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217. Bull, Bear & Beyond – Cordel Group: executive interview
16 Plays10 days ago
In this interview, Cordel CEO John Davis outlines the company’s recent step-up in deal momentum, including wins with Network Rail, TfL, Genesee & Wyoming and a further US Class I railroad. While part of the uptick reflects the timing of deal closures after a slow H1, Cordel is also benefiting from a growing pipeline, now more than £70m of named opportunities, and deeper customer relationships in North America. The interview highlights the significance of the £3m Network Rail gauging data refresh, the opportunity in infrastructure monitoring, and new applications in underground and GPS-denied environments. From a financial perspective, recently signed recurring revenue contracts provide a stronger platform for growth through H226 and into FY28. Davis also explains how Cordel Connect V3, the latest iteration of the company’s platform, is supporting the group’s land-and-expand strategy through improved visualisation, multimodal data capture and broader customer engagement.
Cordel Group offers a patented cloud-based platform for master data management and business analytics, together with specialist hardware and software for capturing, analysing and reporting on large datasets within the transport sector, employing sophisticated AI algorithms.
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About ‘Bull, Bear & Beyond’
Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
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Transcript
Introduction to Edison TV and Cordell
00:00:07
Speaker
Hello and welcome to Edison TV. Today I'm joined by John Davis, Chief Executive Officer at Cordell. Cordell is a rail technology company that uses advanced data capture and AI to monitor rail transport corridors, improving efficiency efficiency and safety.
00:00:25
Speaker
John, many thanks for joining me today. Thank you, Dan.
Increase in Cordell's Deals: A Shift in Momentum
00:00:29
Speaker
um and Can we start by um looking at recent deal flow? You've you've you've announced a lot of deals recently, a real step step change in the amount of deals that have come in. um Can you discuss discuss those, but also what's driving that that change in momentum?
00:00:44
Speaker
Yeah, well, as you know, our industry sees some pretty long sales cycles and that's been one of the challenges for Cordell over the last handful of years. And really what we've seen in this last few months has been ah huge amount of work delivering on these big deals and bringing them to fruition.
00:01:04
Speaker
um I think that's partly about timing. We sort of thought we'd be further forward by the half year, but actually it's just taken a little bit longer. But I think what we are seeing is real positive momentum in our three core markets.
Success in Core Markets: UK, Australia, US
00:01:18
Speaker
And I think in the UK, that's partly driven by the huge amount of data we've captured there. the um ah approvals that we've ah earned in that market and the reputation that we've built because of that.
00:01:32
Speaker
In Australia, I think that's quite a lot to do with the relationships we've built there and the local presence we have in the market. And I think in the US, which probably has been the slowest and most challenging for us,
00:01:45
Speaker
partly about a bigger team that's allowing us to build deeper relationships with our existing clients and potential clients. And I think the visualization work we've done, the improvement in our product is really landing well there.
00:01:59
Speaker
So can you run through the the key highlights in terms of the deals you want? Yes, so since the the half year, I think there have been five really important steps
Major Deals and Financial Outlook
00:02:08
Speaker
for the business. The first was to to win a a POC with another Class 1 in the States, um which we're really excited about and is already leading us to get more POs out of that particular customer that we'll talk about in the the near future.
00:02:23
Speaker
The second would be ah a change in the Genesee and Wyoming, the GNW arrangement that we have to be on a recurring revenue basis. um And then very quickly after that, we want and another so bit of ah mileage with GNW in their Canada region.
00:02:40
Speaker
The one that followed that was the extension into the district line for TfL and again, sort of proof that what we did for them last year really worked for them and there's more to come there, I think, as we look into FY27.
00:02:52
Speaker
And then the final one, the biggest one was the Network Rail ah refresh of their gauging data, which um is a really significant project for us, £3 million pounds through to the end of calendar year 2027. Great. And um you had a slow first half um and ah now you've seen the pickup. Can you talk about the financial implications of that?
00:03:14
Speaker
Yes, so we were really disappointed with our first half results and ah the market certainly saw that and and we had some difficult conversations with investors back in February. But even then, I think we felt like this was just a matter of timing and that we would ah get those deals to come to to close relatively quickly.
00:03:36
Speaker
I think it's great now that we are seeing the evidence of that and able to talk to the market about that. And and I think it gets us back into a really pretty strong position for FY26 and almost more interestingly, an even better position for FY27.
00:03:52
Speaker
I think the quality of the wins is significant and the effect that that's having on long-term annual recurring revenue is also very significant. And both those things we feel really optimistic about.
00:04:04
Speaker
Yeah, certainly looks as if maybe estimates have gone from, um the the estimates risk has swung from maybe from the downside to the upside.
Strengthening Pipeline and FY27 Revenue Targets
00:04:13
Speaker
um Talk us about the pipe tell us about the pipeline. How's how's that looking at the moment?
00:04:17
Speaker
Yeah, so um the pipeline's really improved significantly, ah but particularly over the last year. So we have more than £70 million pounds of pipeline opportunity that we are looking at today with named clients. So this is people we're either in real negotiations with, late stage negotiations, or in indeed people a little bit earlier, but all named clients.
00:04:39
Speaker
and um that is more than double where we were 12 months ago so it's been a significant uplift partly driven by ah a sort of larger team in the US s but also I think in partly because of this reputational and product improvements that we've we've talked about previously.
00:04:59
Speaker
what What also we feel really optimistic about is is what we take into FY27. So I think we can look at our revenue targets for FY27 and feel like more than 50% of that feels pretty much in the bag for the year. And that gives us a really great foundation stone as we look at the next 12 18 months.
Expansion in North America
00:05:21
Speaker
um And can we turn to North America? um You've ah you've making been making good progress with ah PTC, positive train control, but also started to move into Canada through through your clients there. Can you just discuss the key highlights and in North America?
00:05:36
Speaker
Yes, so we increased the size of the team in in North America um at the very end of our last financial year, FY25. And I think we probably expected that to lead to more rapid results than we've seen. It's taken quite a while for that to bed in and to to drive some progress in the market.
00:05:56
Speaker
However, having said that, I think with our key relationships with Amtrak, with GNW and with two other Class 1 railroads in the States, we really can see the benefit of having that larger team and the opportunities that's creating across a number of our different use cases. So not only in clearances, which tends to be our our headline use case, but also in ballast, in vegetation, ah in PTC, as you were mentioning.
00:06:27
Speaker
PTC feels really interesting and exciting still, but I think it's just taking a little longer to commercialize than we had hoped. We will deliver some revenue from PTC in this financial year, but I think the significant revenue will come in FY27.
00:06:40
Speaker
um But what I was really excited to see earlier this week is the first time we've had our own AI model using third party data and giving us some really exciting results in terms of how that maps to the existing PTC assets that these class one railroads have. So I think what we are now really confident about is we have a very, very compelling proposition. It's just now getting it to the point where our customers are ready to to spend money with
Deal with Network Rail and Infrastructure Projects
00:07:09
Speaker
us.
00:07:09
Speaker
And look at the UK, you've recently announced a a big, um larger deal with Network Rail. Can you talk about, um I guess, talk about that deal, talk about the implications of it and, yeah, long term, what does that mean for for Cordell? Yeah, so Network Rail is a really interesting beast to work with. They're they're actually extremely exacting about what they' they want to do. So we always feel both with the approvals and then when you win a deal like this that you've you've really sort of proved yourself at the at the really fiery end of the market.
00:07:44
Speaker
um This is a significant deal for us. It's worth £3 million pounds guaranteed through to the end of, for calendar year 2027, with a potential to extend that for a further year at another £1.3 million. pounds And it's all about updating the gauging data in the database that we run for Network Rail to make that make sure that it's fully up to date and compliant with their standards.
00:08:08
Speaker
It actually, I think also leaves us in a great place for the infrastructure monitoring project that's coming down the line, because I think it proves to the market, to Network Rail, that we are really effective in gathering data, analyzing that data, and then producing it back to them in a format that works for them. So so that infrastructure monitoring project, that's that's essentially moving to um ongoing monitoring rather than sort of in batch, is that great? Well yes, it's ah it's a range of things. It's £1.8 billion pound project so it goes way beyond the data services that we provide and it actually will be a full replacement for the Yellow Fleet.
00:08:45
Speaker
um But within that £1.8 billion is is a requirement for about 18 data delivery services of which we believe we are in the box seat to win roughly half of those. And this ah exactly as you described, that will just be a more ah meaningful ongoing project to to keep that data up to date across a whole range of different use cases.
00:09:09
Speaker
Right. And you've recently made inroads into underground. um can you Can you discuss that?
Advancements with TfL and GPS-Denied Environments
00:09:15
Speaker
And also, you know What should we think about that incremental opportunity in terms of what that opens up for you for Gordon? Yeah, sure. So, um yes, we've been working with with TfL. We've just got an extension project with them. So initially we did the central line. Now we're looking at the district line.
00:09:31
Speaker
um We've really made a step change in what we're able to do in GPS-denied arenas. And that has been a very important unlock for us in in the the tunnel world.
00:09:45
Speaker
um So certainly within the UK, we see this as ah another significant customer opportunity, a sort of million pound a year opportunity, potentially as we move forward.
00:09:56
Speaker
I think as we look into the US where we are doing some work with Amtrak on this particular challenge, um it's hard to quantify precisely, but but it might be something akin to half what we see in the PTC opportunity, so maybe a $2 million to $5 million opportunity each year. and And then obviously, we haven't really looked beyond those two markets at this point.
00:10:17
Speaker
So we're really excited about what's possible in in tunnels. Yeah. Can we talk to turn to product innovation?
Launch of Connect V3: Enhanced Visualization
00:10:24
Speaker
You recently launched Kod LV3. um Can you discuss the key innovations in that and and what that whatard opens up for for you?
00:10:32
Speaker
Yeah, so ah Connect V3 has been a really and important step for us. and There's been a lot of work going on in our Newcastle office in Australia to to really develop the the the visualization aspects of that product. And that's something that I think has been particularly effective with our US customers. There's a real wow factor now to to that that, that I think is quite different from where we were even, let's say, six to nine months ago.
00:10:59
Speaker
um There's also ah been some real progress made there in terms of where we're pulling data from and how effectively our multimodal approach works. So that's the use of both video and LiDAR to create something which is ah doubly effective for our customers.
00:11:18
Speaker
And I think what we're also seeing is with work in the underground space, with work on the PTC space, really understanding better how to identify a whole range of trackside assets. It's just deepening the quality of what we have to offer in Cordell Connect 3. And that, um as you were rightly saying, that the kind of ah symbiotic um benefits you get of working in one area and bringing it to another is something that that's really effective for us. And one example of that actually has been work we've been doing with Amtrak in the States has now come back into the work we're doing with Network Rail as part of this like new large contract. And that's where I think we really see the economies of scale kicking in.
Future Deals and Network Expansion
00:12:02
Speaker
And so, so what should we look out for for Cordell over the next 12, 18 months? One of the key milestones we should keep an eye out for. Yeah, so obviously we've been delighted with the recent momentum on customer deal wins. I'm ah pretty confident that doesn't stop here. We've got a number of things that are very close to to coming to um ah close in the next handful of months. So certainly before the end of our financial year, I would hope to see two or three more announcements out. And then ah clearly as we look into FY27, as I said, we have a really great foundation stone in terms of
00:12:36
Speaker
ai ARR, but I also think that there are some exciting ah opportunities to extend some of our existing contracts. So some of the names that are already familiar, I think we're seeing them ah partly because of this new better visualization, we're seeing them interested in a whole range of different things that we have to offer. And that sense of land and expand has has been something we've talked about for many years and it will be great to be able to show the market that that is truly coming to pass.
00:13:05
Speaker
So it's great to see Cordell starting to benefit from those network effects with a ah wider customer base, more expansive product set starting to sort of pull through. John, many thanks for joining me today.
00:13:16
Speaker
Pleasure. Thanks ever so much.