ROC: “Vision Artificial Intelligence” technology - new contracts and renewals.

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 6,430,000 ROC Shares and the Company’s staff own 125,000 ROC Shares at the time of publishing this article. The Company has been engaged by ROC to share our commentary on the progress of our Investment in ROC over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs.

Our tech Investment, Rocketboots (ASX:ROC) has developed “Vision Artificial Intelligence” technology for giant companies to analyse and respond to in-store customer behaviours.

(basically this means using AI on live in-store camera footage to analyse customer behaviours, allowing the giant company to improve operations)

ROC’s tech is currently in use by TWO major, household name companies - Suncorp in the banking sector and Bunnings in retail shopping.

~3 months ago ROC signed a $140k, three month trial with a major Mexican retail bank - a customer with over 1,000 branches... (source)

8 days ago, ROC announced a $320k contract RENEWAL across 250 sites with a “Major Australian Retailer” - with the partnership moving into the 8th year running (source)... (We assume Bunnings)

This morning ROC announced a new “Major Australian Retail Bank” that had commenced a trial back in August has converted to a contract rollout worth $190k in year 1 (source, source).

This “stage A” roll out is to less than 10% of this bank's branches and future site rollouts are being evaluated with decisions expected next quarter - so still plenty of room to grow.

(note - this is not ROC’s existing “Major Australian Retail Bank” customer Suncorp - today’s new deal is a different “Major Australian Retail Bank”)

So we have seen a major existing customer renew a large contract AND a new customer quickly move from trial to expanded contract rollout, and a major international enterprise go on a paid trial.

This tells us that they are getting value from using ROC’s tech.

(many tech providers can convince a major enterprise to do a trial or a 1 year contract with a slick sales presentation - it’s whether or not the enterprise gets value from the tech AFTER they have actually used it that determines if they will keep paying for it or not)

But what really caught our attention in today’s ROC announcement was this line:

The Company continues to progress advanced commercial discussions across 14 international enterprise customers, representing ~20,000 potential sites across grocery, retail and banking verticals.

(Source)

The one thing we are most interested in is new sales to major enterprise customers from ROC’s advanced sales pipeline.

Based on the assumption that ROC charges ~$3,500 per year per site for its tech (source, ROC investor deck slide 10).

And ROC says there are ~20,000 sites across 14 customers in “advanced commercial discussions”...

That advanced sales pipeline amounts to a total potential contract value of ~$70M.

(of course like any sales pipeline, there’s no guarantee it all converts, and timing is always uncertain)

At 12.5c ROC is capped at $21M.

ROC reported $746k in cash receipts in FY25 (source)

So even converting just 10% of our estimated $70M potential revenue in its ADVANCED stage pipeline would be almost a 10X growth in cash receipts for ROC.

Note again - the key word here is ‘potential’ - ROC will still need to convert its sales pipeline into actual revenue, and it may not be successful in doing this. Just because a potential contract is in the pipeline does not mean it will convert to a signed contract.

(ask any salesperson about this when hassled by their sales manager)

We like that ROC started developing its AI (artificial intelligence) way before AI became the hottest investment theme in recent memory.

Companies developing genuine AI with over a decade of development efforts AND internal knowledge on how to apply AI to solve a specific and real world problem are not that common on the ASX...

And in our view are the best positioned to leverage and apply the rapid recent advances in AI technology and tools to their specific sector of expertise.

ROC’s “advanced stage pipeline” almost doubled in a quarter...

We Invested in ROC in March this year after it had already spent years developing and marketing its AI tech.

(way before AI became cool)

We think it is now at the point where it can materially start to scale up its revenue.

At the time of our initiation (31 March 2025) on ROC, the “advanced stage pipeline had ~10 advanced state pipeline customers with ~10,000 total sites.

Now that number is at ~14 international enterprises representing ~20,000 potential sites.

So the advanced stage pipeline has almost doubled.

Of course, like all investors, what we really want to see is ROC convert more of its sales ‘pipeline’ into actual sales (meaning more yearly recurring revenue for ROC).

If ROC was able to convert ~25% of these deals into signed, paying customers it would materially increase ROC’s existing revenues.

...and (we’d expect) re-rate the ROC share price.

(ROC is currently capped at ~$21.4M)

(Source)

Of course, converting all those ‘potential’ sales is no guarantee. We have seen ROC have two low cash receipt quarters in a row now ($5k in June and $108k in September). This is a high risk early stage tech stock.

We like tech stocks because of that “hockey stick” style growth potential - and we are Invested in ROC with the hope that with one (or more) large signed deal in the near term, ROC can achieve something like this:

The above potential growth looks great but success can take longer (sometimes much longer) than expected... or never actually eventuate.

We first Invested in ROC in March, today’s news is the first update we have had on a new contract since then.

Now we watch to see if ROC can deliver more conversions to sales over coming months.

You can check out our full initiation note on ROC here, in that note we run through:

• What ROC does and why we like it’s tech
• The 8 key reasons why we are Investing in ROC
• What ROC sells and who it sells it to...
• What our Big Bet is for ROC and a full breakdown of how we think it can achieve it
• Our detailed ROC Investment Memo

8 key reasons why we are Invested in ROC

Below is a reminder of the 8 key reasons why we like ROC from our 31 March initiation note.

We have added a few updates under a few of the reasons based on any new information from today’s announcement and ROC’s recent quarterly.

1. ROC already has long term, paying enterprise customers including Bunnings and Suncorp.

Both Bunnings (large DIY goods retailer owned by Wesfarmers) and Suncorp (a bank owned by ANZ) are paying customers of ROC.

They have been customers since before ROC’s December 2021 IPO and continue to renew and expand their licence contracts 7+ years later.

This is strong evidence that ROC can sell its product to enterprise customers, and that those customers find long term value out of the service.

2. Over ~$35M in potential annual recurring sales from “advanced stage deal pipeline”

According to ROC’s most recent quarterly report, ROC had 10 customers in its “Advanced Pipeline”.

These customers represent over 10,000 sites in total.

At $3,500 per site per year, by our rough, basic calcs this represents over $35M in potential annual recurring revenue if ROC is able to convert into sales.

(using a basic $3,500 per site per year times number of sites calc, ignoring bulk discounts and setup fees)

Even if just 10% of that “advanced stage” pipeline is converted, it would be 3.5x ROC’s current revenues.

UPDATE:

ROC confirmed today that it is in advanced commercial discussions with 14 international customers representing ~20,000 potential sites across grocery, retail and banking verticals.

As mentioned earlier, our back of the napkin calcs show that advanced stage pipeline could be worth ~$70M+ in potential annual recurring revenue.

Again - there is no guarantee these pipelines deals turn into revenues for ROC.

3. One large deal could multiply ROC’s current revenue

If ROC is able to sell to a large multinational contract it could have its product in thousands of stores through just one deal.

At a price point of $3,500 per store, one deal could be in the millions of dollars in recurring free cash flow.

These deals take a very long time to secure (as do most enterprise software deals).

ROC has shown that its enterprise customers tend to be incredibly “sticky” (stay on for a long time)

4. Partnership with Europe’s largest Point of Sale company: Gebit Solutions

Gebit Solutions sells self checkouts to supermarkets and retailers.

Gebit is the point of sale system for some of the largest supermarket retailers in Europe and Gebit will now support an “out of the box integration” with ROC’s software.

High-synergy partners like Gebit help improve ROC’s reputation to enter the conversation with big retailers, despite ROC being a smaller player in the space.

5. Original founding team still in place, with a new experienced tech chairman at the helm

The original team that developed ROC’s technology in the early 2010s are still running the company (including the CEO and CTO).

This is a positive sign for tech startups when a long term founding team has been working on the product for 10+ years.

Now however, ROC has a new chairman with experience in both private equity and tech enterprise sales.

ROC’s new chairman Roy McKelvie is also the chairman of an education technology company called Pathify that he helped to scale and raise US$25M at a A$180M valuation.

Roy invested $200,000 personally into ROC last year at 8.5 cents and a further $90,000 in the current placement.

6. Genuine AI and deep knowledge of how to apply AI to a specific problem

ROC’s AI and machine learning technology has been developed since 2010.

(well before AI became a big Investment theme)

Companies developing genuine AI with over a decade of development efforts AND internal knowledge on how to apply AI to solve a specific and real world problem are rare on the ASX...

And in our view are the best positioned to leverage and apply the rapid recent advances in AI technology and tools to their specific sector of expertise.

7. Vision capture technology valued in the US$250M-$500M range

In late 2022 a company called Trigo raised US$100M off the back of its grocery vision software.

In 2023 one of the largest companies in this space Everseen raised US$70M to advance a very similar technology.

Those large raises are evidence of the size of the opportunity in this space that investors are seeing.

If ROC is able to deliver more sales and capture market share, it could grow to the size of these larger competitors in the space.

8. ROC has a good capital structure with strong ownership represented in board and management

Following today’s capital raise news and its completion, ROC will have 154 million shares on issue.

The major shareholders are the original vendors of the technology and have proven to be sticky since the IPO.

The board and senior management represent ~44% of the shares on issue prior to this recent capital raise, which means they are very aligned to shareholders interests.

UPDATE:

Immediately following the March $3M capital raise at 8c, ROC attracted cornerstone backing from a major tech fund, Bombora Investment Management.

Bombora came into ROC with a $1M investment on the same terms as the $3M raise, and Bombora’s co-founder David Willington joined ROC’s board.

The Bombora Special Investments Growth Fund is now a substantial holder of ROC with 7.30% of shares. (source)

Bombora has had a previous win with ROC’s chairman - we covered Bombora’s investment in our last ROC note here: ROC to bank another $1M, secures new strategic investor, and board member.

We hope ROC will be another one.

Ultimately, we are hoping that a combination of the above reasons helps it achieve our Big Bet which is as follows:

What is our Big Bet for ROC?

“ROC re-rates to a $200M market cap by securing multiple large recurring contracts with retail clients and scaling up its business”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our ROC Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

What’s next for ROC?

🔄Sales updates

We want to see ROC close deals, with updates that include the number of sites that ROC’s tech will be deployed to and contract dollar values.

We’ve outlined the types of deals that ROC is in the process of closing in our ROC Investment Memo:

New Sales: Retail/Supermarket

🔲 New customer 1

🔲 New customer 2

🔲 New customer 3

New Sales: Consumer Banks

✅ New customer 1

🔲 New customer 2

🔲 New customer 3

Existing customer re-signs or expands:

🔲 Contract re-sign with existing customer

What are the risks?

The main risks we see right now are “sales and delay risk” as well as “funding risk”.

On the sales and delay risk front it’s quite straightforward - ROC needs to sign contracts and bring in cash:

Sales and Delay Risk

ROC could lose key clients or not seal as many deals, hurting their revenue and share price. Large organisations like the one’s ROC works with don’t tend to adopt new technology very often and the sales cycle can be long. This feature of ROC’s customer base can cause delays in sales that drag out over a long time, Macro factors in the market including a recession can cause a reduction in spending on new technology, affecting ROC’s ability to make sales.

Source: “What could go wrong” - 31 March 2025 ROC Investment Memo

ROC ended the most recent quarter with $1.1M in cash.

At the same time, ROC had cash burn of ~$1.4M for the last quarter so there is always a risk the company needs to raise cash inside the next few weeks/months.

Funding Risk

ROC is a small cap stock that it is spending more money than it is making. If the company has not been able to secure a major deal in that time then it may be doing the next raise at a lower valuation.

Source: “What could go wrong” - 31 March 2025 ROC Investment Memo

We list more risks to our ROC Investment in our ROC Investment Memo here.

Other risks

ROC operates in a rapidly evolving AI vision market. Larger, better-funded competitors could emerge and challenge ROC’s position or put pressure on pricing.

The technology depends on in-store video and behavioural analytics. Changes in privacy regulations or public attitudes could increase compliance costs or limit deployment opportunities.

Currently, ROC’s revenue comes from a small number of key clients. Losing any one of these could have a significant financial impact.

Scaling from initial trials to broader rollouts will test ROC’s operational capabilities. Delays, integration challenges, or customer service issues could slow growth.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

Our ROC Investment Memo

In our ROC Investment Memo, you can find the following:

• What does ROC do?
• The macro theme for ROC
• Our ROC Big Bet
• What we want to see ROC achieve
• Why we are Invested in ROC
• The key risks to our Investment Thesis
• Our Investment Plan