ASX:ROC

- RocketBoots Ltd

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.

More recently ROC added one of Mexico’s biggest retail banks to its customer list, a major unnamed Australian bank...

And then the big one - an unnamed “Tier-1 global retailer” - see next reason.

ROC signed a deal with a global Tier 1 retailer that once fully rolled out would 14x ROC’s current revenues.

The contract is for ~$9.1M in Annual Recurring Revenues per annum for five years once fully rolled out (and potentially longer).

The deal is for only 40% of that single customer's store network - so revenue from that one customer alone could get a lot bigger.

We think this single deal is a sort of “anchor” deal that marks an inflection point for ROC.

ROC recently confirmed that it has an advanced stage pipeline of 17,000 sites across grocery, retail and banking verticals from 14 customers.

At $3,500 per site per year, by our rough, basic calcs this represents over $60M in potential annual recurring revenue if ROC is able to convert into sales. (source, ROC investor deck slide 10)

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

Of course, there is no guarantee these pipeline deals turn into revenues for ROC.

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

We have already seen ROC land one of these with the ~$9.1M ARR deal - and we know there is the big advanced stage sales pipeline. One big additional deal could multiply ROC’s revenues.

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).

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 supports 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.

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.

ROC also has a Chairman with experience in both private equity and tech enterprise sales.

ROC’s 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.

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.

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.

We think ROC’s capital structure has been managed well - running the company lean, often with a low cash balance but buying enough time to get a mega deal signed (like the $9.1M ARR one).

ROC’s also managed to resist offering options in capital raises which means there will be very few shares on issue (199,313,384 shares after the December 2025 raise is completed).

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.

We like that ROC has attracted deep pocketed institutional investors to its register including the Bombora Special Investments Growth Fund, who is a substantial holder of ROC (over 5%).

Bombora has had a previous win with ROC’s chairman.

We also like that the most recent capital raise had “4 new institutions” come into the company.

The institutional ownership means ROC is de-risked from a future funding perspective because as long as ROC can deliver contract wins, these shareholders will be willing to bankroll the company’s future cap raises.

For us, it's an implicit de-risking of “funding risk” which is usually a very big risk for early stage tech companies on the ASX.

Both Bunning (large DIY goods retailer owned by Wesfarmers) and Suncorp (community 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.

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.

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)

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.

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.

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

(well before AI became 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.

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.

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.