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. 

AER ticking along, just FCF+ve by $2K and 6% revenue growth. Cloud based operations providing benefit but I would guess increasing costs in the near term to transfer. API development should help scale. You would think all the recent weather events should increase interest in their offerings.

$788,255 in Q1 FY23 customer receipts, up 6% quarter on quarter and significantly on the previous corresponding period (September quarter 2021: $482,462)

Cash and cash equivalents at end of period $2,739,869

New Climatics customers signed (no details)

The team have recently added a fully authenticated AWS API gateway around the Climatics solution and built out the API functionality offering. This is a result of product testing feedback from clients who require API functionality long term. As we have seen in the news recently, the need to properly secure API interfaces is crucial, and the AWS API gateway has enterprise grade security and authentication. The plans for Q2 will include some exciting advancements to Climatics which will include API accessible downscaled CMIP6 data to complement the existing baseline data that Climatics currently provides. In addition to this, a new dynamic report design and format is being developed that will allow users to view the climate intelligence in an offline mode that can be shared with other stakeholders.

Continued development enhancements, priming the Company for future growth

Operationally, the Company is benefiting from efficiencies generated from the successful move of the Company’s core system, its Spatial Analysis Risk Platform (SARP), to the Microsoft Azure Cloud. 

Work continues updating all of the Company’s software to a serverless future. The result is a more robust, faster, and more effective build pipeline which deploys straight into Azure managed test instances (and on to production). This investment will greatly speed up our development iterations and gives us solid foundation to expand our product offering.

FY22 Revenue up 20% ($2.2M vs $1.8M but costs up more $2.9 vs $2.1 (38%) so a loss for the year of $211K vs $468K profit in FY21(includes $220K Covid support). Growth needs to outpace costs going forward.

18% share dilution through raises. No other news in the report.

Some positives but disappointing not to see FCF +ve. Good to see scalability mentioned in the move to the cloud and possibility to add new locations/countries.

-$4M in Sep Q and -$3M this Q for property, plant and equipment not sure if this is from the decomissioning of the servers or general depreciation.

Receipts from customers were $743,919, up 36% from prior quarter ( +6% from same quarter last year but costs up significantly (85%) )

Net cash used during the quarter was $90,240, down from the previous quarter of $261,331, primarily due to increased receipts from customers; ($70K revenue late from last quarter)

Current cash and cash equivalent $2,739,215

New customers include Australia’s largest retailer, auto maker, banks and insurers with multiple potential new customers added to the sales pipeline

First Climatics customer

Flooding across the eastern seaboard in the first half of 2022 has highlighted the need for businesses to be able to assess their flood risk, which is a key component of the offering from Climatics through use of JBA Risk Management Australian flood maps. To date the data has verified well from events with a positive response from users regarding it’s ability to identify if an asset will or not as a worst case scenario. The analysis work focuses on increasing the number of hazards available to users including adding analysis for sea level, storm surge, lightning, frost and solar energy. This will undoubtedly place Climatics in a unique position in the Climate Risk market by being able to provide climate intelligence for 15+ hazards in a single, easy to use platform that will also be available via an API. 

Successful migration of operational SARP to the Azure cloud platform

The streamlining of operations to the Cloud will enhance operational performance and achieve some technology cost savings. It has vastly improved granular control of system performance, scalability and redundancy. This was a crucial step in a generational upgrade to the core system and will provide stability and scalability for the future. Being part of the Microsoft’s Azure ecosystem opens new doors to exciting possibilities, allowing the system to be easily adapted for other locations/countries. 

Half yearly report somewhat dissapointing with small growth and reduced FCF. New hires:  "In the last few weeks, we have recruited a Business Development Manager and Senior Developer." Operating expenses (SMS and unspecified) seem to have increased significantly ~ 100K hopefully due to development.

EWN Climatics Platform (2.0) in development (New climate platform due for release next month). I think it was next month last month?

Much made in the report of all the natural disasters occurring. "With new resources and products, we are looking forward to accelerating growth and opportunity through 2022."

Although cash positive 412,281 the company received 469,965 in government grants and tax incentives so still not really growing underlying FCF.

aer placement

There has been some discussion on HC of late addressing AER’s lack of scalability as some of the IT side of the provision seems to be externally provided (based on financials and staffing costs/ details). This placement would seem to address some of those concerns by bringing work in house. Looks positive although with such a tightly held register whether the 13% discount to the current 0.15c share price was needed is debatable

To raise gross proceeds of $1.5 million by way of a Placement of new fully paid ordinary shares @0.13c

The funds from the Placement will enable the Company to:

• Increase Research and Development capacity with the addition of a data scientist and developer, complete a transition to the cloud and create automation tools for the Company’s Climate Risk Platform

• Add to the Sales and Marketing team with the addition of Business Development Manager/s and the appointment of a Digital Marketing Agency

• Expand into New Data feeds including flood, spatial risk analyser and for a Climate Risk Platform upgrade

Positive result with 467K profit but 200K+ covid support and 475 r&d rebate makes it not quite FCF +ve going forward purely on sales.

Cash inflows from customers in the last quarter $700,815

• Total cash received FY21 $2,921,613 (incl GST)

• Total reported revenue (P&L) $2,536,967 a 44% increase in total revenue inFY2021, compared to FY2020.

• A 78% increase in cash and cash equivalents $1,426,958 FY 2021 vs $799,857 FY 2020

• New contracts signed within the first -two months of Q1 FY22 exceeding $200k in annuity revenue. Several more likely to be finalised in September (revenue  beginning Q2 FY21).

The COVID-19 pandemic appears to have increased risk awareness within both the corporate and government sectors. Since the beginning of the Calendar Year 21, EWN has emerged with increased business enquiry and revenue. This has been supported at the same time by an improved digital presence and platform.

Current areas of strategic focus of the Group include the following:

• Focus on converting significant pipeline of potential clients and on-boarding new customer referrals and lines of enquiry. Several of these prospects would be material if realised and use established platforms and services.

• Focus on distribution of our core IP (data) through channel partners in the GIS industry.

• Pursue white labelling opportunities to leverage the company’s GIS platform and technology.

• Further work on our Climate Risk Reporting platform and development of new services requested by our major customers.

60M shares with 3M in performance shares outstanding 7.8M market cap

4M accumulation of losses to offset future tax.