ideaForge Technology Ltd Q4 FY24 Earnings Conference Call Insights

Key highlights from ideaForge Technology Ltd (IDEAFORGE) Q4 FY24 Earnings Concall

• U.S. Market Entry
  • Promising progress in expanding global footprint and exploring new market opportunities in U.S.
  • Conducted beta testing with law enforcement agencies, successfully carrying out real-life missions.
  • Differentiated experience compared to existing drone inventory, contributing to product-market fit.
  • Early sales expected in FY25, with healthy contribution anticipated in FY26.
• Drone-as-a-Service (DaaS)
  • Pilot programs with anchor customers yielded encouraging results and laid groundwork for commercialization at scale.
  • Transitioning from company-owned to franchisee-owned and operated model for scaling opportunity.
  • Unlocking new use cases to drive greater adoption of DaaS technology.
• Technology and Patents
  • Granted six patents in Q4, totaling 38 out of 72 granted and pending patents.
  • Robust patent portfolio and in-house software/intelligence capabilities extend comparative edge in market.
  • Continuously upgrading existing quadcopter and hybrid VTOL platform categories with cutting-edge features.
  • Collaborations with Esri and GalaxEye to develop joint solutions, unlock new revenue streams, and diversify portfolio.
• New Product Development
  • Initiated flight trials of early builds of tactical UAV.
  • Significant progress in operational envelope definition for middle-mile logistics UAV program.
  • Moving towards configuration finalization for larger drone platforms.
• Revenue and Profit Growth
  • Q4 FY’24 revenue of INR 102.3 cr vs. INR 38.7 cr Q4 FY’23.
  • FY’24 revenue of INR 314 cr vs INR 186 cr FY’23, substantial growth as planned.
  • Q4 FY’24 PAT of INR 10.3 cr vs -INR 5.4 cr Q4 FY’23.
  • FY’24 PAT of INR 45.3 cr vs INR 32 cr FY’23.
• Order Book Pipeline
  • Order book as of 31st March: approx. INR 125 cr.
  • L1 pipeline of INR 300 plus cr with expected progress in coming quarters.
  • Healthy mix of defense and civil orders, with additions from international markets expected.
  • Conversion of L1 pipeline into orders expected in next 1-2 quarters.
  • Close to INR 400-450 crores of visibility for FY25.
  • More additions expected to L1 pipeline soon.
  • Aiming to grow order book throughout FY25.
  • Targeting to close more opportunities than planned execution for the year.
  • Expecting a healthy exit order book pipeline reflecting potential growth for next year.
• R&D and Product Development
  • Tactical product at stage of prototype testing and validation.
  • Middle-mile logistics product at concept and configuration design stage.
  • Enhancing software and intelligence capabilities for existing product segments.
  • Some product launches planned in FY25 with enhanced capabilities.
• Margins and Cost Structure
  • Imports accounted for around 20% of operating revenue in FY24.
  • Employee cost spike in Q4 due to ESOP provisions and bonus provisions, but overall flat year-on-year.
  • No major capex plans apart from R&D expenditures for product portfolio expansion.
  • Operating at optimal utilization levels of 70-75% across segments.
• Middle Mile Logistics UAV
  • Focus in FY25 is to get an early prototype up and flying.
  • Extensive simulations and analysis done to finalize the best configuration.
  • Rapid prototyping of finalized concept to begin soon.
  • Revenue traction not expected for a couple of years due to larger platform size and safety considerations.
• Revenue Expectations
  • Early sales from U.S. market expected in FY25.
  • Healthy contribution from U.S. market anticipated in FY26.
  • Revenue traction from middle mile logistics UAV not expected for a couple of years.
• Capitalized R&D Expenses
  • Total intangible assets under development: INR 47 crores.
  • Capitalized amount for FY24: INR 38 crores.
  • Amortization period for capitalized amount: 3 years.
  • Amortization impact on P&L for FY24: approx. INR 12 crores.
  • Total R&D expense in FY24: around 16% of revenues.
• Other Income and Expenses
  • Other income of INR 5 crores in FY24 due to utilization of funds for expenses and working capital.
  • Increase in other expenses due to marketing for international expansion, IPO-related legal/professional fees.
  • Non-cash expenses like warranty provisions and ECL provisions included in other expenses.
• Pricing Strategy
  • Some contracts bid aggressively for advanced technology or to meet competition specs.
  • Products with recovered development costs allow more competitive pricing flexibility.
  • Enables winning orders by being priced competitively in the market.