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Totm Technologies HY 2025 Revenue Collapse & Web3 Gamble · Investor Exchange

• 0:02
  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
• 0:08
  Imagine a scenario. I think any investor has probably stared this down at least
• 0:12
  once. It's the classic turnaround play.
• 0:15
  Right. The one that keeps you up at night. Exactly.
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  So you're looking at a tech company chart and the lines are, oh, they're messy.
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  The top line revenue isn't just dipping, it's diving. The kind of drop that
• 0:26
  makes you refresh the page just to make sure the data feed isn't broken. Yes.
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  Then you look inside the company and management is just frantically slashing
• 0:36
  costs, throwing cargo overboard.
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  And while they're doing that, they're pointing at the horizon,
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  promising this futuristic pivot to Web3.
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  Ah, the shiny new thing. So the question we have to answer today is,
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  is this a distress signal from a sinking ship or is it a coiled spring ready to bounce back?
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  And that really is the ultimate investor dilemma, isn't it? Do you buy the tangible,
• 0:57
  painful cost-cutting of today, or do you bet on the unproven promise of tomorrow?
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  And that is exactly what we're unpacking on today's deep dive.
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  We're turning our focus to Totem Technologies Limited.
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  Specifically, we're tearing apart their financial results for the half-year
• 1:12
  that ended November 30, 2025.
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  Which, in financial speak, we're calling 1H2026.
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  And we've got the unaudited financial statements and, maybe more importantly,
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  the management commentary that tries to explain it all. Our mission today is
• 1:27
  pretty straightforward. We're putting on our investor goggles.
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  We're not here to be cheerleaders, not here to be haters. We just want to know,
• 1:33
  is this company healthy?
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  Why do the numbers look the way they do? And is their strategy for the future actually realistic?
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  We need to connect the dots between the raw date on the spreadsheet and the
• 1:45
  story they're trying to sell. Right.
• 1:46
  I want to set the tone now. We'll try to avoid the heavy jargon or at least translate it.
• 1:50
  But we aren't going to skip the complex stuff. We need to get into the mechanics. Sounds like a plan.
• 1:55
  Okay, so let's not bury the lead. The headline number.
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  I opened the document, and honestly, it's a bit of a shocker.
• 2:01
  Revenue dropped by 45.8%. It's a massive contraction.
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  There's really no sugarcoating that number. A drop that big usually signals
• 2:09
  a pretty fundamental shift.
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  We're talking falling from $5.7 million this time last year down to just $3.1 million.
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  That's almost half the business gone in 12 months. Just looking at that,
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  my instinct is to run for the hills.
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  What happened? Well, when you peel it back a bit, it's not a huge mystery.
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  It's not like the market disappeared overnight.
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  The drop is almost entirely driven by one specific line item,
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  sales of licenses and other related services.
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  Okay, unpack that for me. Sales of licenses. What does that mean in the real
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  world? It means they sold fewer big chunks of software.
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  You have to remember, Tottenham relies heavily on government contracts,
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  especially for national ID systems.
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  In their biggest market, Indonesia, revenue from those license sales just plummeted.
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  It went from $2.8 million last year to only $0.4 million this year. Wow.
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  That is a $2.4 million hole. For a company this size, that's enormous.
• 3:04
  It is. And it really illustrates the danger of what we call lumpy revenue.
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  Lumpy revenue. I like that term. It's a technical term for, you know, feast or famine.
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  Think of it like selling a fleet of cars versus selling a Spotify subscription.
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  One year, you sell the whole fleet, that's your big license sale,
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  and you make a ton of money.
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  Looks great on the books. Looks fantastic.
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  But next year, that same customer doesn't need a new fleet. They just need an oil change.
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  Totem sold the cars last year. This year, nobody was buying the fleet.
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  So last year's revenue was a bit of a sugar rush, and now they're crashing.
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  That's a really good way to put it. They filled the big order,
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  and there wasn't another one of that size to immediately replace it.
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  And Indonesia is the heavyweight champion in their portfolio, right?
• 3:50
  That market catches a cold, the whole company gets the flu. That's a fair assessment.
• 3:54
  I mean, even with that massive drop, Indonesia is still contributing the lion's
• 3:58
  share, about $2.6 million to the total $3.1 million.
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  They are incredibly concentrated there. But wait, if license sales drop to just
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  $400,000, where's the rest of that $2.6 million coming from?
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  And that's the nuance that saves us from being a total disaster.
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  The bulk of that, about $2.2 million, is now coming from technical support services
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  for that national ID system. Which is better, worse.
• 4:24
  From an investor's perspective, it's actually higher quality revenue. Oh, interesting.
• 4:28
  Yeah. Technical support is recurring. It's the bread and butter. It's stable.
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  They have to maintain the system every single year. So what we're seeing is
• 4:36
  the volatile, lumpy sales falling off a cliff, leaving just that stable support base behind.
• 4:42
  I see. So the floor hasn't completely fallen out. Just the ceiling came way
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  down. But they can't just be relying on Indonesia, surely.
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  I saw something in the notes about Singapore. You did.
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  And that is the one bright spot on the revenue sheet. Singapore revenue went
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  from literally zero last year to half a million dollars this period. OK, so half a million.
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  All driven by installation and integration services. So that's good growth.
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  But does it really balance out that huge drop in Indonesia? Mathematically.
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  No. Yeah. Not even close. When you lose $2.4 million in license sales,
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  gaining half a million helps, but it doesn't plug the hole.
• 5:17
  Right. It does show diversification, which is good long term.
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  It proves they can win contracts outside of Indonesia.
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  But for this half year, the sheer scale of the Indonesian drop just dragged the whole ship down.
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  It's like trying to bail out a boat with a teaspoon while a fire hose is filling it up.
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  A bit dramatic, but directionally accurate for the top line. Right.
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  So top line is hurting, but, you know, revenue is vanity.
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  Profit is sanity. Let's look at the bottom line. If revenue is down almost 50
• 5:47
  percent, you'd hope they're cutting costs to protect profits,
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  did they? They certainly tried.
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  And to their credit, management didn't just sit on their hands.
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  They saw the revenue wasn't coming in and they went on a bit of a crusade with
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  the cost cutting scissors. OK, give me the highlights. Where did they cut?
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  Everywhere. First, subcontractor costs were down 52 percent.
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  Kind of tracks with the revenue drop. That makes sense. Less work,
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  less need to pay third parties. That's a variable cost. It should come down.
• 6:13
  Exactly. But they cut deeper. Legal and professional fees were slashed by almost 55%. 55%? That's huge.
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  Did they fire their lawyers or something? Not exactly. The notes say they stopped
• 6:24
  using various external technical consultants.
• 6:27
  Hmm. That's interesting. To me, that signals a retreat.
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  You stop paying consultants when you're stopping new projects or,
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  you know, some R&D. Or you're trying to bring that expertise in-house to save money.
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  They also cut other expenses by nearly 53%. That's your marketing, your travel.
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  They really tighten the belt. Okay, so let me do some quick napkin math here.
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  Revenue down 46%, cost down roughly 50% in key areas.
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  So logic would suggest they stabilize the loss, right?
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  Maybe even broke even. You would think so. But this is where we run into what
• 7:00
  you could call the profitability paradox.
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  Despite all those aggressive cuts, the net loss actually got wider.
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  Wait, how does that even work? If you cut costs faster than revenue falls,
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  shouldn't your margins get better? In a perfect world, yes.
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  Businesses have fixed costs you just can't cut overnight. This is the concept
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  of operating leverage working in reverse.
• 7:20
  Okay, break that down for us. I feel like that's a concept people hear but don't
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  always get. Sure. Imagine you own a factory.
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  Even if you produce zero widgets, you still have to pay the rent,
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  the insurance, the basic staff.
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  Potom is a public company. They have listing fees, audit costs,
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  a core team just to exist. Right. Those costs are sticky.
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  Very sticky. And because the revenue fell so fast and so steeply,
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  and remember, that license money was high margin, the cost cuts,
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  while impressive, just couldn't keep up with the speed of that decline.
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  The revenue elevator went down faster than the cost elevator.
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  That's a perfect analogy. And the damage is real.
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  The loss for the period is negative $2.9 million.
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  That's 24.4% worse than the $2.3 million loss they posted last year.
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  Ouch. So the hole actually got deeper. It did.
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  And for any shareholders listening, on a per share basis, it went from a loss
• 8:10
  of 0.17 cents to a loss of 0.20 cents.
• 8:13
  For every share you own, the company lost a little bit more money than it did last year.
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  Okay, this is a tough picture. Revenue's down. Loss is widening.
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  So when a company is burning money like this, the next question is always,
• 8:25
  how long can they survive?
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  Do they have any cash left? And this is where the story gets really interesting.
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  It's almost a sleight of hand.
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  If you just glanced at the balance sheet, you might think they had a fantastic six months.
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  Why? Because their cash balance actually jumped. They have $2.7 million in cash right now.
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  That's way up from just $0.8 million at the start of the period.
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  Okay, hold on. Walk me through this.
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  You just told me they lost $2.9 million.
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  The business shrinking. How on earth do they have more cash in the bank?
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  Did they find a suitcase full of money?
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  No suitcase. Yeah. It didn't come from selling software. It didn't come from operations.
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  In fact, net cash used in operating activities, the actual day-to-day business,
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  was negative $0.6 million.
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  They burned cash. So where did the money come from? It came from selling pieces of the company.
• 9:13
  Ah, financing. Exactly. In August 2025, they did what's called a placement exercise.
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  They issued 135 million new shares and raised about $3.0 million.
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  Okay, we need to pause and explain dilution because this is critical.
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  Right. Imagine the company's a pizza.
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  Before August, that pizza was cut into a certain number of slices.
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  If you owned a slice, you owned a percentage of the company. Okay.
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  In August, they didn't make the pizza bigger. They just sliced it into way more,
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  much smaller pieces to sell to new people.
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  So my original slice got smaller relative to the whole pie.
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  Precisely. Your percentage ownership shrank. Your holding is now diluted.
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  The company had to do this to fund operations because the business itself wasn't
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  generating cash. It's a survival move.
• 9:58
  Painful for existing shareholders, but it keeps the company alive. It is.
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  But it does put them in a safer position cash-wise. So is $2.7 million a lot?
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  How long does that last them?
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  We talk about runway all the time. What's Totem's runway?
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  Let's do the math. They burned about $0.6 million from operations over six months.
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  They have $2.7 million in the bank.
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  So just on that, they've bought themselves a decent amount of time,
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  maybe two years at the current burn rate. Two years sounds pretty comfortable.
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  It is, assuming the burn rate doesn't get worse. So they aren't going bankrupt
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  tomorrow. They're not in immediate danger.
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  And what about debt? Are they loaded up with loans? Surprisingly, no.
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  The balance sheet is relatively clean. They have some standard lease liabilities
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  for offices, but they even repaid a $200K loan to a director during this period.
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  That's a good sign, usually.
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  Paying back insiders. Correct. But, and this is a big but, the listener has
• 10:53
  to understand that Totems is currently reliant on that external funding.
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  They're living off savings, not income. Okay, so they've bought themselves time.
• 11:03
  Cash is in the bank. Costs are cut. The question now is, what are they going
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  to do with this time? You mentioned a pivot. Let's talk strategy.
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  The core business is effectively in what I'd call stabilization mode.
• 11:14
  The management commentary highlights a few defensive wins.
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  Like what? In Indonesia, they renewed their annual technical support contract
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  for the national ID system.
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  That's the recurring revenue, the bread and butter. Exactly.
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  That's the safety net. Keeps the lights on.
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  They also signed a new subscription for something called a maritime cloud platform.
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  It's a 12-month contract. A maritime cloud platform. That sounds new.
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  It is. It's an attempt to apply their identity tech to the shipping industry.
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  It shows they're trying to find new verticals.
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  Is it a game changer, though? It's a 12-month subscription.
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  It helps, but it's not a company maker yet. These are safe, slow-growth moves.
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  The real story management is pitching.
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  The reason they raised that $3 million is the future.
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  The Web3 stuff. The Web3 stuff. The commentary is filled with buzzwords,
• 12:00
  decentralized identity, tokenization, blockchain, AI driven platforms.
• 12:06
  Sounds exciting. It sounds like the kind of thing that sends a stock price to the moon.
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  Is it real revenue? Not yet. And this is where investors need to be really, really discerning.
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  They mentioned signing new use memorandums of understanding with entities named
• 12:20
  Quiranium, Immerso, and Agentes. Okay, I'm going to stop you there. Moo.
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  We see this all the time. In the cold, hard world of investing,
• 12:28
  how much weight should we really put on it on IU?
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  I always tell people, and MoU is an agreement to agree. It's non-binding.
• 12:34
  It's like dating, not marriage. There's a huge difference between a definitive
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  contract with a dollar value and a delivery date and a MOU that just says,
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  we will explore working together. So dollar value today.
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  Zero dollars today. So they're selling potential. Pure potential.
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  They're pitching a story where they use their identity expertise,
• 12:53
  which they legitimately have from the ID projects, and bridge that into the
• 12:57
  blockchain world. That's a massive ambition.
• 13:00
  It is. And for an investor, this completely shifts the stock's profile.
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  How so? Well, it moves Tottenham from being a value play, a boring but steady
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  company, to a high-risk venture capital-style growth bet.
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  You're betting they can actually monetize these ideas before that $2.7 million
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  runs out. It's like they're trying to swap out the engine of the car while driving down the highway.
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  And hoping the new engine uses a fuel they haven't bought yet.
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  A very different investment thesis.
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  Okay, let's wrap this up. Risk and opportunity summary. If I'm a bull,
• 13:30
  what's my case? The bull case is that the cleanup is done.
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  The painful surgery is over. Costs are slashed. The cash runway is secured for
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  a couple of years. And the valuation is low.
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  The valuation is beaten down. So the argument is,
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  If, and it's a big if, those Web3 bets pay off, the upside is massive because
• 13:49
  you're buying in at the bottom. Okay, fair enough.
• 13:52
  Now, play the bear. What keeps me up at night if I'm skeptical?
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  Three things. First, concentration risk. They're still over 80% dependent on Indonesia.
• 14:01
  If that relationship sours, the company is in huge trouble. A single point of failure. Exactly.
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  Second is execution risk. The Web3 strategy is just a concept.
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  They have to build it, sell it, and make money from it.
• 14:12
  That's really hard. And third is the financial reality.
• 14:16
  They are still loss-making. So they might have to raise money again.
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  Which means more dilution.
• 14:21
  Smaller slices of pizza for everyone. And speaking of value,
• 14:23
  I saw one little detail that sums this up. The net asset value per share.
• 14:27
  Yes, the N of E. It dropped to 1.73 cents from 1.90 cents. Explain that simply.
• 14:32
  That's the book value of what you're buying. If you liquidated the company today,
• 14:36
  that's roughly what a share is worth on paper. That value is shrinking.
• 14:41
  You're buying assets that are currently decreasing in value,
• 14:44
  hoping the future strategy reverses that trend. So this really is a transition story.
• 14:49
  Okay, let's bring it home. The final verdict on Totem Technologies. How do we sum this up?
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  Totem's a company in the middle of a difficult surgery.
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  They've successfully stopped the bleeding on expenses. That part is a success.
• 15:02
  They've stitched up the wound by getting that cash infusion.
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  But the patient, the revenue engine, is still very weak. The recovery hasn't
• 15:09
  started yet. So the question for you, the listener, is this.
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  Management is claiming the cost
• 15:14
  cuts, and these new Web3 mo-us are the foundation for a bright future.
• 15:19
  But as an investor, do you trust the cost-cutting discipline of today?
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  Or are you willing to bet your capital on the unproven Web3 promises of tomorrow?
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  Because right now the numbers say one thing contraction, and the narrative says another expansion.
• 15:33
  Which one will actually drive the share price? That is the gamble.
• 15:36
  Thanks for joining us on this deep dive. We'll catch you next time.
• 15:42
  You.