Share your optimism about the future for ONDO but only lightly invested til we see where this runs. The key metric I'm focused on currently is installation rate being delivered as promised. They hit the mark to end March, as you say, with installs increasing from about 1,000/wk, from September to end Dec, to 2,000/wk, for 2025 to end March. Look forward to seeing how much this increases as they continue the US rollout. I hope it is gathering pace but run rate is already 100,000 pa+ so even maintaining this would be solid.
They may have the production capacity in place to ramp up to 40,000/month. I don't believe they will be producing at these levels though until required so wouldn't get hung up on that. It's contract production rather than owned too isn't it? So a shared or third party risk? (depending on terms negotiated). With debt levels/borrowing costs I wouldn't want them holding too much stock.
I haven't the patience or ability to go through the income/profitability to the degree you have, which is appreciated. Rather relying on the CEO stating no need for further fund raise and the finance team having their business model worked out to deliver profitability as they grow the install base. Clearly many are sceptical or this would have flown much further. Let's see who's right.
the "prepayment" they've negotiated with the US insurers pays for the stock and yes it's 3rd party production and contract production. Unclear whether it is batch production on a call off basis or continuous. Obviously the price from that 3rd party of continuous would be quite different to call off basis.
Unfortunately, growth has been a bit disappointing to me so far. Probably about 40K new customers in H1 (~25K in the US), Ondo will need to accelerate to reach 100K by March. Most of it in the US though, which is good.
Management confirmed that we should be EBITDA positive on a runrate basis by the end of the fiscal year. Also good. I'm not sure how though...
This I don't understand:
Annualised Revenue Run-Rate: Projected to exceed £7.5m in Q4 FY2025, reflecting c.90% growth compared to Q4 FY2024 (£4.0m).
Was it supposed to be the quarter ending in March 2025? Exit-rate ARR was £3.3m, I'm not sure what this £7.5m is supposed to mean?!
I am assuming that if a customer does not install an insurer supplied unit, they will find that their leak cover is compromised in the event of a claim. That makes it even more of a no-brainer from the insurers POV.
If there are huge numbers of uninstalled units sitting on US customers shelves, presumably there will be various prompts to get them going. However, uninstalled units still represent a substantial cost to the company even if not included in COS (apologies if I missed an accounting for these somewhere).
Another risk could be failure of the units in place. I remember the company crippling effects of the FireAngel recall when their batteries did not last as expected.
1/ On the Insurer T&C - yes you'd think they'd think about this. If I were an insurer I would :)
If they do, then that is a massive reason to accelerate adoption (avoidance of liability for claims)
2/ On the uninstalled units US insurers are offering discounts (we are told) to encourage use. It is one of the frustrations with prior interviews that no one has thought to ask hey what's with all the uninstalled units? How many have you produced and how many have been activated? I picked up via reading the 100 reviews that some were sent these unsolicited by their insurer leading to harrumphing about GDPR.
3/ The units run on 2 AA batteries and there's a low battery alert to the mobile phone app - so they appear to have thought of that one. Little point having an IoT gadget without its capability to cry for help!!!
Oak
Share your optimism about the future for ONDO but only lightly invested til we see where this runs. The key metric I'm focused on currently is installation rate being delivered as promised. They hit the mark to end March, as you say, with installs increasing from about 1,000/wk, from September to end Dec, to 2,000/wk, for 2025 to end March. Look forward to seeing how much this increases as they continue the US rollout. I hope it is gathering pace but run rate is already 100,000 pa+ so even maintaining this would be solid.
They may have the production capacity in place to ramp up to 40,000/month. I don't believe they will be producing at these levels though until required so wouldn't get hung up on that. It's contract production rather than owned too isn't it? So a shared or third party risk? (depending on terms negotiated). With debt levels/borrowing costs I wouldn't want them holding too much stock.
I haven't the patience or ability to go through the income/profitability to the degree you have, which is appreciated. Rather relying on the CEO stating no need for further fund raise and the finance team having their business model worked out to deliver profitability as they grow the install base. Clearly many are sceptical or this would have flown much further. Let's see who's right.
SevenCC,
the "prepayment" they've negotiated with the US insurers pays for the stock and yes it's 3rd party production and contract production. Unclear whether it is batch production on a call off basis or continuous. Obviously the price from that 3rd party of continuous would be quite different to call off basis.
As you say time will tell.
OB
Great article, thanks!
Unfortunately, growth has been a bit disappointing to me so far. Probably about 40K new customers in H1 (~25K in the US), Ondo will need to accelerate to reach 100K by March. Most of it in the US though, which is good.
Management confirmed that we should be EBITDA positive on a runrate basis by the end of the fiscal year. Also good. I'm not sure how though...
This I don't understand:
Annualised Revenue Run-Rate: Projected to exceed £7.5m in Q4 FY2025, reflecting c.90% growth compared to Q4 FY2024 (£4.0m).
Was it supposed to be the quarter ending in March 2025? Exit-rate ARR was £3.3m, I'm not sure what this £7.5m is supposed to mean?!
Hi OB,
I am assuming that if a customer does not install an insurer supplied unit, they will find that their leak cover is compromised in the event of a claim. That makes it even more of a no-brainer from the insurers POV.
If there are huge numbers of uninstalled units sitting on US customers shelves, presumably there will be various prompts to get them going. However, uninstalled units still represent a substantial cost to the company even if not included in COS (apologies if I missed an accounting for these somewhere).
Another risk could be failure of the units in place. I remember the company crippling effects of the FireAngel recall when their batteries did not last as expected.
Hi Doogie,
Great points.
1/ On the Insurer T&C - yes you'd think they'd think about this. If I were an insurer I would :)
If they do, then that is a massive reason to accelerate adoption (avoidance of liability for claims)
2/ On the uninstalled units US insurers are offering discounts (we are told) to encourage use. It is one of the frustrations with prior interviews that no one has thought to ask hey what's with all the uninstalled units? How many have you produced and how many have been activated? I picked up via reading the 100 reviews that some were sent these unsolicited by their insurer leading to harrumphing about GDPR.
3/ The units run on 2 AA batteries and there's a low battery alert to the mobile phone app - so they appear to have thought of that one. Little point having an IoT gadget without its capability to cry for help!!!
OB