BirdDog Technology (ASX: BDT), a Melbourne-based innovator in broadcast-quality video technology, has had a challenging year, but the company now appears well-positioned for a significant turnaround. This was the central message of the recent RaaS Research Group Stock Take Webinar, where analysts and investors gathered to assess BirdDog's prospects. The event featured a detailed analysis by RaaS senior analyst Graeme Carson, followed by presentations from BirdDog's CEO Dan Miall and CFO Barry Calnon.
BirdDog’s core business is based on producing high-quality video cameras, converters, and cloud-based solutions used across industries ranging from live sports broadcasting to corporate events. The company also leverages its proprietary Network Device Interface (NDI) technology to integrate its cameras into IT networks, allowing for easy deployment without sacrificing video quality. Despite a difficult FY24, the company is now focusing on new product launches and margin expansion, underpinned by a leaner cost structure and a promising foray into the healthcare sector with their new product, Remedi.
A Year of Challenges—and Opportunities
RaaS analyst Graeme Carson opened the webinar with a candid assessment of BirdDog's recent financial performance. FY24 was, in Carson's words, "an awful year" for BirdDog, marked by severe supply chain disruptions and litigation with a former contract manufacturer. These issues dragged down revenue, which dropped from $28 million to $18 million, a 36% decline. However, Carson quickly turned his attention to BirdDog's future, which he believes holds considerable promise.
“We’re looking at FY25 as the company’s rebound year,” Carson said. “This turnaround is being driven by a range of next-gen product launches, alongside a significant improvement in margins. FY24 was tough, but BirdDog is set for growth in the coming years.”
At the heart of the company's recovery is its new line of cameras, which started rolling out earlier this year. BirdDog’s cameras are robotic and can be controlled remotely, making them ideal for a wide range of industries—from broadcasting to education. The company has also diversified its manufacturing partners, reducing reliance on any one supplier, and significantly improving margins as a result.
Next-Gen Cameras: A Key Growth Driver
A central theme in both Carson’s analysis and the presentation from CEO Dan Miall was the importance of BirdDog’s new range of next-generation cameras. Miall highlighted how these cameras are already gaining traction in the market, noting that BirdDog had recently begun seeing repeat orders, a strong indicator of customer satisfaction and product reliability.
“These next-gen cameras have been in development for over two years, and they’re a game-changer for us,” said Miall. “Not only do they offer broadcast-quality video, but they’re easy to install and operate over regular computer networks. Early feedback has been overwhelmingly positive, and we’re confident these products will drive significant revenue growth over the next few years.”
One of the standout features of BirdDog's cameras is their use of NDI technology, which allows the cameras to seamlessly integrate into existing IT networks. This reduces the need for specialised, expensive AV infrastructure. The cameras are robotic, capable of pan, tilt, and zoom (PTZ) operations, making them highly flexible for various applications—from live sports to corporate boardrooms.
Expanding Margins and Supply Chain Resilience
A major part of BirdDog’s turnaround is the significant improvement in its margins. CFO Barry Calnon detailed how the company had diversified its supply chain by working with three manufacturers spread across Asia. This move not only reduced the risk of future disruptions but also led to a doubling of the company’s margins on its camera products.
“We’re now seeing margins in the 40% range, up from around 20% historically,” Calnon said during the webinar. “This is a huge improvement, and it’s been consistent across the months of June, July, and August. We expect these stronger margins to hold as we scale production and increase sales.”
Calnon also pointed out that BirdDog has reduced its headcount from 48 to 32, a move that has trimmed $3 million from the company’s overhead costs. The company’s tight control over expenses, combined with its margin expansion, means it is now well-positioned to return to profitability.
“We’ve had three consecutive months of EBITDA-positive results,” Calnon added. “It’s not massive yet, but the trend is clearly in the right direction.”
Remedi: A Potential Healthcare Game-Changer
Beyond cameras, BirdDog is also branching out into the healthcare sector with a new cloud-based product called Remedi. This software platform enables doctors and medical professionals to collaborate remotely, sharing real-time video feeds from operating theatres or clinical environments. While still in its early stages, Remedi is starting to gain traction, particularly in the Asia-Pacific region, and BirdDog is confident it will become a significant part of its business.
“We’re seeing great momentum with Remedi,” said Miall. “The pipeline is growing, and we’ve already started booking sales. The technology is ready, and now it’s about scaling it to the wider healthcare market.”
In the Q&A session, Miall elaborated on Remedi's potential: “This isn’t just about telehealth—this is about enabling specialists in different parts of the world to collaborate on surgeries or other complex medical procedures. The demand is there, and we believe Remedi can become a strong growth driver.”
RaaS analyst Graeme Carson was cautiously optimistic about Remedi. While he acknowledged the long sales cycle in the healthcare sector, he pointed out that BirdDog’s early sales momentum and growing pipeline were promising signs.
Addressing Investor Questions: What’s Next for BirdDog?
During the Q&A, several key investor concerns were addressed. One of the first questions centred on BirdDog’s revenue performance in the September quarter, given the recent product launches. Miall confirmed that sales of the new camera range had been strong, with repeat orders starting to come through.
Another question focused on the company’s margins and whether they would be sustainable moving forward. Calnon was confident: “We’ve embedded these higher margins into our contracts with the new suppliers. So, yes, we do expect these margins to hold and even improve as we scale up.”
One of the more pressing questions was about the company’s cash balance and potential uses for its $12.3 million in cash. Both Miall and Calnon noted that while BirdDog was not currently carrying any debt, they were considering several options for deploying this capital.
“We’re always on the lookout for accretive M&A opportunities,” said Calnon, “but our priority is to scale our existing business first. Once we see consistent profitability, we’ll also consider returning value to shareholders through dividends.”
Potential Catalysts and Risks
As with any microcap stock, there are risks and potential catalysts that could move BirdDog's share price in the coming months. One of the most immediate catalysts will be the company's next quarterly update, which is expected to showcase further traction from the new camera range. Additionally, BirdDog's AGM later this year may provide more clarity on the company’s FY25 outlook.
However, risks remain, particularly around macroeconomic conditions and ongoing challenges in the global supply chain. While BirdDog has diversified its suppliers, any major disruptions in the semiconductor market or geopolitical tensions could still impact the company’s ability to meet demand.
Another key risk is execution. While the company has made significant progress, it still needs to scale its new products and ensure that its sales pipelines convert into meaningful revenue.
The Valuation Case
From a valuation perspective, Carson believes BirdDog is significantly undervalued. The stock is trading at a steep discount to its net tangible assets (NTA), which stand at 13.6 cents per share, compared to a share price of around 7 cents. BirdDog also has a negative enterprise value, meaning its market capitalisation is lower than the cash on its balance sheet.
“This is an unusual situation, particularly for a company that’s on the verge of profitability,” Carson said. “If BirdDog can execute on its strategy, there’s significant upside potential here.”
In his forecasts, Carson expects BirdDog to grow revenue at a compound annual rate of 25% out to FY27, with EBITDA margins improving as the company scales. He values the stock at 27 cents per share, based on a discounted cash flow (DCF) analysis.
Final Thoughts: Is BirdDog a Buy?
BirdDog Technology is in the midst of a crucial transformation. After a difficult year marked by supply chain disruptions and legal disputes, the company has stabilised and is now well-positioned for growth. With new products gaining traction, significantly improved margins, and a growing pipeline for its Remedi healthcare platform, BirdDog is a microcap stock with a potentially bright future.
For investors willing to take on the risks inherent in microcap investing, BirdDog offers a compelling turnaround story with substantial upside potential. As Miall succinctly put it during the webinar, “We’ve been through the tough times, but we’re coming out stronger—and now it’s all about execution.”
Investors will no doubt be keeping a close eye on BirdDog's next few quarters to see if the company can deliver on its promise of profitability and growth. If it does, the rewards could be significant.
