Guardforce AI Co., Ltd. Q4 FY2021 earnings call

Management Statement and Operational Highlights

• IPOs and Fundraisings: In the fourth quarter of 2021, Guardforce AI uplifted to the NASDAQ capital market with an IPO gross proceeds of ~$15 million. Followed by a private placement of ~$10.3 million, resulting in a cash position of ~$15.9 million as of December 31, 2021.
• Acquisitions and Expansions: Acquired a majority stake in Handshake Networking (a leading penetration testing company) in Q1 2021. Announced expansion into Malaysian and Macau markets via mergers, relocation of corporate HQ to Singapore. Entered China via acquisitions of Shenzhen and Guangzhou robotics companies, and entered the US via a strategic partnership with a US-based technology solution provider.
• Business Segment Updates: Secured Logistics revenue decreased due to COVID-19 impacts. Robotic Solutions deployed over 1,400 robots in the Asia Pacific region and developed the Intelligent Cloud Platform (ICP) for remote management. Information Security is a new segment with growth potential.

Segment Performance

• Secured Logistics: In 2021, revenue totaled US$34.3 million, a slight decrease of approximately 8.3% from 2020's US$37.4 million. It represents approximately 97.6% of the total group revenues.
• Robotic Solutions: 2021 revenue was approximately US$0.4 million, which is about 1.4% of the total group revenues. The business is in its strategic phase but is expected to be a significant revenue contributor in the next two years.
• Information Security: 2021 revenue was approximately US$0.5 million, accounting for around 1.4% of the total group revenues. This is the newest segment, driven by the acquisition of Handshake Networking in 2021.

Guidance

• Reaffirmed 2022 net revenues guidance of approximately $55 million to $60 million, representing over 66% growth from 2021.
• Expect inorganic revenues from acquired companies in 2022 to be approximately $21 million, making up 36% of total revenues.
• Anticipate non-cash revenues from robotics, information security, and other services to expand to approximately $25.5 million, representing 44% of total revenues.

Risks

• Forward-looking statements are subject to risks and uncertainties discussed in the company's Annual Report on Form 20-F, including those related to market conditions, competition, and execution of expansion plans. No specific detailed risks were extensively discussed in the provided transcript beyond the general forward-looking statement disclaimer.

Question and Answer

• Q: Mike Albanese asks about margins of Robotics vs Secured Logistics. A: Terence Yap states that secured logistics margins are in the teens, while robotics and cybersecurity have much higher margins, with confidence that as these segments scale, gross margins will improve.
• Q: Mike Albanese follows up on robotics expansion. A: Terence Yap discusses the Intelligent Cloud Platform (ICP) for remote management and control of robots, noting that robotics can generate revenue through RaaS model and data analytics.
• Q: Mike Albanese asks about capital expenditures. A: Terence Yap mentions CapEx focus on acquisitions and robotics, with plans to upgrade systems in the secured logistics business for AI and data analytics.
• Q: Hunter Diamond asks about misconceptions regarding Guardforce AI. A: Terence Yap talks about being underdiscovered and moving beyond the secured logistics business to include robotics, AI, and information security.
• Q: Hunter Diamond asks about Dubai and Australia expansions. A: Terence Yap states these were part of the company's strategic plan, leveraging opportunities in Smart City initiatives and labor cost-driven automation in Australia.
• Q: Hunter Diamond asks about ideal acquisitions. A: Terence Yap emphasizes acquiring companies with existing distribution networks and client relationships to expeditiously enter markets, preferring companies not in startup phase and in traditional security space.
• Q: Hunter Diamond asks about competitive robotics market. A: Terence Yap talks about Guardforce AI's robotics as a service model, differing from manufacturers who sell robots as one-offs, focusing on recurring revenue and service including maintenance and data analytics