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.