Vection awarded $1.2m worth of contracts from tech service providers

Between 2022 and 2023, the Australian Cyber Security Centre received over 94,000 reports of cybercrime – a 23% increase from the preceding period. This underscored the need for companies to improve their cybersecurity infrastructure, which is where the integrated mixed reality company Vection Technologies (ASX: VR1) comes in.

Vection has won two contracts valued at $1.2m. The contracts are with technology service providers focused on cybersecurity and infrastructure security solutions for law enforcement, government agencies, and security agencies. 

Of the total contract value, $400k will be recognised as revenue in FY24 and the remainder across FY25 and FY26. The service will be ultimately provided to international government agencies. These orders focus on cybersecurity-related ICT infrastructure and are expected to generate positive earnings. 

They are repeating awards from two well-established customers, highlighting Vection’s ongoing collaboration with customers and its maintenance and enhancement of client relationships. 

Vection is confident in the customer’s creditworthiness. The contracts aim to provide an ICT solution that strengthens cyber and data security for National Security Intelligence in the Defence, Space, Military, and Law Enforcement market segment. 

Due to increasing geopolitical tensions, there is a critical need to advance the technologies used in this field, improve monitoring capabilities, and strengthen national securities’ perimeters. Integrating artificial intelligence algorithms will be vital in accelerating and managing real-time big data analysis to support these efforts. 

These awards follow Vection’s contract win in May when it bagged a contract valued at $2.1m. The total amount is expected to be recognised in Q4 FY24. Similar to the recent contracts, this one also deals with a technology service provider focused on cybersecurity and infrastructure security solutions for law enforcement, government agencies, and security agencies, with the service ultimately provided to international government agencies. 

This order mainly focuses on cybersecurity-related ICT infrastructure and is expected to generate positive earnings. It is also a repeat engagement from a well-established customer. In April, Vection signed a deal worth $500k to provide its first Extended Reality (XR) solution tailored for naval maintenance management. 

In the nine months leading up to March 2024, Vection’s unaudited revenue was $19.8m, up 82% from $10.9m in H1 FY24. Plus, its cash receipts were $26.7m, up 82% from $14.7m in PCP. In Q3 FY24, its total debt was $8m, down $1.3m compared to Q2. It had cash of about $7.7m.

The Company is focusing on integrating spatial data with real-time analytics and interactive environments. It aims to transform how businesses interact with both digital and physical realms, promoting sustainable and cost-effective operations. It is closely monitoring its costs as it drives sales initiatives and market presence. 

These contracts cement Vection’s position in its customers’ supply chain and pave the way for integrating spatial computing solutions in future projects in this sector. Such advancements would improve data visualisation and security management through 3D modelling and real-time analytics. 

While positive earnings are expected from the latest contract wins, they will likely be immaterial to earnings per share in FY24. Vection anticipates that these ongoing partnerships will yield valuable and continuous work, with the customers signalling sustained and expanding collaborations.

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Alinda Gupta

Alinda is a Business Reporter for The Sentiment

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