The meeting recording with the M2M Connect CEO, Mohan Jesudason, is now available. And you can access the transcript here: M2M Connect Transcript.pdf

So, a quick glance at this company is not going to set your world on fire. The share price has collapsed since listing, it’s extremely illiquid, and they’re still bleeding cash. Given the balance sheet and cash burn, you have to conclude that a capital raise is only a matter of time.

Tell me more Andrew!

Well, the bull case is that X2M has spent the past decade building and proving the tech. A lot of the early years were loss-leading to secure reference sites, and they’ve since walked away from low-margin hardware work and restructured the business. What they have now is a platform that’s finally been commercialised, with real customers, real deployments and some meaningful sales momentum.

Mohan stressed the uniqueness of their platform (device-agnostic, real-time control, patented), and the fact that once you’re in churn is basically zero because switching is expensive and painful for utilities. That’s why the “land grab” concept comes up repeatedly. If you believe they’ve already done the hard yards, the next phase is harvesting existing customers, expanding into their TAM, and layering high-margin SaaS on top.

The addressable market is massive, the competitive landscape is fragmented, and X2M seems to be one of the few actually doing device-level control, not just data collection. On a pro-rata basis the shares trade on roughly 0.75x sales, which is dirt cheap *if* they can sustain the revenue growth while holding the cost line.

The market clearly doesn’t buy it yet. “Show me” is the dominant sentiment, and that isn’t unreasonable given the track record. But if you think they can maintain this momentum, there’s a case that this is deeply mispriced. The next couple of quarters will tell us whether this is finally an inflection point or just another head fake.

Too early for me, but one to keep an eye on.

Here are some other highlights:

• The license model is the real growth engine (they license the software to 3rd parties that handle the sales and bundle with hardware). Most of the software margin goes to X2M. Japan and the UAE are cases in point; licensees install the platform once, handle all sales, and X2M collects high margin SaaS fees for ten years. Margins are around ninety percent and no staff are needed on the ground.

• Sales cycles are long but defensible. It can take twelve to twenty four months to win a new customer, but contracts are multi year and very sticky.

• The total addressable market inside existing customers is large. South Korea has roughly five hundred and eighty million dollars of customer TAM and X2M has only reached around five to six percent so far.

• Hardware is being phased out. They no longer want low margin device sales and are focused on recurring platform and SaaS fees.

• The platform has real differentiation. It can control devices remotely, not just read data, and is device agnostic and able to operate over any telco backhaul. This is a key technical advantage.

• Early traction is emerging in new markets. Japan, Taiwan with Hive.AI and the UAE are all showing progress. The UAE partner has already landed large real estate contracts.

• Renewables is a new vertical. Hive.AI in Taiwan is the first step into energy optimisation. Early stage but potentially significant.