DUG - DUG Technology

[Dona Ferentes]

for August comment ... @debtfree

DUG trading sideways for a while .. $2.65.

back above $3 ... results for the Financial Year ended 30 June 2024

Highlights
● DUG delivers record revenue, EBITDA and Sales wins:
o Sales wins of US$67.4 million, a record high, up 35%.
o Revenue from customers of US$65.5 million, up 29% driven by a 36% increase in Services revenue.
o EBITDA of US$16.6 million, a record high, up 10%. This EBITDA result accounts for US$6.6 million in third-party compute costs, which were required until newly purchased in-house compute was delivered and commissioned.
o Excluding this cost, underlying EBITDA was $23.2 million, up 54% compared to FY23 EBITDA of $15.1 million.
o Net profit after tax of US$3.3 million, down 33%, primarily due to costs of third-party compute not incurred in the prior period.
o Operating cash inflows of US$12.1 million, down 10%, primarily due to costs of third-party compute not incurred in the prior period.
o Strong order book of US$36.5 million at 30 June 2024, up 31%:
o Cash of US$9.4 million, up 18%.
o Net debt owing of US$14.5 million.

DUG Managing Director, Matt Lamont said:
“We’ve had another great year, breaking a number of financial records along the way. The growth of our Services business was particularly encouraging with the increasing uptake of our Multi-parameter FWI Imaging technology. In total we secured US$67.4 million in new services projects during FY2024. The Software business grew and continues to gain traction with our clients.

Operating cash inflows were impacted by third-party compute costs, delivering US$12.1 million for the year. Property, plant and equipment grew by $31.3 million, primarily due to the new compute hardware in Houston that we announced during the year.

We recently announced the signing of a significant Intellectual Property licensing agreement with Baltimore Aircoil Company which we believe will change the data centre cooling landscape globally.

The outlook for our Services business line continues to be strong. We are excited by our new Abu Dhabi office which has been commissioned and undergoing fit out.
With a 30 June 2024 order book of US$36.5 million we are expecting a strong FY2025.”

 

[bk1]

Cup and handle??

 

[Dona Ferentes]

Cup and handle??

just buying strength on the back of a set of 30 June results.

 

[Dona Ferentes]

just buying strength on the back of a set of 30 June results.

that didn't last.

following the results on the 22/8, DUG has moved from nudging $3.20 to now trading in the region of, around $2.85.

CFO resigned and there's a search for a new one

@debtfree Sept comp comment

 

[BossMan.]

Seems to be a trend of a rally following news and then failing to hold itself up. It appears to find support around the $2.45 - $2.6 mark if we see it go below $2.45 I think ill definitely pick some up.

Order book is growing, data centers are hot, and they are sticking to what they know (not piling into AI chips etc.)

 

[Dona Ferentes]

as low as $2.23 ... a 10 per cent drop today on no news.

EDIT. now $2.19

I thought this was a number crunching/ processing for minerals outfit, then it became AI/ data centres.

 

[BossMan.]

Microsoft’s climate hypocrisy on AI

The tech giant has marketed AI technology to ExxonMobil and Chevron as a powerful tool for finding and developing new oil and gas reserves.

www.afr.com

Interesting - potentially this relates to the drop? Microsoft appearing to compete in the Oil and Gas identification via AI

 

[peter2]

Nah, if anything, the Microsoft news should only educate investors to another activity that may be suitable for AI. In fact DUG should promote that their business activities involve AI to help miners 3-D map their huge drill result datasets.

If a business activity isn't easily understood, then investors are going to be reluctant to hold for the long term and sell more quickly after any poor news. This resent sell-off in DUG is probably just short to medium term holders grabbing some profit after the recent rally. Yes, it looks oversold, but I'm not going to buy as I can't form a solid understanding of their business activities and how they make a profit.

Better corporate marketing is required IMHO.

 

[Dona Ferentes]

elsewhere @BossMan. said

The only reason I can think for DUGs sudden drop is a sell on open that caused a sequential execution of peoples stop losses and the news that Microsoft is exploring the use of AI for Gas & Oil exploration

.. to me it looked more like a capitulation, slow and steady selling by a holder then, when there's little perceived buying interest, then the remainder is dumped as in today's early drop.
...then others realise the seller is out, and price adjusts. That's my untutored view.

@peter2 raises an interesting point or 3. DUG started out with their inner circle of users and fans, then other investors piled on, with the AI narrative taking over. It's back to basics.

 

[bk1]

if we see it go below $2.45 I think ill definitely pick some up.

You would want to be sure that it was capitulation volume yesterday...
20% equity destruction in a very short space of time.

 

[peter2]

We haven't mentioned that the CFO suddenly resigned. I doubt this was the reason though.

The large volume traded is definitely a sign of capitulation. Now we wait to see if there's enough demand at these lower prices to rally the stock.

 

[Dona Ferentes]

A trading halt is requested pending the release of an announcement by the Company in relation to the outcome of a proposed capital raising .

now $2.18; the CFO moved on at the end of August and prior to that , DUG was trading well above $3 . ... @bossman pointed this out, elsewhere.

...guess this is a dilemma where at the peak of the SP the CFO gets sacked. Probably took a few weeks to get a good idea of the financial positioning.

I wonder what the dirt is?

@debtfree this is October comment; there'll likely be more DUG will probably drop below $2 and the CY24 comp is looking very bleak, for me.

not held

EDIT to add bossman's comment

 

[Dona Ferentes]

A trading halt is requested pending the release of an announcement by the Company in relation to the outcome of a proposed capital raising .

now $2.18;

The non-underwritten institutional placement is split into two tranches – an unconditional placement to raise the bulk of the funds, $30 million, and a conditional placement to the directors to raise an additional $200,000. DUG will also seek to raise a further $5 million via a share purchase plan.

New shares were priced at $1.90 – a 12.8 per cent discount

 

[Dona Ferentes]

back trading, mainly holding above $2

Have impressed the big players.
moving to new areas.., Persian gulf .
they reckon they're 18 months ahead of competition.

MP-FWI imaging can completely replace traditional seismic processing & imaging (P&I)
‒ It produces all the traditional P&I outputs.
‒ Since the outputs are derived in the kernel of the inversion, based on physical principles, they are accurate.
By definition a "single-parameter" FWI can only invert for one quantity, which in an imaging context is a smudge of a number of properties that cannot be teased apart after the fact.
o MP-FWI imaging is a substantial improvement over traditional P&I
‒ The approximations and assumptions inherent in traditional P&I are absent in MP-FWI imaging, resulting in improved deliverables.
‒ It uses the full wavefield, so what was noise is now signal. More signal means better results.
‒ Treating noise as signal means all of the time-consuming noise reduction steps are not necessary, leading to both significantly reduced project turnaround times and required man time.
• A 12-month project could be reduced to 3 months; and
• A team of 2 or 3 is reduced to 1 geophysicist.
‒ It does require ~10 times more compute than P&I but only 20% more than single parameter FWI

 

[Dona Ferentes]

buying strength on the back of a set of 30 June results.

and then the selling started.

@debtfree Nov comp comment
.

in a hole; stop digging