The capital raise is for sophisticated & institutional investors, not retail shareholders. The HNW also get options from this placement which sucks as I wanted them :D Sucks being a retail shareholder... They should rename capital raises to privilege placements lol

I am not participating in the SPP as I can buy from the market at discounted prices... I believe management shoot themselves in the foot since the SPP is no longer a discount.

The funds are needed to increase CAPEX to drive further revenue and keep the business operating profitably. ZOLEO's don't grow in trees. They need outside capital to fund the expansion. I am hesitant on the acquisition route and I hope they don't pay too much.

Overall pretty hilarious from a retail investor perspective and I'll buy from the market at a discount to the SPP :P The thesis has not changed when you look at the fundamentals.

There was soo much to like about the quarterly report. The biggest takeaway is that Beam managed to grow during the lockdown and not only that but also generate positive operating cashflows. Global orders for ZOLEO are growing QoQ and Mr Market finally woke up.

Despite the surge in price, it is still sub $50M market cap. I am glad that they are getting valued as a growing retail business.

Need to revalue the business as the quarterly report beat my expectations.

Beam received quite a lot of sales orders in anticipation of strong demand in North America (Iridium) & pent up demand in Australia and NZ.

Around 9k devices will be recognised as revenue from North America (also need to consider the 50-50 split with Roadpost). 

ANZ is up for grabs. Finally got freedom for NSW which is October 11, so a lot of people will start booking flights, buying caravans and start exploring outside of the city. I am living around upper Northcoast NSW and the weather is epic (I am seeing dolphins and whales regularly). Bushfire/floods are a slight concern but most city folks that I know, are begging to go on day trips. 

Camplify demand will be interesting as my dad is seriously thinking of buying an RV :D There's a lot of Caravan parks around my area so I don't think we would be buying online. Maybe the city folks are the ones buying/renting online? 

Beam is looking really good at MC < $20M. The market has no clue. They are executing and my valuation was extremely conservative. They might have gone past 20,000 sales for FY22. Although, the annoying part is what sales are recognised as revenues in FY22? Hard to know until the quarterly report.

I hope we see some margin expansion and get a rerating from a broker followed by large fundies buying improving liquidity. It's deep value stock with product-market fit. 

Comprehensive summary regarding the latest announcement 

• They have $4.4M cash for expansion. It came from the capital raise and debt financing from NAB.
• $9M in 1HFY21 revenue does not consider recurring revenues. 
• After 1 year of launching ZOLEO in USA, Canada and Australia, we saw uplift in revenues coming from Canada which was $3M. Quite significant, maybe due to winning the outdoor retailer roadshow. ZOLEO actually generated $6M but since it is a 50-50 venture with Roadpost, they both obtained half the sales.
• Iridium is selective on who can come to the network, and they chose Beam due to the long standing partnership. Although, long term Starlink is a clear competitor in the market for Iridium. In saying that, historically new players do not wipe out the legacy tech but instead expand the market size. I have not thought about that until the latest revision in the valuation. 
• I like how they showed the states with poor cell coverage around Australia, rural NSW is a big market for them. 7million people in Australia live in rural/remote Australia, which is interesting. 
• Accelrating orders for ZOLEO slide might be categorised as a "pump" as the red line show cumaltive sales. That line would mean a lot to investors if recurring revenue was like 80% but we have no way of knowing that information until the next report. So the red line to me, does not mean anything despite showing the start of an exponential curve. 
• Although, the following slide is very useful ARPU was flat and now growing, which is interesting and churn is is relatively flat.
  • I wonder why the ARPU went up? It was not explained in the slide but would like to know the context behind the increase. It maybe due to higher recurring revenue. I have no clue with that one.
  • They have benchmarked a 2% churn which I think is quite cool for a small company to say. It keeps them accountable and the statistic will mean a lot for investors when they scale. 2% churn is quite low, which is surprising considering products like Starlink dish have a lot of sticky customers. People like ZOLEO, who knew? 
• Number of outlets increasing adoption of ZOLEO is always a great sign -that includes online search volume.
  • Australian subscriber growth rate accelerating in recent months is interesting to see. I don't think it is sustainable long term, but during this phase is a great sign for investors.
• I saw recently they are charging more for location share, which is very cheeky as they are extracting more revenues from customers. Great for shareholders, hopefully it is useful for customers considering the value added service fee of $8/month. Will customers shift? Too early to say as it was launched this month (May). 
• Expanison into Government/Enterprise market (100% yes)  
  • Now this is an area I see ZOLEO being extremely useful for the Emergency Services, Long-Hall Transport and Agriculture. I am not sure if they can succeed in Resources, as there must be many players there.  
  • Emergency services is crucial, I hope they can do well there, as the prodcuct is suitable for rural areas. You can argue it is a faster way to market than going direct to consumer in Australia.
• They have forecasted $5.2M for Beam's territories at end of FY23 which equate to 15K subscribers. 
  • Beam's territories are: 
    • Australia, NZ, China and Japan
  • Road Post's territories are: 
    • USA, Canada
• Expansion into new markets (e.g. Europe) and product upgrades may require additional capital from partners
  • "Beam is able to fund its share of investment from existing resources" - I doubt that as if they do not gain enough traction, capital raise is a possibility.
• In the event that value is crystallised by the JV (e.g. trade sale, IPO), Beam is entitled to half of the proceeds.
  • I hope it does not happen soon. Let the business growth further before IPO, so that shareholders get more.  

Oh yea, further disclosure: placed buy order today for the strawman portfolio, please do not take it as personal advice. I have been wrong quite a lot, you can with the recent decision to sell a portion of Alcidion - I was too early :D 

I recently increased weighting of Beam due to the valuation and forward sales estimates. The strawman portfolio is showing ~5% weighting. 

The valuation compared to competitors are trading at a discount using EV/EBITDA multiple. Despite low revenues, ZOLEO has the capability for US market penetration. Granted Starlink has over 1/2 million back orders, ZOLEO should capture 1/10 of sales annually to run the the business profitably. 

I believe the reason for the low valuation is due to low liquidity. The company is making small but important strides to secure larger orders down the line. The risk - return I feel is in the investor’s favour. After observing the company for 8months. I will put more thoughts in the valuation section. 

Early last year, I put my email for Starlink updates. Today, received a confirmation that Starlink will be available in limited supply in Australia.

What's even amazing is that not only prices can be found but also the service speeds. Speeds vary 50Mb/s to 150Mb/s for the limited coverage in Central Victoria and southern NSW. 

I just put a random address in NSW and found the following: 

• Hardware cost = $709 
• Service = $139 per month (very expensive) 
• Shipping and handling = $100

Comparing with Zoleo's pricing 

ZOLEO pricing 

• Hardware cost = $345
• Service 
  • $32 per month for the basic plan 
    • 25 satellite messages 
    • additional satellite message cost $0.65 per message 
  • $55 per month for In-Touch plan
    • 250 satellite messages 
    • additional satellite message cost $0.50 per message
  • $80 per month for Unlimted plan 
    • Unlimited satellite messages 
    • Free additional 

Zoleo is cheaper than Starlink despite Starlink in Beta mode. A rational customer would go for Zoleo but Starlink has free marketing in the form of SpaceX and Elon Musk. Especially Elon who has close to 50M followers (I am one of them :D) so he has a lot of influence on his products. 

Keeping a very close eye on Starlink and how it competes in this market.  

Q2 FY21 Update 

• Beam grew their quarterly receipts by 17.3% to $4.9M. Beam received record ZOLEO order in the quarter as demand for the device accelerates. The demand growth is verified by Iridium in their earnings call, so management has not misled investors. 
• Beam had invoiced and shipped 21,932 ZOLEO units to ZOLEO Inc, with the remaining 13,068 to be invoiced by April. As they say in the quarterly update "it took more than six years for Beam to receive the 50,000th order of its Iridium GO device." Hence, the ZOLEO product is expected to outsell Iridium Go quickly. 
• Then there is a lot of commentary around the cash in the business especially the debt. This is my understanding, please correct me on this as I am not sure about the intricate details. This is my take:
  • Beam raised $5M from institutional/sophisticated investors to pay off a high-interest US$666K convertible debt from SGV1 Holdings. 
    • My reasoning for this was that management thought it was unpredictable if ZOLEO would succeed in the US market. Hence, they need capital to execute, but no institutional investor want equity. So, what they did then was to allow institutions the opportunity for a convertible debt instrument. It protects the investor if the company fail and it acts as upside leverage if the company succeed. The instrument is high interest as the investor in this case SGV1 believe Beam is very risky.
  • Now, with the recent large order for ZOLEO, Beam's risk goes down and Beam decided that they do not have to pay a high-interest rate on the SGV1 loan. NAB offered 3 low-interest loans equating to $1.22M which is better than the convertible debt. 
    • Beam might have also got interest from institutions to do an equity raise. So the $5M capital raise solved 2 problems: 
      • Paid off the high-interest loan from SGV1          
      • Provide enough liquidity to grow the business
    • The question I have on my mind, is wouldn't there be an announcement on SGV1 converting their debt to equity for the remaining amount?  
      • The loan facility from SGV1 was US$2M. Beam took out US$666K, paid that off and cancelled the facility. The remainder was $1.333M, so does this mean it disappears when you cancel? I thought SGV1 had the right to own equity as it was convertible.
• Beam has netted a small positive operating cash flow from running the business, which is great to see and the capital raising gives added cushion on expanding the global ramp.     
• The current market cap on the business is an astonishing $22M which I feel is extremely undervalued. That's before doing a proper DCF valuation. The growth in quarterly cash is expected to continue in the near term as more people buy satellite communication equipment for rural trips. Long term, I am not sure as borders would open and international travel recommence. It would look like a GameStop if there was a 100% short interest, but I can't find it haha.   

Apparently, Beam won the outdoor Retailer Innovation award which is a big deal in Canada. I assume sales for the December quarter will be promising. May see a spike in the stock? 

@CanadianInvestor not sure if this website is owned by you, but cracking content if you made it :D 

https://www.canadianinvestor.com/2021/01/22/zoleo-named-product-of-the-year-at-outdoor-retailer-innovation-awards/amp/?__twitter_impression=true

A very large order right before Christmas for ZOLEO. Beam did not specify if the order is for North America or Australia specifically. However, they mentioned, "The increased order size is in response to the growing demand for ZOLEO in the North American and Australian markets". I think it means both markets are showing demand. One is better than the other (Beam gets 85% commission in Australia, Japan, China, NZ while 50% commission for Rest of the world). More orders coming to Australia help Beam's topline. 

Looking at the announcement from cash collection perspective. Deliveries of this latest ZOLEO order is expected to be completed by April 2021.

This is what I do not know, does Beam receive the cash upfront and deliver later or do they have to wait 90 days to get the cash? Revenue will be recorded now but how long does the cash come to the business? 

Also doing rough maths 12,500 order x $350 (Average price) ~ $4.4M. You are looking at $4.4M order. The market up 12% equates to $3M gain in market cap. So the market is pricing the order very close to the order amount and is not extrapolating future orders. Which means, Beam in my eyes is still undervalued as more orders will come.  

Starlink and product innovation

• It is abundantly clear that Beam is developing products for old satellite tech (Iridium, Thalaya) etc.. 
  • Thus in terms of product innovation, they are limited in what the connectivity products can offer. The satellites they cater to have low bandwidth and slow speeds. This means people who are going road trips to the outskirts and using Beam products are selective with Wifi usage and only send emergency communications. Most consumers are savvy internet users and would not pay per megabyte - this is the current offering. 
• Starlink is the new tech in the satellite sector and cover more people living in rural regions with higher speeds.
  • There will be more consumers buying connectivity devices like the dish pointing to Space. 
  • The only disadvantage is that the dish is large and not portable, so not great for road trips. However, accessories may come allowing certain car mounts. 
  • There are more satellites coming with around 30k expected to cover the Low Earth Orbit. When this happen, global rural coverage is a possibility. 
• Starlink is discussed heavily in North America as Canadian regulatory authorities recently approved Starlink access. Many customers like the product. 
  • Last I checked it was US$499 for the dish and $80/month for the plan. Slightly more expensive than ZOLEO but provide faster speeds. It is currently in Beta mode but will be interested to see what the official release would look like in North America.         
• There is no doubt that demand could shift to Starlink when it becomes widely available. There is the risk that it could soften demand for Beam products (especially in the consumer side).
• Fortunately for Beam Starlink is in Beta mode, however when it becomes available globally, would people buy ZOLEO? That's if Starlink comes with a competing portable product.   

Beam manufactures products and services used by global satellite and telecommunications companies such as Iridium, Telstra, KDDI, Inmarsat & Thuraya. Their distribution network is global with roughly 3/4 of sales coming from the US, Canada and Australia. 

Beam is globally recognised for its R&D expertise developing many World’s First products for the satellite industry. In other words, they have lived with dinosaurs. Their products have been used since the early 2000s. They also won many awards. Their new products Iridium Go! and ZOLEO have seen more sales than the old products. This is good to see.

They have special relationships with satellite and telecom companies but the most notable one is Iridium. Beam was appointed as a Value Added Manufacturer nearly twenty years ago, as one of Iridium's first partners. Since this time, it has developed a strategic range of Iridium based accessories and terminals for the Iridium satellite network. Iridium has 66 cross-linked LEO satellites providing communication services to the Naval, first responders, military and government sectors. 

ZOLEO is a Joint venture between Beam and Roadpost. Beam owns the customer, control airtime revenue and collects 85% of profits. Roadpost is in charge of generating sales in North America while Beam looks after Australia, Japan, China and NZ. ZOLEO's distribution is omnichannel they have physical stores but also list ZOLEO online through eBay, Amazon and recently Kogan.  

ZOLEO pricing 

• Cost $345 to buy the device but comes with additional service fee options 
  • $32 per month for the basic plan 
    • 25 satellite messages 
    • additional satellite message cost $0.65 per message 
  • $55 per month for In-Touch plan
    • 250 satellite messages 
    • additional satellite message cost $0.50 per message
  • $80 per month for Unlimted plan 
    • Unlimited satellite messages 
    • Free additional 
  • All 3 plans come with Unlimited SOS, Unlimited Cellular and Wifi 
• They are really catering to the Adventure, Tourism, Rural Communities, Lone Worker, Government and Enterprise application. This is marketed using B2B and B2C but not B2B2C. 

Future Product - Iridium Certus (this is for the new next-generation satellite constellation Iridium will deploy). 

This is the covid tourism play where the assumption is people willing to do domestic tourism and visit rural areas with poor cellular connectivity during the summer holidays. Those types of consumers would buy ZOLEO as a safety communications device. The Iridium CEO pointed out that the appetite for personal communications devices was in demand in the US summer as covid forced people who planned on international holidays to do domestic travel. In the Q3 Iridium quarterly conference call, the Iridium CEO mentioned ZOLEO as one of the products showing some success.   

In saying all of that, there is one massive risk that I will watch out for. Will put it in the next straw.