All right, let's get started here. Thanks, everyone, for joining us for day two of Sidoti's September virtual conference and for Metatek Group's presentation from the company. We have Mark Davies, the company's CEO, and Nick Morgan, the company's CFO. They're going to run through a presentation. Then we'll get to some Q&A at the end. If you do have a question, enter it through Zoom and we'll get through as many of those as we can at the end. With that, I'll hand it over to Nick and Mark.
Thanks, Greg. Morning, afternoon, everyone. My name is Mark Davies, CEO of Metatek and founder. Started the business back in 2012. By way of background, I'm a geologist, geophysicist, volcanologist, hazard specialist. Spent 30 years in industry and academia. I'd identified clever tech in the academic world, bring across the commercial world. Not a financial background, so I rely on good guidance from Nick.
Hi, good afternoon. Good morning, all. Nick Morgan, Group CFO, chartered accountant by training. 15 years in investment banking, doing M&A and ECM work, mainly to the oil and gas industry and natural resources. Six years as the CFO of a London-listed oil company, and then joined Mark at Metatek just over four and a half years ago.
Okay, so the overriding question is: what does Metatek do? We're all about bringing underground wealth into view. And what I mean by wealth, it can be hydrocarbons, it can be critical minerals, bulk minerals, new-age stuff like hydrogen, helium, carbon sequestration, you name it. Anything that has intrinsic wealth within the subsurface, we're all about identifying that for our clients. In that respect, our clients tend to be nation-state entities. We've got over 90% of our clients are in the sovereign kind of field. So we have mandates to drive forward identification of wealth within their subsurface, and that's good for us given that the moment geopolitics is driving kind of security and security energy playbooks. For us, that's kind of our focus for our business.
In terms of the business itself, we are a vertically integrated entity, so that means we acquire data, we process data, and we interpret data. We build products then and deliver it to our clients. We own all our own aircraft and we own all of our own instrumentation. The aircraft themselves are loaded up with lots of different types of instrumentation, but at the center of it is something called the gravity gradiometer sensor. More about that in just a second. Essentially what we do is we capture and interpret high-resolution subsurface data to empower governments to make decisions on natural resources. On the right-hand side of the slide at the moment, essentially what you see is a snapshot of the business in 2025. We did just under $24 million of revenue, which represented 99% growth from the year prior.
That translated to around about 39% EBITDA, with 60% cash flow. It is important to note that that snapshot there is not your typical margin of a services company. That is the margins of a company that has bespoke technology that we are able to deploy that is exclusive to Metatek. When people ask me, "What is it?" when I talk about subsurface, the easiest way to describe it is Google Maps of the subsurface. We look at surface all the way down to about 15 km depth, identifying the wealth at each interval and reporting it back to our clients. For us, when we fly the aircraft, one scan does everything. So it is not just for energy, it can also be for infrastructure planning, it can be agriculture, it can be hydrology. You name it. It is not individual silos, it is truly multidisciplinary.
Each time we fly over an area and add more and more data and layer up, that gives us a cleaner picture. As I said earlier on, we load the aircraft up with lots of instrumentation, and at the center of it is what we call a Full Tensor Gravity Gradiometer. It is a bit of a mouthful, FTG for short. What that does is it measures minute changes in density within the subsurface in three dimensions. That is kind of the glue that holds everything together. It allows us to bring in all the other data sets, forge them all together, and give an accurate picture of what we see in the subsurface. We are all about faster acquisition, processing, interpretation, leading to prospects discovery, and ultimately revenue generation for our clients.
That multidisciplinary kind of nature of the work that we undertake is reflected in the slide on your screen at the moment. Let us take the two areas we currently operate in. Azerbaijan, we currently fly in for a big program for the national energy company there. Last year, actually, we did a test program that was just for hydrocarbons. When they saw the quality of the data and realized it was of use for other disciplines, we are there this year on a much bigger program, doing not just hydrocarbons, but also critical minerals, CO2, and also hydrogen. That is echoed in Japan. We have got one of our big systems over in Japan. Two years ago, we went there just for a very small geothermal survey.
They looked at the data, they liked the data, and we are there for probably their biggest energy company, flying a huge area, and that is predominantly for hydrocarbons, critical minerals, geothermal, and hydrogen as well. That is the multidisciplinary nature. And one of the things that we are most proud of as a company is that when we tend to do a project, be it a test program or just a normal proprietary survey, we always get invited back, and we have 100% repeat client base from our customers. The question is what is so special about this instrument, this FTG instrument? Well, in our world, the exploration world, the old adage is you can have two of quality, value, and speed. And the gold standard in exploration is seismic, which I am sure everyone has heard of.
It gives you a phenomenally good image of the subsurface, but it is slow to acquire, and it is quite expensive. And you can contrast that with older airborne technologies. And those old airborne technologies, they are cheap to acquire, really quick to acquire, but actually they do not give you the image of the subsurface, which means when it comes to our clients, they would be missing areas where they might have wealth within the subsurface. We feel with our airborne instrument, the eFTG, that we get all three of quality, value, and speed. And on the right-hand side, what you see is a comparison of the gold standard of seismic versus an airborne eFTG data set. And you are comparing and contrasting the two, and what you are looking for is those four bodies that are identified on both images.
But if you are a minister for a nation state entity, the question that you must ask yourself is, the one on the left-hand side, the seismic, cost about $28 million and took three months to acquire, whereas the eFTG on the right-hand side took 16 days to acquire and $3 million. That is the question that our clients ask themselves, and we signed a huge program for the Department of Energy in the Philippines very recently. Philippines is a fantastic area, which is super under-explored. It is blessed with geology that could give you untapped resources. And it is 2.2 million square kilometers to explore. And as a minister making a decision, how do you do that?
You are not going to do it with seismic, which would take decades to acquire and cost billions of dollars. You need another technology to do that rapidly, and that is what the eFTG gives us.
A little bit of an origin story, this slide. You are probably wondering why this company in the U.K., that many of you would not have heard of prior to this, why do we have or how do we have exclusivity to fly an FTG which is built actually by Lockheed Martin, the big U.S. defense contractor? The origin of the instruments themselves came out of the Cold War technology. They were used in submarines to navigate the world's ocean and launch ballistic missiles. And in the 1990s, when GPS kind of came into operation, they declassified it and decided they needed a home for it, so they tried it in an exploration environment.
They took this instrument in a very benign, quiet environment and put it in an airborne environment where they were bouncing around, and a component of it never worked, and Lockheed couldn't get it to work. This is where Metatek came in. I founded the company back in 2012, and by then I'd already been working with the Lockheed team for about a decade. Key members of my team also had been working with them for about the same length of time as well. All we wanted to do actually at the time was just become the world's best at processing and interpreting this type of data. That's all we wanted to do. We set about trying to fix this component that never worked with clever algorithms and software. Cut a long story short, we succeeded.
That surprised Lockheed Martin, and it's led us to where we are today, where we have given our algorithms and software to them, and they've given us exclusive, worldwide exclusivity to operate their highest resolution system, which is called an eFTG. More about that a little bit later on, but we have three instruments essentially. We have an eFTG on the right-hand side, which is the big instrument that's deployed and in high demand. We also have another instrument, which is a slight miniature of that allows us to put it not just in a fixed wing, but also in a helicopter called a dFTG. We've got a third instrument that currently is at Lockheed being refurbished. It was actually deployed down in Colombia. We went there for one test program three years ago, ended up doing 11 programs in a row. That's currently at Lockheed.
That's being refreshed, and that's going to be repurposed onto a marine vessel. It's important to note, right, that exclusivity doesn't just come from the technology itself. Exclusivity comes from what I call the cerebral knowhow. Metatek as a company knows how to take this instrument, knows how to get the aircraft, knows how to modify the aircraft, knows how to install it, get the data out, process it, interpret it, and deliver the products. Exclusivity is on both sides. The moat around the technology and the company as a whole is pretty deep and very difficult to break into. A little bit more about our nation state entities. What do I mean by nation state entities? Well, 90% of our current backlog or our customer base are nation states.
We've tapped well and truly into that geopolitical kind of landscape that's driving the entire world at the moment. When I say nation state, I mean Ministry of Energy and Natural Resources and Environment, for example, state-owned oil companies, state-owned mineral companies, geological surveys. In the case of Singapore, they're sovereign wealth funds. That's the typical clients that base that we tend to have. As I say, geopolitics is driving it and I had dinner with the president of one of those African countries there, and he summed it up quite nicely, which was, "You know what? We're sick and tired of third parties coming in and taking our wealth.
We want to do it ourselves." We have tapped into that narrative, which is great for us because instead of it being a cyclical exploration budget, which is finite in size, it becomes a sovereign mapping program or wealth program, which is multi-year and multi-phase. In the interest of time, because we have got a half hour, I am not going to talk too much about this slide, but do look at it at your leisure. It just shows you how we deploy the instruments themselves. This is on a project in the Western Desert of Egypt, where we flew an area of 120,000 sq km. Put that in perspective, that is three-quarters of the size of Florida, and it took us 33 days.
What we were doing there, and the value that they saw from the Egyptian government's perspective, was in an area that large, they saw value in us telling them where not to spend exploration dollars. Okay? Because the last thing that they want to do is throw good money after bad money. Please do read through that. Our data is on the right-hand side, and you can compare and contrast old-school data on the left. It looks nothing like our data. The one that I will describe, though, is this one. This is a project we did in Indonesia for the State Oil Company, whose partner on this was BP. We were asked to come in and fly the Tangguh gas field. These are gas fields that provided energy security in this part of the world for decades, and they depleted.
What they wanted to know was energy security. Do they use it as a gas storage facility, or do they decommission everything? They couldn't shoot seismic to just check the integrity of the fields, because environmentalists were blocking the acquisition because it is triple canopy. Also offshore, the fisheries union was stopping them from acquiring data. They called us in. Cut a long story short, we went in, 46,000 sq km were surveyed in just under 60 days. 45 days later, we had the results and the product for them. Here is the kicker. What we saw was not only the super giant gas fields, we also identified numerous satellite fields that sat around them that they did not even know existed. What happened there was six months later, BP invested $7 billion in a new infrastructure project.
For us, it is not just about finding minerals in the ground or oil in the ground, it is also about generating wealth in other ways. For example, infrastructure. Nick.
Yeah, I'll take it. Thanks, Mark. Mark mentioned at the beginning about the growth that we had last year in 2025, 99%, and this explains a little bit of how that's come and why that's come. Our sales cycle is typically between somewhere one to three years, and that's because we go in to see our clients, which are now majority governments or government entities, and we explain the technology and take them on a journey and understand what they need the technology to do and the feasibility of it. Given that timeline, during lockdown and COVID, it broke that sales cycle as well as curtailed operations. However, now, three years after that lockdown, you're seeing the benefits of that sales process coming in and also for the backlog building. Hence, we got the 99% growth in 2025.
We've put out guidance for this year for our revenue of between $28 million and $32 million. Again, showing good growth from the prior year. Just over on the right there, you can see our EBITDA margins. This year should be somewhere similar, around 39%, 40%, but we think our long run EBITDA margin, as we continue on the growth, should be around 50%. Our gross profit margin is 60%+ . Just a little bit about seasonality and how our revenue builds. On the left there, you've got the revenue and the seasonality of that revenue split in the halves for 2025, and you can see that effectively did 1/3 in the first half of the year, 2/3 in the second. In this year, 2026, that's going to be even more pronounced. There's a couple of reasons behind that.
There is seasonality to our business, and that is because we deal with governments. Quite often, governments will either award a contract or put it under a letter of intent as we come towards the end of the year. But they can't actually sign the contract until they get into their fiscal year and their budget time. That's signed in January. There's always a bit of lead time. Traditionally, Q1 and even parts of Q2 have been quieter, and always Q3 and Q4, much busier, as it is happening this year. This year, there was a couple of particular events which exacerbated that problem completely unforeseen. One, we had deployed our new instrument, the dFTG, in the Middle East, and shortly after deployment, project was going very well.
The conflict kicked off over there, and that grounded our aircraft because the aviation area was shut, and we got stuck there. So that contributed to being less than we foreseen for that first quarter. In the second quarter, we went back to one of our long-run clients, who we'd been to, I think, three or four times by then. There was an unforeseen delay from the government, which unusually were not ready to accept us. So that first half of the year was completely unforeseen, and that's why it's exacerbated that split that you see in front of you. Just comment on a couple of good things that have happened this year since we floated back in March. When we came to market, we had a backlog of approximately $45 million. That has now doubled in the last six months.
Some of those announcements show where those contracts have come from. I think one of the most recent ones is worth picking out, and that's in the Philippines that Mark mentioned we're about to go towards as well. That's a good size contract in itself that we should execute in the fourth quarter. But more importantly, as Mark said, it's a very interesting country, very underexplored, huge amount of natural resource wealth, and a government that's determined to apply considerable budget over the coming years to explore that wealth. It was very important for us to get this first contract. It was an open tender that we won, which was great to see. Hopefully we do well. We'll have lots of future business there.
Just looking at this slide, this sort of explains a little bit of how we build up the business and where the growth is coming from. As we said, in 2025, we did $24 million of revenue, and that was with the deployment of our main instrument, one instrument, the eFTG. That gives us our rule of thumb that each instrument should drive $20 million- $25 million of revenue each year. So last year was one instrument. This year, as I said, the dFTG was deployed during the first quarter, so that will now contribute and bring that growth. As we said, we've got guidance of $28 million- $32 million, so a lot of that growth is coming from the dFTG. That's two instruments. Going to next year, the iFTG, which was an older instrument that we used in the airborne environment for quite some years.
It's currently now with Lockheed Martin. They're refurbishing it, and we are manufacturing and fabricating the necessary kits because we're going to deploy it on a boat in a marine environment. That's targeting contracts next year, although we hope to see if we can get that started before the end of this year. That will bring growth next year. Across those three assets, if you take our rule of thumb of delivering $20 million- $25 million of revenue per instrument per year, you've got growth there of up to $75 million. GeoVault, which we haven't spoken about a huge amount, but GeoVault is a software component which allows us to create a portal for our clients to look at data.
It's also a marketplace where we have significant legacy data sets that we are looking now to market and sell, and that brings follow-on business in terms of data integration and processing, where you look at new survey data sets that now need to be integrated with legacy sets, which a lot of governments have, as you might expect, to revitalize and revamp information. Across the existing assets and the base that we have at the moment, we're looking to grow the business towards that $70 million- $80 million over the next few years. It's that point that the next set of instruments kick in. So we're close to signing our new instrument deliveries with Lockheed Martin, something we mentioned and raised capital for at the IPO.
And so that will then have Lockheed delivering the next instrument two to three years' time, and one shortly after that. Again, bringing that $20 million- $25 million of revenue. That is how we are going to layer up and scale this business year on year. Just looking at some of the economics that we have got here. So an instrument typically costs around the $15 million mark. To get an aircraft to put that instrument in, you are looking at about another $10 million. So you would say a survey unit is about $25 million. Driving that annual revenue of $20 million-$ 25 million as well at the 60% gross profit margin means you are going to get payback within two years.
There is very robust unit economics in terms of deploying new instrumentation. I think it is worth mentioning that we do currently own both our instruments and our aircraft.
However, as we look to acquire more instruments, we are not going to be looking to acquire new aircraft as well. We are going to probably move to a leasing model. Owning a fleet of aircraft is not what we are about. We do not want to become an aircraft operating company. That is a different model, different cost base, different risk approach. So we are advanced in conversations about strategic partnerships with aviation suppliers. So we will likely to have a different CapEx model for the new instruments as they come. But what is important is if you look at that adjusted backlog there of $89 million as we reported, it is all about building new instrumentations into that backlog. The backlog of about $89 million effectively is two instruments for two years, and so that is what that is reflecting.
We have not included any backlog for the iFTG, which will go into the marine environment, because those contracts are now being worked up and they should get signed. That is where you are going to see the growth in the backlog. You probably won't see much more than two years on the existing instruments, but that doesn't mean that we haven't got a lot of work. There is probably a pipeline in the region of $200 million to $250 million of projects constantly being matured as we bring them in to keep ourselves a good headroom on projects. It is a very scalable business and there is a lot of opportunity and a growing market. Thanks, Mark.
Thanks, Nick. It is probably worth just reiterating that iFTG that is going on vessel, that is actually been driven by our existing client base. We have three clients that currently want us to deploy it for solving some of their objectives. So, there is a ready-made kind of market for that instrument. Very quickly, a little bit about our C-suite team and our board of directors. Bottom left, top right, those are relatively new additions to our team. Both of them work for PGS and TGS, the kind of billion-dollar seismic company. Bottom left, Philip Briandet, used to be president of Asia Pacific. He comes with a great network that allows us to market throughout that area, which is why we are very strong there. Rob Adams, top right, used to be COO of PGS/TGS. He has come across.
He is used to shifting steel around the world, now he is shifting aircraft and land teams, so both of them very, very good. He is going to push. Currently, our operational efficiency is around about 50%. Really, it should be up close to 65%, 70%, so he is going to push that to increase our margin. Board of directors populated with a lot of public company experiences. What I want to do is point out two to you. Hirofumi Katase, he is from Japan. He has held various ministerial vice minister director general positions within science technology, engineering, space security, and he currently sits on the board of Ivanhoe Electric. He brings a huge network and great experience to us. The other one I will point out is Bob Harward. Bob Harward used to be a Navy SEAL. When he retired,
he used to work for Central Command, actually, under various administrations. When he retired, he became CEO of Lockheed Martin Middle East. Forbes listed him as one of the most influential men in North Africa or in the Middle East. So he comes with an enormous amount of experience as well. Really good, strong C-suite team, backed up with good technical experience as well and a good board of directors. Just to summarize very briefly then. The company itself has predictable revenue. We have an instrument, and an instrument will give us $20 million, $25 million. Our backlog is growing. As Nick said, in the pipe we have over $200 million, which at the moment, frankly we are too afraid to sign those because we will let people down because we do have two years' worth of work as it stands.
For me, from my perspective as a CEO, if I could get my hands on the two new instruments tomorrow, I could put them to work adding an extra $50 million of revenue. For us, demand is not the constraint. Capacity is very much the constraint for us as it stands at the moment. We have this exclusive technology, which is defensible, proprietary software that goes on the back of it that we have not even talked about, and we have a good, diverse customer base firmed up with nation-state entities. For our business, it is very, very scalable. Add an instrument, you add $25 million. With that, we will take questions.
All right. Thanks, Nick and Mark. I will just start off with the listing question here. Why are you listed in Toronto and not maybe cross-listed in the U.S. with an ADR?
Sure. Yeah. Well, it is something that we had lots of conversations on. For us, given the technology that we deploy and the space that we operate in, it was kind of looking at if we went to Oslo, for example, we would be compared with seismic companies, and we are not a seismic company, not at all in any shape or form whatsoever. We felt that we were a little bit too small to go into the U.S., which left us Toronto and Australia, who really do understand the mineral natural resources space. And for us, Toronto is a little closer than Australia. Nick, do you want to add anything to that?
No, I think the combination of technology and natural resources, as Mark says, fits firmly in the TSX environment and a lot of good history there of the investment community getting involved. Yeah, it is a no-brainer.
Okay, so no plans to cross-list in the U.S. then as of now?
I think that is a size issue so in good time, yeah.
Yeah.
Okay. You mentioned the economics of the equipment, pretty quick payback period. What is the useful life of one of these once you have it, and how long can you run it?
Sure. Some of the instruments that came out in the early 1990s are still operating today. Our iFTG, which was down in Colombia, that is one of the earlier derivatives of the instrument, so that has had a very, very long shelf life. For us, it is way beyond 25, 30 years.
Okay. It looks like you are concentrated mostly in emerging markets. Why have you not been able to contract any customers in developed markets like the U.S., Canada?
Yeah. Okay. There is a bit of a story that goes with that, and I am a little bit embarrassed to tell the story, but I will. When we took delivery of the eFTG, the big instrument, as a company, we put a lot of resources into it. We fitted the instrument and as we were about to fly our test programs, which were in the U.S. and in Canada, COVID hit. With that, all airspace shut down and only emergency flights were allowed to fly, so we were grounded. That was a big problem for us, was a small company facing a cavern. We looked at all the opportunities that we had on the table at the time, and I saw the Egypt one.
In Egypt, they were still allowing domestic and commercial aircraft to fly within country, and we did actually have a program to do in Egypt. I looked at that and thought, "Well, if we could get a plane to there, that would be great for us." Problem is, how do we get permits to fly when airspace was shut down? I went out and bought a quarter of a million dollars of PPE equipment, donated it to Egypt. That gave us safe passage across to Egypt, and we did our test program there, which kept the lights on during COVID. The truth is, we have never come back since because by the time that we had executed that, showed people the data, we just started getting bookings over and over and over.
We have ended up over there between Africa and Southeast Asia and not had chance to come back to the Americas yet. We have got lots of opportunity in all the Americas, Alaska, Canada, U.S., and Latin America. We just need to get an instrument back there. If I could get an instrument tomorrow, I would have one in South America and one in North America. That is how we ended up geographically kind of over the other side of the hemisphere.
Okay, nothing structural with the markets precluding it.
No, not at all. We have been flat out. Currently we have two years of work to get through. Capacity constraints, so can't wait to get the new instruments online. Nothing to do at all with the opportunity that is in North America and South America.
Given the capacity constraints and you have exclusivity to the technology, do you have more pricing, are you capped at $20 million-$25 million? It would seem like you would have a lot of pricing power in this market to raise rates.
Sure. Nick, do you want to tackle that, or I might be too integrated?
Well, I think it's an evolving marketplace. Yes, our prices are likely to go only one direction, which is up, and we've evolved those prices as we've come to the market with new technology. The eFTG was deployed for the first time a few years ago, so it's still relatively young in its life. But I think as clients look to book time on the instrument, then there's likely to be a bit of a competitive environment building, for sure.
Just emphasizing what Nick said there about booking time on the instrument, right? That's a game changer for us. In the past, it's been, can you fly? And we calculate the cost of the survey per line kilometer flown. Well, what we find then is all our nation states are going, "Right, we need you back next year." And we have nation states now that are booking time on the instrument and not even knowing where they're going to fly.
That for us is a game changer. So actually we've managed to succeed in moving the price kind of north, not south. Whereas lower resolution technologies that tend to do high volume, low margin stuff tend to be way down that kind of cost basis, right? So, we're the ones that occupy the higher end at the moment.
All right, great. We're at the end of our time. A little over, actually. So I'll leave it to you if you wanted to give some parting remarks and then we can wrap it up.
Yeah, absolutely. From our perspective, it really is exciting times. We're learning all the time as a newly public company. You will have noticed Q1, Q2 this year, that's very much our seasonality. I think next year as a management team, we're going to try and smooth that seasonality out by populating Q1 with large independent companies rather than nation state entities, which tend to fill the back end of it. So really exciting times for us, both from the technology perspective and where the technology is going, and also in terms of the demand and interest from nation state entities.
All right, great. Thanks Nick and Mark for the presentation. Really interesting and look forward to seeing how everything develops for you. So with that, we could wrap it up.
Thanks Greg.
Thanks.
Thanks very much.