Clear Blue Technologies International Inc

XTSX:CBLU

Earnings Call Transcript 2021-Q2

[Natalie Smith, Director of Marketing]

Okay. I think we'll get things started now. So once again, welcome, everyone. Thank you for joining us today. My name is Natalie Smith, and I'm the Marketing Director of Clear Blue Technologies. I will be moderating today's webinar. I'm here with Miriam Tuerk, Co-Founder and CEO of Clear Blue as well as Farrukh Anwar, the CFO for Clear Blue. They will be taking you through the financial results of our Q2 2021 today.So just a couple of notes for some housekeeping. This presentation will be recorded and will be made available on our website directly after the presentation for viewing, if you would like to review it afterwards. And if you have any questions, we would welcome your questions. [Operator Instructions]. So with that said, let's get started. Miriam, I'm going to hand it over to you.

[Miriam G. Tuerk, Co]

Okay. Thanks very much, Natalie. Good morning and good afternoon to everyone who's attending today. We appreciate your time at this end of the summer. As always, please be aware that any forward-looking statements you need to be aware of the regulatory and normal advice on forward-looking statements. In terms of the agenda today, I'm just going to go over a quick overview of Clear Blue, but more importantly, I'm going to dive a little bit into our market and the size of our market and what our addressable market is. Farrukh's going to go through our financial results today. And then at the end, we'll talk about our outlook, and we have some exciting new data and metrics for you to talk about today. We're going to be starting to provide guidance as of this quarter going forward.So just to jump into the overview of Clear Blue. So what Clear Blue does is we deliver clean, managed wireless power anywhere, anytime. So it is primarily off-grid power. It's not connected to an electricity grid. We deliver a mini complete electricity grid all in its own system. We can connect to the grid as an optional capability. We do that in a number of installs, but most of our focus is off-grid. We provide a highly reliable energy source and we provide power and energy as an ongoing service. So our business is about building the core power electronics and intelligence of a system, delivering preconfigured nanogrid streetlight and other power pack solutions and then delivering them on an ongoing basis from an ongoing service and management perspective. The benefit to our customer is that with our technology, they have the lowest total cost of ownership, not just in terms of the whole plan, but the upfront CapEx investment required with our technology is lower than with any technology in the marketplace, specifically, because of our modularity, our parallelization, our sizing and our smart off-grid management capabilities.So our clear -- our business model is to deliver a product that delivers the maximum uptime the customer is looking for, the longest system life, it's got to be easy to install and maintain, and the name of it again is Lights Out. So it's completely remotely managed and operated from -- by us. And our key technology innovation underneath the smart covers is that we provide energy forecasting and management. So we use predictive analytics, moving towards artificial intelligence to provide energy forecasting and energy management, and we have the best in industry troubleshooting and remediation tools to allow us to deliver for the customer.So trying to understand what that means is really to understand that smart off-grid in telecom or in other sectors is really a move from an analog presentation and solution to a digital one. So on the left-hand side, you can see a traditional off-grid power system or grid-connected power system, which will almost always be using a generator with gas or diesel energy required to operate the site. Even if it has solar, it still needs gas, a lot of manual relays and switches, which require on-site management, maintenance and operation, which means people have to go to the site to manage and operate the site. In our technology, we've moved everything from that analog world to the digital world. So you can see all those switches and breakers have gone away. There is no generator, no need for gas, no one for go there and everything can be digitally, remotely managed from our cloud-based application.In terms of our customers, as you may know, we have 3 verticals and market sectors that we're going after right now. In the telecom sector, we are today doing mostly wireless broadband connectivity. So cell phone, 2G, 3G, 4G and then the backhaul that would connect it, which could be either satellite or microwave. And in that market, we have had some really great traction. We focused on the African market as our first market, and I'll talk about that in a few minutes about market sizing. And within that market, the 2 largest telco operators in Africa are MTN and Orange. And through our partner network of major players in that market, which include NuRAN, IHS Towers, Parallel Wireless, Avanti and Vanu. We are today delivering power infrastructure in numerous countries for Orange and MTN.We also have a number of small projects in the Latin American marketplace where we've worked with Mayu and Telefónica. That's our wireless broadband marketplace. We are also starting to work on satellite marketplace, which we believe is going to explode. We have a partnership with Avanti. We work with Intelsat. We're working with a number of other satellite companies as well. In our streetlight vertical, which is solar off-grid street lights, our primary focus is in the North American marketplace. We have not yet tackled the global marketplace. And in that market, we are really providing mission-critical ongoing infrastructure as an ongoing Energy as a Service to cities, towns, municipalities, director -- Department of Transportation. So New York, North Dakota Department of Transportation. Customers like NASA and Boston Scientific and Federal Reserve Bank. And then also cities like Philadelphia, Hamilton and Mississauga, Boston, many different countries, provinces, states and cities across North America. We do have a number of projects in the global marketplace. We're particularly very excited about the projects we've done in Oman with our partner there, where we are powering streetlights around 3 airports in Oman.So what Clear Blue delivers is, first of all, we deliver the technology. Clear Blue's technology is the smarts, the power electronics, the controlled equipment, that is the part where we actually build it ourselves. We draft on to the industry advancements around solar and battery energy. So as the solar industry evolves and improves as the battery industry evolves and improves, we are drafting on to those traction mechanisms. And because our technology is smart as a next-generation version of technology comes out in these areas, we're easily able to capitalize it and easily able to help our customers maintain leadership in their technology currency with easy upgrades. So that's our technology from a onetime sales perspective.Ongoing service management is the key focus of the company. We manage, control, service and operate every system that we deliver in the field. So we don't just ship it to Africa or ship it to North Dakota and say, "Hey, is it working? Let us know if there's a problem." We monitor it. We're on it. We're looking at how things are performing, and we're supporting the installer and the customer on an ongoing basis to make sure that it's managed. And of course, when you put your money where your mouth is about maximum uptime and longest life and easy to install and maintain, you learn a lot about whether you're actually doing that, how well you're doing it. And so we have constant feedback to improve our product. And because of the amount of data and the history that we have in that data, that we've been doing this for, well, the company's anniversary is almost 10 years now, and we've been live with production customers since, I think, 2014. We have more history, more data and more installation points than any other company in the world today.So how do we deliver? We deliver Energy as a Service. We manage and operate the power and service for our customers on an ongoing basis. And this is really key. Because if you are a customer and you're looking at power, you might want to make a choice, am I going to go grid, am I going to go grid hybrid or am I going to go off-grid. You don't want to have to have as part of that decision analysis, well, am I going to go grid and have the power utility run it for me or go off-grid and have to run it myself. No, you should get Power as a Service, Energy as a Service in all business models. And so delivering that as part of the off-grid solar part of the business in order to have that business benefit and allow customers to go off grid without having to get into the energy and power management business is a key part of our growth strategy. It builds recurring revenue over time for the services, which is high value to our shareholders. And it's also high value to our customers because it means that it actually works and is delivered on an ongoing basis.So we've talked a lot about 3.8 billion people are unconnected in the world and that we are addressing the market that is going to get those people connected. But that's a very hard number to kind of get around and say, "Well, so what does this mean for Clear Blue?" So we've been doing a lot of work on market sizing. And I want to share with you the market sizing for our current nanogrid telecom power marketplace. We still have our satellite telecom market, which is not included in these numbers. We have our smart city street lighting market and other IoT market. So this is only the key market segment that we have high growth in today. We have other market segments, and we'll be talking about that in the future.So the global market for telecom power systems is USD 5.25 billion, and it's growing at a 3.3% CAGR. You can see that there was a nice impact from a COVID perspective, and we're now coming out of that. In 2020 alone, the world added 250,000 new telecom towers. And every time you have a new telecom tower, you need a new telecom tower power systems. When you're looking at telecom tower growth, it's driven by 3 key factors. The first is increasing demand because the population is growing. So if you've got a high-growth population that has a good impact, if your population is young and it's aging, then they're going to buy and adopt new cell phones as they are aging and growing into young adulthood and the general adoption of cell phones. You also need to look at geographical coverage. Obviously, a market where there isn't a whole geographic coverage is going to grow much better or differently than perhaps a market where you've already got full geographic coverage. And then the last point, and this is, I think, a key point to understand is that technology evolution drives tower growth. Every time you move from 2G to 3G, 3G to 4G LTE and then to 5G, each one of those gives us more bandwidth. Now we're can stream Netflix videos over our cell phone without any delays once we move to 5G.But in order to deliver that increase in bandwidth, you actually have to have more towers closer to you, which means if you start with an area with 2G towers and you go to 3G, you're going to infill more towers; and you go to 4G, you're going to infill more towers; and you go to 5G, got to do that again. So that -- what that means is that the evolution in technology increases the number of tower sites. So when you put all of that together, Africa presents the largest market opportunity. It has the highest growing population. By 2050, the working age population will have doubled and it will become the largest working age population in the world. It has a young and aging population.Over the next 5 years [Technical Difficulty] significant. And when you look at geographical expansion, Sub-Saharan Africa, where we have a very strong foothold is home to 67% of the world's population that are not currently covered by mobile broadband. So it is the new and growth market. From an evolving technology perspective, it's important to understand that for a bunch of reasons, 2G is still very high in demand for Africa. So we're not just skipping to the 5G market there where -- unlike other markets where they matured from 2G to 3G to 4G to 5G. That growth stream, which will happen faster than historical, but it's going to go from 2G to 3G to 4G. So the growth prospects are quite large.The last point is pretty key. The entire telecom power marketplace and telecom tower marketplace is moving towards renewables for power. However, if you have readily available high availability electrical grid at a low cost, you're going to adopt renewable energy a little bit less quickly and urgently than when you don't have that. So because of the cost impact and the lack of available reliable grid power, African telcos are actually going 100% solar. They're specking on going solar. And so when you take the whole market and then you look at, well, what part of it's going 100% solar and growing, Africa becomes the largest long-term growth opportunity in the world for Clear Blue.So let's break that down into -- and I don't know whether I'm going to be able to get this little line. I might have to -- so I might have to change the screen for a minute. So what does that mean? The whole global marketplace is going from $4.6 billion in 2019, up to $5.2 billion in 2026. That breaks down into North America, Europe, Asia Pacific, which includes China and India, Latin America and Middle East. We, today, are not in all of these markets. We're focused in the Middle East and African market, the Latin American market and Asia Pacific, not including China and India. We expect in the future that we will get into Europe and North America.We expect in the future that we'll likely get into India. So we will expand our markets. But in terms of where we are today and we're moving strong, our total addressable market of the total is this bottom line here. So today, Clear Blue has an addressable market of $1 billion in 2021, growing to $1.3 billion in 2026. So when you look at this and you say, okay, there's going to be replacements and upgrades and growth in that. Let's look at the new telecom towers, where they're starting off from scratch, and they have to have a completely new telecom power system installed, while taking the proportional of 250,000, you end up with 58,000 towers in 2020, 60,000 towers in 2021 that are new and being installed in the market that we're going after.If you take that entire market and you say, okay, on average, Clear Blue sells their system, let's say, $10,000 per site, some of them are smaller, some of them are higher. If we got 100% of the market, our market size would be $607 million, we'd be getting $607 million of revenue. Now of course, we're not getting that number. I don't want to mislead you. That's our addressable market for specific towers. So where are we today? Well, we started off at 0.1% when we were in pilot mode. We grew to 0.4% last year with our first deployment year-to-date in only 2 quarters, so we've only done the first 2 quarters of this year. And of course, the first 2 quarters are traditionally our smallest quarters. We've got 0.7% market share. And so the question is, how is our growth percentage market share going to grow here as it grows, but this is the potential of the low-hanging fruit of what's available to us and where we're in that market, and we've got the partnerships to go after that today.So I hope that provides you with a little bit better understanding of the type of market and the size of market and the opportunity that we're going about after and why Africa, Middle East now in Latin America, where we're starting to ramp up production operations, we've hired salespeople there and Asia Pacific which we're also focusing on a little bit slower, but it's our third market that we're going after is a great market for us.So now I'm going to turn it over to Farrukh. Farrukh, are you ready to talk about Q2 results?

[Farrukh Anwar, Chief Financial Officer]

Yes, for sure. Thank you, Miriam. Hello, everyone. Good morning. So I am going to start off with revenues.So our Q2 revenue -- quarterly revenues were $810,406, a 138% increase over Q2 of 2020, a combination of higher Illumience sales in North America and higher telecom sales attributed to contracts with telecom infrastructure operators in Africa. So for the trailing 4 quarters, the revenue was a record $7,714,708 for the company in 2021. And it is a 112% increase over the previous trailing 4 quarter period, a significant growth resulting from higher sales in the African market, fueled by the growth in the telecom sector. Next, slide please? Okay.So for the trailing 4 quarter in 2020 -- 2021, the lighting vertical posted a 35% decline year-over-year as a result of a launch of our Energy as a Service business wherein we see significant growth in our recurring revenue, offset somewhat by declining onetime revenue. For the trailing 4 quarter of 2021, our telecom vertical posted a 503% increase compared to 2020. As you are aware, 2020 was impacted by COVID, which caused the office closure last year, but also a delay in large contracts, starting in Q4 of 2020 and continuing in the current -- in this year and the recent quarter, 3 of our key accounts began their large rollout programs.Geographically, all the markets of focus for Clear Blue posted an increase with Canada, U.S. and Middle East Africa markets growing 73%, 15% and 249%, respectively, driven by both telecom and lighting projects.Miriam, do you want to talk about bookings?

[Miriam G. Tuerk, Co]

Sure. So we've been working over the last few years to increase the amount of information and guidance we can provide on a go-forward basis. And so we started to provide bookings information a few quarters ago. Our bookings consists of 2 things. The first is, as the more and more of our revenue moves towards a recurring revenue model, as we contract customers, all of that revenue doesn't drop into the immediate quarter from a onetime sales perspective. So we felt it was important to start to report what the backlog is of our ongoing Illumience service revenue.Secondly, in terms of purchase orders where we have customers that have signed contracts, we've got bookings, we're getting -- those orders are moving and how is that trending, future orders that we see rolling out, that is a good thing to start to represent. And as these contracts specifically in telecom are multiphased, you can start to have some visibility. So for the quarter, we reported bookings of $3.253 million, which is up 39% from Q1 of 2021. And as you can see, $2 million of this will be over the next 4 quarters. And then beyond that, there's still $1.1 million of backlog that will happen after that.

[Farrukh Anwar, Chief Financial Officer]

Thank you, Miriam. So for recurring revenue, as Miriam said, it's increasing because of our Energy as a Service. So Clear Blue's ongoing management service is a key differentiator and value creator. The company has been building the service and launched its premium energy as a service at the end of Q2 of 2019. As the graph indicates, notwithstanding the downswing due to COVID in Q2 of 2020, our recurring revenue is growing significantly because every system is sold with ongoing Illumience monitoring and management. Clear Blue has the most extensive data collection of production systems in the world with over 6.4 million operating days of site production data, allowing the company to build even smarter and higher-performing products and services.Recently, we passed a key milestone of 10 billion transaction processed between our production power sites and our cloud management platform. This data and the knowledge and expertise behind it is what gives Clear Blue its market leadership position. Next slide, please?So gross margin for the quarter remained high at 38%, which is a slight decrease from the gross margin of 42% in the same period in 2020. For the trailing 4 quarter, gross margin increased to 27% of sales, up from gross margin of 24% in 2020. Including the current trailing 4 quarter was strategic onetime deal with a major customer to support its first rollout with Clear Blue in Africa. Clear Blue provided certain towers and fences along with its core product in the current trailing 4 quarter. Excluding this onetime deal, the gross margin percentage for the company was actually 31%. This achievement is a result of significant efforts made by the company in research and development to prepare for it to scale its manufacturing supply chain, all of which will support our plans to increase our gross margins. Next?For the current quarter, operating expenses increased by $628,111 when compared to the same quarter of 2020. However, including the comparative numbers is a higher government COVID-19 funding support and a bad debt recovery. Excluding the effect of these credits of a net $395,000, operating expenses increased by 25%. Required -- this increase was required to support the increased business activity and revenue growth. Similarly, operating expenses increased by $820,328 for the trailing 4 quarter ended June 30, 2021, compared to the same period in 2020. Excluding the effects of a onetime credit, operating expenses increased by 14%. So next slide.Okay. For Q2 2021, adjusted EBITDA was a negative $833,495 versus a negative $918,951 for the comparative period in 2020. We chose to keep the government subsidies out of adjusted EBITDA calculation because it's a unique onetime event. Clear Blue non-IFRS adjusted EBITDA remained relatively consistent for trailing 4 quarter Q2 2021 at $3,018,375 as compared to respective -- comparative of $3,038,214. Miriam?

[Miriam G. Tuerk, Co]

So in summary, Q2 was a strong quarter with good revenue growth year-over-year as well as strong margins. We're really happy that we were able to ship orders to support 3 of our large rollout telecom customers in Africa. And we have more shipments scheduled for those customers later this year. We have a strong growth in recurring revenues, which is, as you know, a key focus. We're focusing and continuing to work on improving our margins and keeping them strong and also on managing operating expenses. But I do want to comment that we have a very large opportunity ahead of us, bigger than we had previously thought. And so we're investing in sales. We're investing in scaling and we're investing in R&D investments to capitalize on that growth opportunity. Lastly, within the quarter, we announced a strategic contract with Parallel Wireless, and that first order for that project is going to ship in Q3 of this year.So now I'm going to spend a few minutes talking about our outlook and guidance. So we're really happy to be able to announce a guidance going forward. And the company has always said that it's important to look at our revenue from a trailing 4 quarter perspective. Each individual quarter will go up and go down. And today, especially in the current market, a delay in shipping a container not going somewhere, a sudden shortage of parts and things can bounce very quickly from one quarter to the next. So it's best to really look at how are you doing over a 4-quarter basis. So when looking at our forward-looking guidance, of course, you would like me to say, tomorrow we're going to do $5.22 worth of revenue, exactly 100% guaranteed, and I would love to be able to give that to you.But there is uncertainty in what's going forward. And so we're moving towards best practices from a market leadership perspective on guidance. What does that mean? Well, first of all, we've taken the last 3 years of our data, looked at our plans, looked at our budgets, and I will comment that, that does include a fair chunk of COVID time, and then looked at our actual results. So we now have the metrics to know how do we do against plan. And as a result of that, plus what we can see in the pipeline, we are pleased to announce a forward 4 quarter estimate of $8 million. So over the next 4 quarters from Q3 2021 to Q2 of 2022, our guidance to the market is that we will do $8 million in revenue. Now of course, you might say, well, that $8 million isn't very big compared to what we have just reported in Q2. And I would comment a couple of things. The first is, you, of course, know that this team is going for the moon and expects and hopes and is working very hard to [Technical Difficulty] key things. If you look at the chart on the right, the key message that we're giving you is that the sudden increase that went from Q4 last year to Q1 of this year in terms of our trailing 4 quarter performance, that was not a onetime bump. We are going to continue to grow. We expect in our go-forward guidance that those numbers are going to go up. So we're starting with the base, and we want to make sure we deliver to guidance as a bare minimum to the marketplace to give you comfort and reliability and consistency in where we're going.And our business is starting to mature to the point now where we have some more predictability and more visibility to what's going on. Our sales funnel has grown significantly. In the last 18 to 24 months, our sales funnel has gone from somewhere in the $200 million -- in terms of a sales funnel, we currently have a sales funnel that exceeds $450 million. That's a lot of projects and a lot of opportunities, and we work very hard to net that down in a quality way. But the general sales funnel has grown quite significantly. It's quite strong. And from that perspective, we're very pleased to provide guidance. As we provide market sizing, as we provide guidance, as we get more consistent as we have more historical data, it's going to give investors and institutionals and analysts better comfort and we'll be working very hard to get analyst coverage to get institutional investment support and to have our shareholders start to hopefully look at us eventually with -- as a blue-chip stock with a wonderful dividend, still a ways away, but that's where we're going.So subsequent to the quarter, we did have a number of announcements. It's been a quiet summer for the market's perspective, a little bit of a tough market, but we've been very busy. We were thrilled to announce our partnership with Avanti Communications. They are a leading satellite service operator across Africa, and we are deploying a number of systems and projects with them, along with other partners and with other customers. So we're all parts of a consortium, but we've integrated some of our technology into their data center and are working together in the marketplace.We were thrilled to announce on July 29, the award of the Orange DRC contract for our friends at NuRAN Wireless, who, as you know, are doing a very aggressive rollout in DRC. That 1,333 units has an estimated contract value of CAD 8 million to CAD 10 million over the next 3 years. And at a minimum, we see ourselves shipping at least 0.75 million this year, could be higher than that.And then lastly, we go to the marketplace and we talk about the fact that we delivered the lowest CapEx that we -- that smart power delivers the benefit in terms of TCO and value of services, et cetera, et cetera, to the telco operators. I've talked to you before about the fact that Facebook is leading the telecom infra project. They're doing a lot of industry leadership activities in order to help move the market forward and connect the 3.8 billion that are unconnected. And so one of the things that they're doing with Mayu Telecommunications and ourselves is they're looking at that value proposition and that model from a telco perspective, to do an independent study to validate and quantify the benefits of smart power.So we were thrilled to announce that project. It's already underway, and we expect that we'll be able to announce the results of that market -- that independent study sometime in early 2022 help our telecom customers to understand the value of our technology and the value of the features and functionality that the predictive analytics, the data and the smart power management deliver to the marketplace. So we think it's a pretty fantastic thing.So in summary, we think we're positioned for significant growth. We're on the hockey stick. The stick side of the hockey stick moved off of the blade. We have multiple multiyear telecom contracts rolling out and underway. We have more in the funnel that we're working on. And our sales funnel and backlog is quite strong and building. We added 3 telecom salespeople to our sales team focusing on telecom in Africa and in South America in Q1 and Q2 of this year, and they're working very, very strong to build our funnel and grow it. Our technology is proving out its leadership position in the marketplace.We've got a number of systems in the field up and running. Our service model is a huge asset and a very big differentiator versus others in the marketplace. And I think when you take all of that and put it together, at the end of the day, it's really about the team, the people we have that work from day to day. We have a team that we've expanded in Kenya. And our R&D team, our operations team, our service team, our sales team, our finance and administration team are all the ones that are making it happen. And I am very pleased when I give these earnings presentations to talk about the results of what they have all delivered for the benefit of our customers and our shareholders.So at this point, I would like to open it up to questions. Natalie, I hear you were going to have some unforeseen fire alarms. Are you able -- in your building. Are you able to talk about questions? Or do we need to...

[Natalie Smith, Director of Marketing]

Yes. No, everything's good here.

[Miriam G. Tuerk, Co]

Okay.

[Natalie Smith, Director of Marketing]

Okay. And so just a couple of questions so far. So the first is whether or not Clear Blue has enough cash? Or will it be looking to do a public offering?

[Miriam G. Tuerk, Co]

Farrukh, do you want to take that one?

[Farrukh Anwar, Chief Financial Officer]

Sure. I think we're doing great in cash. We had a 68% improvement in cash from operations in the current quarter. Furthermore, we have made a strategic decision to invest in an inventory of approximately $2.5 million, which will result in a sizable cash inflow over the next couple of quarters. And the last thing that I want to say is that we have a great debt facility with BDC. And subsequent to the quarter end, we received a second tranche of around $1 million on that facility, leaving a further $2 million room to draw on, if required. So I think we're doing pretty good on cash.

[Natalie Smith, Director of Marketing]

Okay. Great. And for Miriam, do you have any plans to retire? Or is there a succession plan in place?

[Miriam G. Tuerk, Co]

Wow! Did somebody -- that's the first time I've had that question. I guess I must be looking getting older or looking old. No, I don't have any plans to retire. In my mind, I think 3 years is kind of what I have or more, but at least 3 more years is what I have as CEO and Co-Founder. I am a big believer of relay races and passing the baton for people in the community who know me. They will have seen in my past companies that I am very positive about passing the baton. And I think after the next 3 years, if it happens earlier, it might happen earlier depending upon the Board, the shareholders and the customers think. But after 3 years, it's probably time for me to pass the baton on to someone else. At that point in time, I hope that I'm maybe Executive Chairman or I'm a consultant as strategic business development. Want to -- would love to just be able to pick and choose the things that I love doing the most, which are going out and selling to customers and working with investors. And I hope to be on that to have Board activity and a role in the company for a very long time frame to go.In terms of succession plans, we've been building a pretty strong management team. Farrukh has come on board and completely changed my life and has really run finance in a really great way. We have strong leadership in operations. I have 2 Co-Founders, John and Mark. John has a new person, Kurt Unger, in Africa, who is one of the strongest power people that we could find in the marketplace.So we've got some good succession planning there. Mark's team is growing quite strongly. We have a number of people there that have been here for a while and have been growing into the position. So we are thinking about making sure that our team is growing and that we have a director level growth and a management team growth. So I look at how the company is scaling and you've heard me talk about scaling. It's all about the ability to make decisions and make things happens without me needing to be involved. So we are working on succession planning so that the company is not dependent upon me or anyone else. But those are just options in place and giving us capacity to expand. I don't have any plans to go anywhere in the short term. That's for sure.

[Natalie Smith, Director of Marketing]

Okay. Thank you. So the next comment is, congratulations on the NuRAN DRC contract. Is this contract the biggest contract Clear Blue has ever won?

[Miriam G. Tuerk, Co]

It has -- so yes, I think in terms of the specific numbers identified in the contract as the target rollout, it is the biggest contract. Our IHS contract is quite significant and has the potential to expand significantly there. IHS Towers is the largest tower operator in Africa. I don't know how many towers they have. I should get that number, but they are the largest tower operator in Africa by tens and tens and tens and tens of thousands of towers. And so that is a very large contract as well. Parallel Wireless is a big mover in the marketplace. So we see future growth with them as well. And we do also have a couple of others that are in the pipeline as well. So right now, I'm thrilled that NuRAN is the biggest contract, but I am looking forward to having many of the customers giving them a run for their money.

[Natalie Smith, Director of Marketing]

And do you forecast more countries being added with NuRAN?

[Miriam G. Tuerk, Co]

There are many countries active in the sales funnel. Certainly, lots of proposals and opportunities in the sales funnel. So I know that Francis and the team at NuRAN have plans to expand across Africa and other markets, and we are supporting that effort. So yes, that is certainly in our sales funnel and our progress.

[Natalie Smith, Director of Marketing]

Okay. Do you forecast the telecom industry to be the largest business opportunity in the upcoming future for Clear Blue?

[Miriam G. Tuerk, Co]

In terms of where we are today and what we've got active getting out of the gate, we -- that is the biggest market that we're working on today. We see the satellite telecom market as one that's coming online. A few calls earlier, we used to talk about the 3 phases in telecom that we saw. The first was rural connectivity for wireless broadband coverage, which is the big market that we're in now, and got the big contracts and the big rollouts. And now the question is to monetize the fact that we're in and we've established ourselves. The next market we see is the satellite marketplace, and we're working hard on building a strong presence in that marketplace with some great technology and products. And then the last is 5G, which is still a little ways off, but we will be going after that market as well.

[Natalie Smith, Director of Marketing]

Okay. Thank you. Which industry is more profitable for Clear Blue, streetlights or telecom?

[Miriam G. Tuerk, Co]

See, I think they're both about the same. I think the one thing I would say is, we have 2 levels of Energy as a Service of our recurring service offering. And because the North American marketplace is a more mature market, we've been in there longer, we've been doing more projects, the premium Energy as a Service product, which has a higher portion of recurring ongoing revenue is bigger in the lighting market than -- after lighting market than it is in telecom. Telecom is a few quarters -- a number of -- probably 2 years behind, and we are working to build out the Energy as a Service offering more in Africa and the emerging markets. So it's a little bit behind. But in terms of general profitability, they are the same.I do want to comment that there are -- you've all seen it when people are talking about the automotive industry and other industries, there are significant pressures in the marketplace on cost. There have been cost drivers that have gone up across the board in everything that we procure and source. I think, similar to lumber, which went up like crazy, and now it's dropped like crazy, the market doesn't believe that, that may be a long-term sense. But you will have seen that we've increased our inventory, we are now buying already today capacity and parts and components out to even Q3 and Q4 2022. And so there is a lot of work to be done there. There's also a significant increase in shipping costs. So those -- the shipping cost issue where containers are like 3 and 4x the cost than they previously were, could impact our telecom in the short term compared to the street lighting business in North America, but in the medium, long term, and as it is today, the 2 markets are about the same.

[Natalie Smith, Director of Marketing]

Okay. Thank you. Just following on that one, are you having any challenges on component supply?

[Miriam G. Tuerk, Co]

Yes. Lots and lots and lots of challenges, lots of scrambling, daily calls, active calls, buying ahead. I mean we are -- and I'm quite literally -- I'm getting -- our procurement insurer will call me and say, "I have a lead on 1,000 components for Q3 of 2022, should I go for it?" And I'm like, "Yes, buy them now." So there is a lot of uncertainty and unknown. The biggest challenge is you used to be able to look at the parts and say, well, I know this part has got a shortage and this part doesn't, and manage to that because there's always part shortages. The issues we have now is you could be running with a part shortage in one -- and say the -- I've never had a part shortage ever in this and then all of a sudden, there's just so much uncertainty. What's the example I'd love to give, basic -- oh, I know, I'll give you an example.So in the U.S. next year, they are turning off all of the 3G and going to 4G. So we have to upgrade our systems from 3G to 4G in the field. There's a global shortage of 4G modems that are certified in the U.S. So we've got -- those networks are getting turned off in February, and we're going to get the modems in January. So there are lots of pressures and challenges in this area. What I will say is the team's been all over this since the beginning of the year. And as it stands right now, we don't see it impacting our ability to deliver on our revenue and are constantly on top of making sure that it's not going to in the next few quarters. So the risk is there, but as it stands this way -- at this point, I believe we've managed the risk.

[Natalie Smith, Director of Marketing]

Okay. So there's a similar question that you may have addressed it already. Are there any challenges on shipping to African countries? And if so, what mitigation plans we've got in place?

[Miriam G. Tuerk, Co]

So we -- it's amazing, I'm probably the only person who was actually looking at the boat stuck in the Suez Canal and trying to figure out do I have a container stuck on that boat. And so I was watching it from a business perspective, not just a news perspective, low water in the St. Lawrence caused a delay in shipping and caused an increase in the shipping cost and being able to get it. There was a fire in the Hong Kong port of lithium batteries. And so now getting lithium batteries out of China is a big delayed issue. We have made the decision that we need to establish warehousing in Africa. So we are in the process of establishing warehousing in Africa to get the equipment there ahead of time. And that's part of what you're seeing in the inventory management. So we're -- whereas before, we could just ship to Africa as the orders came in, we could guarantee the time lines, we could predict the time lines. And usually, the projects had the capacity because it takes you 4, 5, 6 months to get the tower built, the land organized, the construction organized, so the customer generally doesn't need the equipment any faster.But now we've seen we ship a container that's supposed to take a month and all of a sudden takes 5 months. So we are establishing warehousing in Africa to support inventory that has drawn an impact on cash. But as Farrukh said earlier, it then gives you the inventory that you've already paid for, which frees up cash when those sales happen.What we are doing is we are working very closely with our partners on forecasts and planning. So beyond the commitments that we have contractually and guaranteed, we are working with our customers on their rollout schedules, on their rollout plans and how those are adjusting and moving on their side so that we can be responsive to match it, which gives us good visibility and strengthens the partnership.

[Natalie Smith, Director of Marketing]

Okay. Thank you. Just a couple of financial questions here. So how do we have plans to fix the negative EBITDA, pricing or cost and how much cash is on the balance sheet?

[Miriam G. Tuerk, Co]

So I'll let Farrukh answer the second question. In terms of the first question, we have been increasing our margins to the customers because of the value of our technology. And it's important to understand that if a customer in Africa, and we did this with IHS, were to go out and buy an off-grid power solution from someone else. If they needed 10 solar and 5 batteries, let's say, as an example for the partner system, with us, they might only need 7 solar and 3 batteries. And so because our smart off-grid gives you the ability to have a smaller power system.Obviously, the investment in the R&D is what gives you that benefit in the result. And so you've seen us invest in R&D which bodes well for the future, creates a huge valuable asset for the company, and will bring the margins in an increased way and the competitive advantage for Clear Blue in the future. So on the top line, we are doing that. On the cost side, supply chain, procurement, engineering of cost out of the product, automation of things is an ongoing basis. If you look at the growth of our gross margin over the last few years, it has grown materially and we continue to -- and part of that has been a reduction from a cost perspective.When it comes to negative EBITDA, we need to balance profitability today versus capitalizing on the opportunity in the future. If you saw the market sizing and the potential, we have the potential to grow this company in the markets it's in to $50 million revenue, $100 million in revenue and beyond. And I've said before, I believe that this has the potential to be a $1 billion company from a revenue perspective. And in order to do that, you need to invest in R&D. And so it's a balance that we're playing.If we wanted to be cash flow positive and profitable today on the business that we're selling today, we could do that now. We are now at a point in the company where it's not costing us more to build, sell and support the current sales than the revenue and the profitability we get from it. The negative EBITDA is coming from investment in scaling in future and building our presence in the marketplace. So we are working on improving it. But as it stands right now, we think that the opportunity in the marketplace is significant and that needs to be balanced when looking at EBITDA. Do you want to talk about cash again, Farrukh?

[Farrukh Anwar, Chief Financial Officer]

Yes, for sure. So to answer the question, we have, at the end of June, around $700,000 worth of cash. That does not take into account the $1 million that we got subsequent to quarter end. So we got another $1 million. And then so we also have inventory, as I said, of $2.5 million. That's going to be converted into cash. So as I said, we are pretty good on cash, $700,000 plus the $1 million that we got subsequent to the year end -- quarter end.

[Miriam G. Tuerk, Co]

Thank you. Natalie, any other questions?

[Natalie Smith, Director of Marketing]

Yes, a few more. What is your breakeven revenue run rate?

[Miriam G. Tuerk, Co]

I don't know the answer to that question. Farrukh, off the top of your head or perhaps what we could do is you could just let us know who asked us that question and we can calculate it and then get back to them after the call. I think that might be the best way to address that.

[Natalie Smith, Director of Marketing]

Okay. That sounds good. We'll move on. Are there any key objectives that Clear Blue is looking for out of the Facebook Mayu study?

[Miriam G. Tuerk, Co]

So we have an ability to show the customer how much money they can save on the power side and what the cost from a CapEx and OpEx perspective is. What the Facebook study is trying to do is to look at what is the impact to subscriber cell phone revenue. So we can quantify very well what the cost implications are to the telco. But what we can't do is tell them, well, what's the revenue implications to the telco? Are you going to lose revenue or get higher revenue through the use of this type of capability or option. And only a telco can do that analysis. So Facebook working with telcos is trying to calculate that number, which is a number that Clear Blue could never do. Now I do want to say, every market is different, every business is different. Mayu Telecom is a great partner. I know Facebook is talking to other telco operators. It will be a data point, but does that mean it's applicable to TELUS in Canada or to Telefonica in Spain or to MTN Africa, it will be a very important data point for customers to use. And most important, I would think, would be the analysis and the perspectives and the points and the arguments to give other telcos, the ammunition and the formula calculation to figure that out for themselves.

[Natalie Smith, Director of Marketing]

Okay. Great. Can you mention any business scale opportunities from the recent partnership with Parallel Wireless?

[Miriam G. Tuerk, Co]

So there's a lot of opportunities. The first is that -- and I would say this is the same for our other telco hardware vendors as well as that when we work together on a system level, we're able to help them make their technology better. And they're -- and working together, we're able to work on improving the service level to the customer. So we might be troubleshooting telecom hardware, data, if there's a problem with the system. The ability to smartly see the power aspect of the telecommunications equipment gives very important information back to the hardware vendors. I was on a call recently where we were talking about, well, when this and this and this happens, we can see a sudden power drop in how it's using and that data was material to the hardware manufacturer to understanding what was going on with their software-driven systems. So the integration of partnership, number one, provides a one-stop shopping and an integrated solution for the customer. So the customer isn't trying to integrate it together. They've got the backhaul, the telecom, the tower, the power, all of that being integrated together from a consortium perspective and delivered as a total solution. Particularly important because I think our main competitors, both for Parallel, for us, for NuRAN and others, is Huawei who kind of does it all. And we do it better because each one of us is expert in our own area of expertise, but then we work together. So we share operational customer information from a post sales, from an integration and operation, getting things working, we cross-train. We do integrated training and all those kinds of things. And from a business development, marketing, sales perspective, we work together very closely, give each other feedback, talk about opportunities in the marketplace. Just a whole lot of synergies there.

[Natalie Smith, Director of Marketing]

Okay. Just a couple more left here. So we have one comment that says don't leave yet, Miriam. Any plans for mergers and acquisitions on the side for Clear Blue? And do you have any competition in that space?

[Miriam G. Tuerk, Co]

So we've done a few attempts to put in some offers on some deals. And I think as everybody knows, the key to acquisitions is you're going to date a lot before you actually get married. And looking at them, I kind of would have liked to have one under our belt this year, and I'm not sure I'm going to make that personal objective. So in my own personal objectives, I'm kind of kicking my butt saying, "I got to get stronger on that." We went public to be able to have access to capital, to have access to investors and have liquidity in our shares, which is a huge asset from an acquisition perspective. And I do think we have opportunities to grow from an acquisition perspective in a number of different ways. So my hope is that we are going to do a lot more of that as we go forward. I think the real reason that hasn't happened is because we're not a company that's just acquiring companies, that's a private equity firm. We have our core technology, our core base, our core markets and then acquisitions are additive, and making sure that we got that train out of the station was the first priority. And until we start to build the management team, scale, have people behind me that could work on other things, that just wasn't -- there wasn't the bandwidth to do it. So my hope is that we will deliver more on that going forward.

[Natalie Smith, Director of Marketing]

Okay. And one more final question. Are there -- is there any analyst coverage for the stock yet?

[Miriam G. Tuerk, Co]

Torrent Capital did do a note on us, I think, in December. I don't know of any of the large analysts who are doing coverage on us yet. I think the main reason is we're still small. Most analysts are looking at companies that are much, much bigger. But it is something that we're working on. And a big part of what we did today in terms of market sizing, market research and guidance was to lay the foundation for that. So we talk about at the board level, getting ourselves moved up to a proper TSX listing. And all of those building blocks are there and are being put in place and moving forward on a go-forward basis. So it is an area that we hope to change in the future.

[Natalie Smith, Director of Marketing]

Just a quick follow-up to that. I think you've sort of answered it, but what's your plan to get the company on the radar for institutional investors.

[Miriam G. Tuerk, Co]

I -- actually, that's a great question. So after what is it, almost 1.5 years of being locked up and not able to travel, the day -- 2 days after Labor Day, I start traveling, and I don't think I'm in Toronto more than a week until December. So a fair amount of investor road show. I will be attending the Muskoka Capital event. I'm going to institutional investor energy conference in Berlin. We are going to be our tentatively planning. Everything could change because of COVID, but I do want to announce we are going to have an investor day, September 29 from 4:00 to 6:00 p.m. It will be at an outdoor venue, a bar, cocktail patio area because it's better from a COVID perspective. I'm very pleased to announce that Francis Létourneau, the CEO of NuRAN will be joining us at that event. We are hopefully going to have another customer join us at that event. And also -- so we'll be giving you a bit of an update on Clear Blue. We'll have some of our customers talking to you. But I thought it would also be interesting for the market to have just a general update on the micro cap markets and how things are going from a general market perspective. So Roger Dent of Quinsam Capital has agreed to also give an introductory presentation on his thoughts on the market in general. So COVID could change it, but we are hoping to have an event in downtown Toronto right in the core and are going to be working to see if we can get a bunch of institutional investors to attend that as well. So that's a big part of my focus from an IR road show in Europe and in North America, September, October, November to work on increasing that.

[Natalie Smith, Director of Marketing]

Okay. And I think we're [ getting a -- just a few more struggling ] in here. So the Investors Day will be September 29, it's an in-person only event, so we'll be sending out a bit more information on that. So that will be in downtown Toronto. And we'll try and get some information on that next week. And let's see if we've got one more. No, I think just a thank you. So it looks like that's all the questions we've got for now. So thank you, everyone, for attending today. Again, this is recorded. So we will put this up on the website as soon as it is available. And all of our documentation is also on the website now as well. Miriam, did you want to say anything else?

[Miriam G. Tuerk, Co]

So I just wanted to say, the management team and our customers and our employees, a thank you profusely for the investor support that we have. We serve at the pleasure of the investors. We think of you all the time in everything that we do. And we really, really appreciate your support.

[Natalie Smith, Director of Marketing]

Okay. With that, we're going to close it. Thank you, everyone, and we look forward to seeing you on the Q3 earnings call.