Arcure markets cameras allowing industrial machinery to detect pedestrians. A new version of the product has recently emerged. How is the launch going?
Frank Gayraud: We rely on a proprietary artificial intelligence, embedded in a camera of our design that can be mounted on any vehicle. The latter is marketed at 5,000 euros per unit. Today, industrial machines are the most numerous to be equipped. The aim of the new generation of Blaxtair is to widen the field of application to other uses than the detection of pedestrians, such as the detection of objects. It is expected to coexist with the previous one until the end of 2023. This is one of our responses to the shortage of components: we will deliver one or the other of the versions, depending on the needs and the components that will be brought to be missed.
You precisely indicated, at the beginning of October, that supply difficulties affected your results in the first half. What is the scale of the phenomenon?
FG: It is not new. It’s been a problem since early 2021, peaking in the first half of 2022. That’s when the impact was most noticeable. We experienced a delay in our delivery plan: at the worst of the crisis, the delay was one and a half months between the order and the reception by the customer. We have gradually absorbed the latter, to return to a few weeks. The shortage remains a major issue: it still exists, and it is unpredictable. Providers [de composants] often warn us of their inability to deliver when we are supposed to. We must remain vigilant to get through this period of crisis as well as possible.
What actions have you taken to protect your turnover?
FG: We tried to circumvent the logistical problem. First, we varied our sources of supply by soliciting brokers. We have also reviewed at the margin the design of our electronic cards. They are designed to allow replacement of a specific component with a similar one. Which mainly involves reworking the software part. These various actions have enabled us to limit the slowdown in the growth of our activity.
In this situation, we have a chance: we are positioned in a buoyant market. The safety of people in the workplace is the main driver of adoption of our technology. This adoption has been accelerating since the Covid-19 pandemic, which has raised awareness among leaders. This type of consideration allows the employee to see that they are being taken care of. It is a talent retention lever. The major industrial groups have understood this and are increasingly integrating this factor into their multi-annual budget.
These groups represent a large proportion of our customers in our three main markets: France, Germany and the United States. They also seek, on the model of Amazon, to empower their machines. However, object detection is one of the first steps in this process. This is also a considerable lever for the adoption of our technology. Note that we have a growing number of requests concerning the detection of elements other than people: furniture, but also the location of other vehicles circulating in the same environment.
For the first time since your initial public offering, you announce that you are generating a positive gross operating profit. Is this likely to consolidate your medium-term trajectory?
FG: We are a growth company. As such, anything that allows reinvestment is a good signal. We will inject funds into business development, particularly internationally. We will also put a first foot in “deep learning”. We were at the end of an investment cycle and the fact of generating a positive gross operating surplus will allow us to be self-financing. We must generate 13 million euros in revenue to go into the green. We should pass this milestone at the end of 2022 [Arcure a enregistré un chiffre d’affaires de 10,4 millions d’euros l’an dernier, ndlr]. The challenge is to control our fixed costs. This is a challenge for any growth company, although it is easier to anticipate these in the industrial sector.
What are your next goals, both product-wise and financially?
FG: Our gross margin will further improve in the second half. The objective remains the balance of our gross operating surplus for the 2022 financial year. To do this, we must release approximately 1.2 million euros per month. It’s definitely doable, especially since we saw a 60+% increase in our gross margin after the launch of Blaxtair Origin. This is partly due to the fact that we have increased our prices to cope with the rising costs of raw materials and electronic components. It was rather well accepted by our customers, who expected it.
For 2023, trade discussions are well underway. Two major American groups have already signed up and we have been delivering them for several weeks. One of our areas of development is based on the fact of natively equipping certain industrial machines. The German manufacturer Liebherr, for example, offers this option to its customers. We must deepen our relations with this type of actor. The turnover achieved across the Atlantic is also progressing quite quickly. Earning a share of revenue in dollars is a good thing when the euro is weak. We have formalized our two-year objective: to double our 2021 turnover by the end of the 2024 financial year.