Beam Communications Holdings (ASX: BCC) has reported a net loss of $12.7 million for the first half of FY25 but expects a rebound in the second half, citing an improved order pipeline and cost reductions. The company has also appointed an independent valuer to determine the price of its 50% stake in ZOLEO Inc. ahead of its sale to joint venture partner Roadpost Inc.
Interim loss driven by one-off items
Beam’s interim revenue fell 18.8% year-on-year to $13.6 million, primarily due to delayed orders shifting into the second half of the financial year. The company’s net loss was largely driven by $10.5 million in one-off costs, including a $7.4 million impairment charge on discontinued R&D projects and $3.1 million in costs related to the ZOLEO arbitration process.
Despite the losses, Beam’s normalised EBITDA remained positive at $199,000, excluding arbitration costs. Managing Director Michael Capocchi expressed confidence that the worst was behind the company. “Based on current orders, recurring revenue growth, cost reductions, and the absence of one-off items, we expect a marked improvement in our financial performance this half,” he said.
ZOLEO valuation and capital return plans
Following an arbitration ruling in October 2024, Beam is required to sell its 50% stake in ZOLEO Inc. The company and Roadpost have jointly appointed Secretariat Advisors, LLC to determine the fair market value of ZOLEO shares as of 30 April 2023. The valuation report is due by 5 May 2025, and both parties are bound by its outcome.
Under the terms of the joint venture agreement, Roadpost will make an initial payment equal to 25% of Beam’s share value within 30 days of the valuation report’s release, with the remainder paid in three equal annual instalments. Beam’s board intends to prioritise a capital return to shareholders using proceeds from the ZOLEO sale.
The valuation process does not include Beam’s ZOLEO royalty income from its territories, but Roadpost has the option to purchase the royalty stream for approximately $3.5 million.
Business outlook and cost reductions
Beam’s recurring revenues increased 38.8% year-on-year to $1.7 million, driven by a 44% rise in ZOLEO royalties and a 35% increase in airtime sales. However, ZOLEO device sales to the joint venture dropped 24.5% to $3.1 million, and Beam plans to cease manufacturing ZOLEO devices by the end of FY25.
As part of its business transformation, Beam is targeting $2.5 million in annual cost savings, with additional reductions expected from a revised employment contract for Capocchi. The company is also open to divesting parts of its business or pursuing other transactions to enhance shareholder value.
Chairman and largest shareholder David Stewart acknowledged the challenges faced by investors. “Shareholders have weathered a difficult period and deserve to see a return on investment. The board is focused on unlocking the value of Beam’s assets for the benefit of all shareholders,” he said.
