SenSen Networks: An Inflection Point or a False Dawn?
A fundamentals-driven look at a high-risk, high-reward bet on a sticky business model
Disclaimer: I do not own shares of SenSen Networks Limited at present. I may decide to purchase or sell shares at any time without prior notice. Do your own research and size positions appropriately if you invest. Nothing here is meant to be understood as investment or financial advice. My research and writing process is assisted by AI tools to enhance analytical efficiency and clarity.
Executive Summary
SenSen Networks (SNS.AX) is an Australian micro-cap specializing in AI-powered video analytics for Smart Cities and retail, which appears to be at a critical inflection point. After a multi-year period of unprofitability, a new Chairman and a renewed focus on cost discipline have started to bear fruit.
The investment thesis rests on four pillars: 1) A "sticky" end-to-end technology platform with high switching costs for its government clients; 2) A proven "land-and-expand" model with major cities like Brisbane and Calgary; 3) The appointment of a capital markets veteran as Chairman; and 4) A large, untapped global market.
However, significant risks, including a history of shareholder dilution and the recent, highly suspicious resignation of the CFO at this critical juncture, demand extreme caution.
Introduction
This article sheds light on Australian micro-cap IOT / SmartCity / AI company SenSen Networks Limited (ticker: SNS.AX, SNS for short). For reference and context, make sure to read this Substack post by
. While I am sceptical about IOT SmartCity business stories, the following quote in the article intrigued me:The company achieved its second consecutive quarter of positive free cash flow in Q1/FY25 - although very small (~A$0.2M) - which reduces dilution risk.
Alas, the cash flow back then was only positive because of government grants - without it would still burn cash… I believe the picture has changed now.
Outline
Executive Summary
Introduction
Outline
Company Overview
Competitive Advantages
Growth Levers
Risks: A Three-Tiered Framework
Thesis
Valuation
What to Track?
Conclusion
Appendix: Assessing Long-Term Scalability
Company Overview
Current Business
SNS is a provider of AI-powered video analytics solutions, specializing in the smart cities and retail sectors. The company's core technology, the SenDISA platform, integrates data from various sensors to provide real-time insights and automate enforcement operations. SenSen's segments:
Smart Cities: This is the largest and fastest-growing segment, providing solutions for civic compliance, traffic management, and public safety to city councils and municipalities globally. In FY24, the Smart Cities segment's revenue grew by 9% (excluding the exited gaming revenue). Key customers include the cities of Calgary, Montreal, and Brisbane.
Retail: This segment focuses on anti-fuel theft and retail loss prevention solutions
Gaming (exited in FY24): This segment provided solutions for table game monitoring and analytics to casinos. SenSen exited the gaming business in FY24 to focus on its core Smart Cities and retail offerings. The gaming business comprised 7% of annual revenue at the time of exit.
The company has demonstrated a strong growth trajectory (revenues increased from AUD 5.1M in FY 2021 (including the gaming segment) to AUD 12.5M in FY2024, a 35% CAGR over three fiscal years despite exiting a business segment, with a focus on expanding its recurring revenue streams and securing major contracts in North America and Australia.
Equity Summary
Ticker Symbol: SNS.AX
3 month avg trading volume: 111.5K shares, i.e. AUD 4K
Share Price as of market close July 15th, 2025, (Yahoo Finance): AUD 0.037
Shares out as of December 31, 2024: 793M
Current/non-current Assets as of December 31, 2024: AUD 4.7M / AUD 6.88M
ST/LT Liabilities as of December 31, 2024: AUD 5.66M / AUD 0.34M
Includes AUD 1.6M of unearned revenues
fully diluted Market Cap: AUD 29.34M; Enterprise Value: AUD 29.31M
net cash: AUD 0.03M (Koyfin)
Website: https://sensen.ai/
Some General Statistical Indicators
I like to check gurufocus.com for several freely available scores regarding balance sheet strength and company characteristics. For tracking purposes, I record them in this Google Sheet. The latest measures were recorded on July 15, 2025.
Judging from these indicators, SNS is in dire financial distress, but stable and is unlikely to manipulate earnings. While historical unprofitability flags the company as being in financial distress (parameter X2 in the Altman Z-score formula), its balance sheet currently shows a net cash position. The entire investment thesis hinges on whether the recent operational changes have permanently stopped the cash burn that led to this situation. Similarly, a superficial look at the current ratio (current assets vs current liabilities) below 1 can lead you to believe the company is in a liquidity crunch. However, unearned revenues (earning high gross profit margins), the consistently negative modified cash conversion cycle (see analysis behind the paywall), and the available liquidity as per the company’s most recent cash flow report mitigate that concern.
The WACC is exorbitant at 18.6%, the market is pricing in a very high degree of risk and demands a very high return to compensate (caused by the very high beta of the company’s shares).