Mobilicom Limited (NasdaqCM: MOB) stock is staying committed to rally mode, surging over 49% in October and more than 113% YTD. Better still for investors, it did so on enormous revenue that eclipsed its average trading volume by over 5198% last Tuesday, with over 20.7 million shares exchanging hands. The interest may be linked to Mobilicom introducing itself to procurement specialists at the Association of the United States Army’s Annual Meeting & Exposition in Washington, D.C., on October 9-11, 2023. With no other news to suggest otherwise, it’s fair to speculate that the rip higher in price and volume results from current and potential clients liking what they see. (* YTD share price from 01/01/23 – 10/16/23, 10:56 PM EST, $0.97 – $1.94, Yahoo! Finance, 09:35 AM EST)
That would follow precedent. At past events, MOB left with significant new interest, historically leading to “design wins” that become revenue-generating contracts. But pointing to only that event as the cause of interest isn’t fair to MOB. After all, the company has a list of additional contributing value drivers that not only add to its rally tailwind but also support appreciably higher share prices. Those include MOB maximizing its recent grant of approximately $250,000 from Space Florida, Florida’s Aerospace, Finance and Development Authority, earning its initial purchase order for two of its innovative cybersecurity products from one of Europe’s largest defense contractors, and its design win and initial $150,000 purchase order from a leading drone designer and manufacturer that serves commercial and defense customers worldwide.
Those scores account for value-creating deals made during just the past two months.
SkyHopper Pro Earns Global Client Interest
Prior to those deals, MOB announced new revenues inherent to design winsin three new geographic markets. That includes scoring add-on orders for its innovative small-drone security technology and a commercial scale purchase order for 120 of its SkyHopper Pro datalink systems from Teledyne-FLIR (NYSE: TDY), one of the world’s largest manufacturers of small-sized drones and robotics. Adding to that list, MOB completed significant operational groundwork and established several tier-one business relationships since the start of 2023 that do more than justify the bullish thesis; it’s enough to fuel a rally to re-claim its 52-week high of $3.33, 71% higher than its current price. That’s more likely to happen than not.
Comparably, MOB is better positioned today than when it scored that high. Thus, re-claiming that mark is more than an expectation; its business pipeline could lead to it posting sooner rather than later. That’s bullish speculation, for sure. But, it’s warranted from MOB pioneering and, as importantly, benefiting from its first-mover advantage to provide cybersecurity solutions to the small-drone and antonymous vehicle markets. The value comes from maximizing that position. If MOB does, it could benefit revenues increasing not only in the millions but in the billions from being one of the first companies to introduce cybersecurity solutions optimized for small drones and robotics, its ICE CybersecuritySuite.
Modeling for billions in revenues isn’t overly ambitious in a mid to long-term model. In fact, it’s supported by MOB continuing to capitalize on and maximize its first-mover advantage with its ICE Cybersecurity platform that provides measurable competitive benefits in a currently thin competitive landscape. Those distinctions continue to be highlighted. Last week, MOB showcased its end-to-end solutions to procurement specialists from the U.S. Army and defense contractors at the Association of the United States Army’s (AUSA) Annual Meeting & Exposition in Washington, D.C. They weren’t alone.
They teamed with its U.S.-based strategic collaborator, Mistral, a prime contractor for the U.S. Department of Defense. The duo likely captured significant attention, especially with Mistral integrating and showcasing Mobilicom’s solutions into contract bids for its U.S. defense industry customers and partners. Mobilicom wasn’t only linked to Mistral. They also introduced field-proven,military-grade cybersecurity solutions for ground, avionic, and maritime uncrewed drone and robotics platforms. Those products are more than best-in-class; they are designed to operate in the most stringent environments, a difference that provides a significant advantage over competing products and platforms.
Mobilicom Design Wins Leading To New Contracts
Those advantages led to a slew of new design wins and industry recognition. In September, MOB was awarded a new grant of roughly $250,000 from Space Florida, Florida’s Aerospace, Finance and Development Authority, which serves to extend contract services through 2024. For this engagement, Mobilicom is focused on developing a Multi-Link (MLU) communications system that incorporates three concurrent transmitting transceivers (SDR/Cellular/Satellite) for auto redundancy to address U.S. civil drone regulations. This MLU will extend Mobilicom’s ‘beyond visual-line-of-sight’ datalink functionality to include using satellite connections for redundancy, enabling the operation of uncrewed systems in areas with limited or zero cellular network coverage. The added grant does more than expedite MOB’s growth initiatives; it underscores Mobilicom’s unrivaled value to a rapidly growing drone industry.
That value includes the benefits of MOB’s SkyHopper Datalinks supporting line-of-sight and cellular network-based ‘beyond-line-of-sight’ communication. That difference is a massive operational advantage. And while it’s a significant one now, MOB is working to make it better by integrating satellite connectivity to create additional redundancy to serve client needs for long-range drone delivery and inspection operations with an ‘always-connected-anywhere’ capability. It can be a substantial revenue driver, with design wins and new contracts expected to accrue in 2024. Space Florida is just one high-profile client.
Last month, MOB received an initial purchase order from one of Europe’s largest defense contractors to integrate its Mobile Ground Control Station and MCU Mesh networking into a paired, networked ground vehicle and drone system. That client intends to leverage MOB technology to enable remote control of a drone, typically from inside a ground vehicle, that can be moved quickly by the drone’s operator. That’s a critical difference from other remote control platforms in that it utilizes mesh networking capability that can be expanded to support multiple drones in a swarm operation. That’s valuable because it facilitates independent decision-making in multi-drone operations through shared data via Mobilicom’s secured Mesh Networking.
The better news for MOB and its investors is that this deal will likely lead to more.
Design Wins, Purchase Orders, Long Term Relationships
In fact, it has been. In September, MOB announced earning a design win and an initial $150,000 purchase order from a drone designer and manufacturer that serves commercial and defense customers worldwide. The order includes Mobile Ground Control Stations and the SkyHopper Pro V datalinks, which MOB said will be integrated into high payload long-range drones set for intensive commercial demo efforts with leading defense and commercial end users across the U.S. As important, this design win and contract expedites Mobilicom’s expansion in the U.S., particularly its defense sector. In the case of military drone use, MOB is quick to its opportunities.
Conflicts in Russia, Ukraine, and the Middle East underscore the importance of drone warfare capability. In fact, headlines indicate that thousands are being deployed in the current combat battlefield. Keep in mind that these drones aren’t the ones that fly around the backyard. These are sophisticated weapons that need specific technologies embedded to be effective. Without it, drone losses can be significant.
Forbes reported in 2022 that Russia’s electronic warfare troops rendered 90% of Ukraine’s drones inoperative. That report was followed by one from the New York Post in May 2023 that estimated Ukraine is losing 10,000 drones per month due to Russian electronic warfare. Again, not from warhead arsenals, but through cyber breaches. The Russian side may be faring no better. While those stats may be less forthcoming, likely, they are also losing considerable numbers of drones through the same cyber breaches. In other words, physical weaponry isn’t the only threat to small-drone assets. Cyber infiltration is also a formidable foe that can substantially damage mission-critical systems. As noted, that threat and loss of drone arsenal now extends into a new war in the Middle East, where thousands more drones are being used and lost in combat fire and cyber breaches.
But know this, too: small-drone losses aren’t limited to just the battlefield. Similar vulnerabilities exist for drones operating in the commercial space, affecting delivery applications, utility/oil/gas inspections, the mining & process industry, and even first responders. That’s led to corporate users such as Amazon (NASDAQ: AMZN), Walmart (NYSE: WMT), and Exxon (NYSE: XOM) to invest heavily in small-drone security to safeguard their fleet operations. So are NATO countries that continue to increase their defense budgets in response to the Ukraine-Russia conflict, noting that drone applications on the battlefield are offensive and defensive game-changer. While no one embraces why, the advantages demonstrated in battles are significantly increasing drone demand. MOB can capitalize on the interest as an established leader providing field-proven, cybersecure technologies.
Drone Growth Increasing At Record Pace
Indeed, Mobilicom is in a sweet spot of opportunity. And better than being in an excellent position to capitalize on rising demand, it can maximize potential with innovative and unique offerings. Don’t just take MOB’s word; they have earned plenty of industry recognition to support the bullish sentiment. MOB has and is earning innovation awards, grants, certifications, and standards recognition by the U.S., Japan, and the E.U. They have also achieved recognition from AUVSI, the Association for Unmanned Vehicle Systems International, which has led to introductions to U.S. Congress members advocating for drone cybersecurity.
Working to increase its deal count with the U.S. is indeed a value driver. However, the U.S. is among many big governments interested in Mobilicom’s expertise. In May, Mobilicom technology was chosen by the UAE Government to protect its electric-powered arsenal for Homeland Security and defense. Along with those agreements, MOB reached several milestones. Also in May, MOB joined the U.S. cybersecurity industry standard as a contributor and entered a strategic partnership with a prime contractor for the DOD. In June, MOB launched Cybersecure SDR to expand its marketing reach into the mid-sized drone market. In July, the company announced its commercial scale order from Teledyne-FLIR for a drone fleet sold to the US DOD. Then, in August, the company announced further global market traction by earning design wins and new client business in Korea, Brazil, and Canada.
In Korea, a drone manufacturer ordered Mobilicom’s MCU Maxi Controller PRO, a mobile, handheld Ground Control Station, for integration into its drones. In Brazil, a client manufacturing robotics and un-crewed ground vehicles ordered Mobilicom’s SkyHopper Datalinks for its small-sized robotics solutions. The same was requested by a Canadian drone services provider in the oil, gas, and mining industries, who plan to utilize the technology to distribute real-time sensor feed from drones to on-the-ground users.
By the way, those contributed to 48 design wins as of June 30, 2023. Since each design win often leads to new clients being signed and additional revenues scored, MOB’s revenue trajectory is expected to steepen significantly in Q4 and next year. And keep this in mind- Mobilicom’s client book includes at least eight Tier-1 customers. Serving that list does more than endorse MOB’s technology; it validates it.
Mobilicom Ideally Positioned For 2024 Breakout
That matters in a field where there is no room for compromise. And while the world’s largest companies want what MOB provides, the better news is that MOB has the capital to serve them. The company secured $13 million in funding last year, which, considering its monthly cash burn at roughly $500,000, provides an operating cash runway well into 2025. Better still, MOB has no debt. Thus, combining its financial health with a strong business pipeline, MOB looks ideally positioned and capable of facilitating new sales and accelerating global expansion initiatives.
Still, the MOB value proposition isn’t just a forward-looking one. It’s a mission in progress, evidenced by MOB serving a client list that, among others, includes Airbus S.E., Elbit Systems (NasdaqGS: ESLT), Censys, and several other prominent global players. Expect more to be added. In fact, updates may be forthcoming now that its introductions at the Florida concludes. No one should be surprised to hear of additional bids to more big-name companies, even from Lockheed Martin (NYSE: LMT) and Tesla (NASDAQ: TSLA), the latter keeping no secret of its plans to utilize autonomous vehicle technology in its next-generation of vehicles. A cyber breach through the Tesla vehicle firewall could have a devastating impact on its brand and drivers. Logic says they are doing significant work to make sure that never happens. While there is no link to Tesla, it would be unreasonable to not consider them a potential client.
All told, combining intrinsics with near-term potentials, a solid evidence-based case is made supporting that the bullish mood of MOB’s stock is likely to continue. In fact, with MOB showing only 4.82 million shares O/Sand roughly 316,000 in its float, an already bullish trend could significantly steepen. Considering the groundwork completed, deals made, and more of the same expected- deservedly so.
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