Mobilicom’s Optimized Small-Drone And Robotics Cybersecurity Solutions Target Untapped Market Opportunity ($MOB)

Mobilicom's Optimized Small-Drone And Robotics Cybersecurity Solutions Target Untapped Market Opportunity ($MOB)

Mobilicom Limited (NasdaqCM: MOB) shares are scoring an impressive YTD run, evidenced by an over 54% gain* with momentum at its back. While that run far outpaces market averages, the excellent news for investors interested in MOB stock, even after its 2023 rally thus far, is that the move higher is a likely precursor to more appreciable increases. Plenty supports that bullish presumption. (*share price from 01/01/23 – 09/05/23 market close, Yahoo! Finance)

Foremost is that Mobilicom is more than timely to a massive small-drone and robotics cybersecurity market opportunity; they are pioneering the space as one of the first companies to introduce a cybersecurity solution optimized for small-sized drones and robotics, known as the ICE Cybersecurity Suite. And that puts them in the right place, with the right products, at the right time to seize potentially transformative revenue-generating opportunities. In fact, after investing significant resources to develop innovative cybersecurity solutions for this niche market, Mobilicom entered 2023 better positioned than ever to stake its claim as a leader in the space and has since been leveraging that position by providing best-in-class, specialized cybersecurity solutions for clients in the drone, robotics, and un-crewed vehicle market sectors.

Of course, being a leader comes with perks. For MOB, it has allowed them to close significant deals, including with the Israel Ministry of Defense, which uses its ICE Cybersecurity solution to protect its small-drone assets. Earning that contract is a milestone reached that is more than a value driver; it’s proof that MOB is widening its competitive distance from potential poachers in an already thin competitive landscape. That widening gap matters. Not only from a new revenue perspective but also from hardening the barriers to entry, which MOB has successfully done. 

In fact, competitively speaking, MOB has made it hard for those trying to break into the space, especially since MOB is already maximizing the value inherent to its products and platforms portfolio, already rigorously tested and validated. That critical distinction is fueling more than organic growth. From an investor perspective, it’s exposing a valuation disconnect between assets, revenue growth, and a share price that may be too wide to ignore.

Mobilicom Rallies, Proving Being Different Is An Advantage

As evidenced by its over 60% YTD gain, many investors aren’t. That action is warranted, especially as headlines relating to the Ukraine-Russia conflict continue to underscore the importance of embedding cybersecurity assets into small-sized drone fleets. Forbes reported in 2022 that Russia’s electronic warfare troops rendered 90% of Ukraine’s drones inoperative. It’s getting worse. An article in the New York Post in May 2023 reported that Ukraine is losing 10,000 drones per month due to Russian electronic warfare. While the stats on the Russian side may be less forthcoming, it’s more likely than not that they are also losing considerable numbers of drones through the same cyber breaches. To be clear, these countries are losing small-drone assets not only from missiles but also from cyber infiltration. 

And small-drone losses aren’t limited to just the battlefield. Drones operating in the commercial space, including drone delivery, utility/oil/gas inspections, mining & process industry, and first responders, face similar vulnerabilities. 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. These small-size drones, also called mini or small drones, typically weigh up to 250 pounds and operate within distances ranging from 1 to 15 kilometers (1 to 10 miles). While small compared to drones used for long-distance missions, don’t under-appreciate their contributions. These roughly $50,000 assets carry essential payloads, including cameras, parcels, and light military equipment. Because of their compactness, lightness, low power consumption, and affordability, businesses and defense forces are utilizing these small drone assets more frequently, noting their abilities to provide the optimal balance between price, size, and performance.

Their need has led to demand, which has led to Mobilicom scoring some impressive deals. The company recently announced receiving a purchase order for its end-to-end cybersecurity solutions from a global autonomous and remote-controlled armor technology provider. That deal resulted from a product and services design win, leading to Mobilicom’s Mobile Ground Control Station 10″ Pro, MCU Mesh Networking, and SkyHopper Datalinks being installed into autonomous and remote-controlled vehicles for customers in the homeland security and defense markets.

More deals could quickly accrue. Mobilicom CEO and Founder Oren Elkayam said, “This purchase order marks the first in a line of expected orders for initial delivery to customers by our design-win partner, an armor and autonomous vehicle provider.” His optimism is based on more than product value. It includes recognizing the value inherent to his company’s impressive IP portfolio that facilitates integrating multiple products into a turn-key bundle ready for deployment.

Mobilicom Has The Capital To Expedite Market Penetration

The better news from a company and investor perspective is that optimism is being exchanged for revenues. Live demonstrations showing the advantages of its end-to-end solutions that deliver a comprehensive and holistic approach to cybersecurity are attracting new client interest. That includes Teledyne-FLIR (NYSE: TDY), one of the world’s largest manufacturers of small-sized drones and robotics. MOB announced TDY’s intent to purchase 120 of Mobilicom’s SkyHopper PRO datalink systems. Like its other design wins, the deal with Teledyne came after its products, services, and platforms passed critical design, development, integration, testing, and validation. In this case, those positive results led to MOB’s largest-ever commercialization order to serve federal agencies and customers in the US markets.

More good news for MOB is that the deal could continue giving, noting that Teledyne-FLIR is expected to continue integrating MOB’s SkyHopper PRO systems into small-sized drones for the US Department of Defense (DOD). Revenues from the deal aren’t all forward-looking, either. Mobilicom said it expects to post considerable income from that agreement this quarter. Other sources are likely to contribute to a steepening revenue curve.

In July, Mobilicom announced design win sales in Korea, Brazil, and Canada. In Korea, a drone manufacturer ordered Mobilicom’s newly designed and released MCU Maxi Controller PRO, a mobile, handheld Ground Control Station for integration into its drones. Opening its market reach in Brazil, a client manufacturing robotics and un-crewed ground vehicles ordered Mobilicom’s SkyHopper Datalinks for its small-sized robotics solutions. And in Canada, a drone services provider in the oil, gas, and mining industries also ordered Mobilicom’s SkyHopper Datalinks to distribute real-time sensor feed from drones to on-the-ground users.

Accounting for those deals, MOB has scored 48 design wins as of June 30, 2023. That’s important since each win represents initial sales of Mobilicom’s systems and components being integrated into new autonomous systems designed by manufacturers of drones and robotics. The better news is that MOB describes its growing client book as including at least eight Tier-1 customers. Those deals and the deep pockets that come with them are expected to help accelerate MOB scaling to serve commercial demand from the manufacturers that are bringing increased numbers of uncrewed and autonomous vehicles to the markets. As important to the deals made is having the capital to enable meeting that demand.

A Balance Sheet To Fuel 2023 Revenue Growth

Mobilicom checks that box, too. The company secured $13 million in funding last year, expected to be ample to fuel 2023 growth, considering its monthly cash burn is reportedly less than $500,000. Mobilicom reported having roughly $11 million in available cash, about 24 months of runway, as of last quarter’s end. Better still, with no debt and a potent business pipeline, that capital can be put to work to make MOB grow bigger faster. That’s happening. 

Since 2017, MOB has expanded its sales reach into 16 countries, accounting for over 50 unique client contacts. They also have 34 patent claims in two patent families, which add value by protecting and increasing its competitive edge and distance. Its multinational presence also brings considerable revenue-generating opportunities, even more so in the high-dollar defense and commercial drone sectors. It gets better. Earning a leading position to serve this vast potential comes with a significant prize- the spoils from an over $8.5 billion small-drone market by 2026. 

To capitalize on that opportunity, MOB has established a formidable infrastructure to support aggressive growth strategies and initiatives. Assets within it, including its innovative end-to-end solutions-provider abilities, are already helping the company turn aspirations into revenues. Contributing to that cause, MOB is leveraging the value of its robust and comprehensive small-drones and robotics space cybersecurity solutions. Those include Mobile Mesh Networking Aerial terminals that connect multiple drones to a fleet and swarm operation, its Cybersecurity Suite AI-based 360º degree protection of drones’ platforms data and communication channels, and its ControliT, a cloud-based network management software solutions for drone operators. Further value is added from MOB’s SkyHopper Datalinks Bi-directional data links that share and distribute video and data in real-time, all supported by rugged ground terminals.

As noted, Mobilicom’s services portfolio is attracting significant attention. Competitive advantages over competing products and services have led to MOB signing a Who’s Who client list, including Airbus SE, Elbit Systems (NasdaqGS: ESLT), Censys, and several other prominent global players. And don’t discount the potential for MOB to score some potentially massive deals with other companies pioneering the drone and autonomous vehicle sector, including Lockheed Martin (NYSE: LMT) and Tesla (NASDAQ: TSLA), the latter keeping no secret of its plans to utilize antonymous vehicle technology in its next generation of vehicles. While all its deals generate near and long-term value, the biggest takeaway from the agreements is that Mobilicom’s technology extends well beyond the borders of military defense. And that could generate billions, not just millions, in sales in the next few years as the company scales to meet diverse client needs.

Broad Products Portfolio Leads To Design Win Momentum

Reaching that lofty revenue projection could happen faster than many think. Over the past 2 years, the company has earned accelerating design wins. That matters since each win typically results in revenues. The company noted one of its clients has transitioned from the design-win phase to the initial production stage, setting up potentially significant deliveries to the US Department of Defense. Another consideration supporting near-term growth is that a contract earned has its own organic growth potential. In fact, MOB’s strategy is to keep its clients close with recurring revenue through high-margin repeat hardware sales and from software and cybersecurity SaaS recurring revenues.

Keep in mind that once MOB hardware is embedded, the company has a significantly better chance to cross-sell bundled solutions with multiple hardware, software, and services to drive higher revenues while providing flexible pricing that can maintain high gross margins. In other words, MOB can get bigger faster by doing what they do best- serving its clients with an impressive product suite that keeps revenue flowing for them while keeping the barriers to competitive entry high for others. Plenty of industry accolades support that likelihood. 

Mobilicom has earned innovation awards, grants, certifications, and standards recognition by the US, Japan, and the EU. They have also earned industry leadership awards from AUVSI, the Association for Unmanned Vehicle Systems International, which has helped the company secure meetings with US Congress to advocate for drone cybersecurity. It’s also led to a busy few months of activity, some of which can immediately increase shareholder value.

In March, Mobilicom demonstrated a 5G AI Mesh Network for Autonomous Vehicles and announced a share buyback. In April, MOB announced securing a repeat order for its Mobile Ground Control System. In May, Mobilicom technology was chosen by the UAE Government to protect EVs for Homeland Security and defense. Also in May, MOB joined the US cybersecurity Industry standard as a contributor and entered a Strategic Partnership with the US 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. And in August, the company announced further global market traction by doing new client business in Korea, Brazil, and Canada. That’s a lot of groundwork completed for a microcap company.

More importantly, with MOB stock currently trading at $1.52 a share, that work’s combined intrinsic and inherent value contributions support the bullish side of the investment proposition. As of now, it appears to be lacking from the market cap. 

Harnessing Broad-Based Business Momentum

Of course, it takes more than a disjointed share price to attract savvy investor interest. MOB delivers in that respect. As of August 23, 2023, MOB reported having only 4.8 million shares O/S, with a good portion of those shares tightly held by insiders. Interestingly, despite the low O/S count, liquidity is excellent. Over the past three months, an average of 1.61 million shares exchanged hands daily. That can keep the trading spreads tight, allowing investors to capitalize on profit-taking, similar to when profits were taken at the 52-week high $3.33 level in July.

However, going forward, investors may want to take profits on advisement. Emerging from the Australian ASX exchange, Mobilicom is climbing from under the radar to show itself as a cybersecurity sector gem. In fact, side-by-side comparisons to its competitors show that Mobilicom products and services offer tremendous, cost-effective, and comprehensive value to a global client list that is advancing small-drone and antonymous vehicle use faster than even the most aggressive estimates have forecast.

Thus, combining the sum of Mobilicom’s parts with a small-drone and an autonomous vehicle market expected to grow exponentially toward 2030, the interest in MOB stock is warranted. In fact, including the value from a management team that has successfully scaled companies from the startup phase to merging with large corporations, it’s justified. So, don’t be hesitant based on fears of its YTD rally losing steam. Mobilicom stock can do more than appreciate into the end of 2023. It has all the pieces in place to do so in exponential fashion.



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