's competitor to watch - maybe Google will look to shift more into alerts/notifications given the data and mapping it already has at its disposal.

Link here for those interested.

Aeeris Limited (AER) is a geospatial data business. The Company’s Early Warning Network system and proprietary GNIS technology platform ingests and maps vast amounts of live data from multiple sources regarding severe weather, fire, traffic, and other geospatial hazards.

Equipped with this capability, it provides all-hazards (natural and man-made) alerting and forecasting services for government departments, commercial entities, and Australian people – to prevent injury, loss of life, property loss and disruption to business. Monitoring occurs in real-time, and risks are communicated instantly over multiple channels to customers.

Colloquially, have you recently had hail forecast in your area and received an SMS from your insurance provider? This is the very likely the result of a proactive early warning system. Natural disasters are critical for AER, but there are other areas of concern it addresses too – specifically any client that has a need to mitigate the financial impact of adverse events, geospatial hazards, personal injury, etc.  

Thesis

• AER recently became profitable, an impressive feat for a company currently trading at around 13-14c. They are well positioned to re-invest profits without having to dilute shareholders. AER’s new climate product (more on this below) is proof of this. The company’s ROE (around 40%) is excellent and increases my confidence that they will continue to use cash well. The thesis is central to AER investing cash inflows back into the business (which they have done effectively to date). 
• No debt and healthy balance sheet.
• Founder led with 31% ownership. The CEO also recently purchased additional shares at 12/13c. Good to see skin in the game and continued CEO confidence around current share price levels.
• Sticky customers with almost no churn. The ability of the company to continue its growth through CV19 and not lose key customers—many of which were obviously hit hard financially— demonstrates the criticality of AER’s services.
• Industry tailwinds:
  • General preference to outsource alert/forecasting services: It is resource intensive to provide a real-time warning service. Hypothetically speaking, let’s assume you want to develop this function in-house because for whatever reason your company has a need for it. You will probably require staff to work around the clock (24/7), skills that might differ considerably from your current staff (e.g., insurance vs monitoring/analysis) and sufficient technology to ensure the proactive warning service is effective. This would be complex and time-consuming to implement. Consequently, I think outsourcing this element of a business makes sense, creating demand for AER’s technology and services.
  • Warning services are increasingly becoming ‘critical’: Many companies, particularly those in the insurance game, are increasingly shifting towards investing in proactive monitoring/notification. I was in Canberra a few years ago when the city experienced a serious hailstorm. Most cars that were not under cover were either written off or suffered broken windows. My insurance company sent me a ‘warning’ message an hour before the storm hit. Simple, but effective. Without having inside knowledge of insurance companies, my guess is that was an incredible ‘return on investment’ by having that proactive warning system in place -saving insurance companies thousands of dollars in claims/repairs by proactively warning their customers prior to the weather event. 
  • Australia and surrounding regions are susceptible to natural disasters: Bushfires, flooding, earthquakes, tropical weather systems - these can and do have significant impacts on business and government, for a variety of reasons. This obviously is not new, but if AER continue to offer market-leading warning services I believe there will be continued interest in their services.
  • Climate change requirements: The successful litigation against a superannuation company (REST) – for failing to disclose climate risk within its investments – suggests that businesses need to adjust to the recent momentum and requirements to disclose necessary information. AER recently launched its ‘Climate Risk Platform’, which potentially increases the company’s addressable market substantially.

Monitor:

• I want to keep seeing meaningful increases in ARR to demonstrate that the company is continuing to expand/grow. Customer receipts decreased slightly between Q3 and Q4 reporting in 2021 – monitor this, ideally, I want to see gradual growth over HY and FY periods. At the same time, slow quarters are expected. 
• Keep an eye on AER’s ability to target the climate change disclosure market, particularly given the company’s heavy investment into this product.
• I don’t think the biggest threat to AER is other companies, I think it’s the Australian Government. The last five years has seen significant investment in how the government and its departments plan, respond to and coordinate natural disasters. While I tend to take the cynical view that governments do not use capital or develop innovative software anywhere near as effectively as the private sector, this is still a risk for AER – with an increasing focus on all-hazards management and coordination of information. Although unlikely, keep a close eye on any government-led initiatives in this area. 

DISC: Not held (yet), but high on my watchlist. I am still looking to prioritise other holdings at the moment but will keep a close eye on AER.

Snazzy New Website

Certainly looks better than the old one which looked like it had been created 15 years ago (which might not be too far off given they started operating in 2007). 

Thanks to the Strawman community, namely Wini, MrKrabs , Noicewon11 and INTJ for putting these guys on my radar. I started researching into the company months back and have been pleased with what I’ve uncovered so far. 

As mentioned by some prior: 

• Very impressive client portfolio. In Feb in their quarterly report new logos included Chubb Insurance, Comminsure, Transport NSW, Hireup and Life without Barriers. These are great companies. 
• They seem to have no churn. They provide updates on this in reports consistently. Latest mentioned no clients lost. 
• Nearly all revenue appears to be recurring. Yes, they received tax incentives for their R&D and COVID-19 stimulus support, which is noted (for a total of about 431K), which we will clearly not include in ARR. 
• Clean balance sheet with $1.2M in cash. 
• Valuation very reasonable. It looks like their headed for a close to $2M which we can pretty much consider ARR. That’s a P/ARR just shy of 3 consider today’s dip, bringing the MC below $6M. 
• Insiders keep buying on market. I love to see that. 

The recent half year report was a little light on growth at 5% (discounting of course stimulus received), but they claim they will make up for it with a very strong pipeline now building up. 

Things on mind that I am keen to see and hear if you guys have any opinion on: 

• How are these guys finding new clients? Is it all referral based? They don’t appear to have anyone in sales/business development as I can see on their LinkedIn or don’t appear to have hired for such roles in the past. They will probably in a near future reach a plateau if the growth has been only organic so far. I’d love to see the hire for growth. 
• Very keen to hear what they have to say about the TAM on Climate Risk Analysis, when they will be ready to deliver to market, and how it will actually work. 

Today’s dip of 14% which is certainly not uncommon in stocks like this makes it a very appealing opportunity. 

I think it is very hard for anyone to accurately predict on a macro level how long the current downturn lasts for and the long term effects of it. What we can and should do though is look at individual businesses and assess the impacts to them from the coronavirus, positive or negative.

For AER, I recently spoke to the CEO Kerry Plowright just to get his view on what impacts he is seeing on the business, right now and potentially into the future. He said they have yet to see any impacts from coronavirus with business as usual. He and the General Manager reviewed their customer list and identified two very small clients in the leisure sector who are at risk of removing their subscription, however for most clients AER's service is critical and comparatively very low cost to other areas where customers could cut costs.

On top of that, the alerting platform was originally built to handle viral outbreaks and AER quickly implemented available datasets into the platform and are now providing data to Esri who has integrated the coronavirus into their geographic information system. At the time Kerry said there were only a handful of clients subscribed but it is a very low cost vertical and may grow if the outbreak is unfortunately unable to be contained.