Ocean Power Technologies Inc (NYSE-A:OPTT), which offers renewable energy-as-a-service for offshore applications and maritime products for commercial and military markets, is “uniquely positioned to leverage several megatrends” in the industry, noted analysts at Water Tower Research.
In a note to clients, Water Tower Research said the offshore power market is expected to see "significant growth" in the coming years, with OPT focused strategically on data and Power-as-a-Service (PaaS).
“OPT is uniquely positioned to leverage several mega-trends inside the broader industry. The company has identified several growth opportunities, including military, oil and gas, construction, and wind power,” said the analysts at Water Tower Research.
READ: Ocean Power Technologies wins maritime surveillance sub-contract from Science and Technology Directorate
“These sectors are prime for remote power needs and big data gathering. The plan is to become an industry leader in offshore data collection, integration analytics, and real-time communication for various crucial applications.”
Recurring revenue model
Founded in New Jersey in 1984, OPT initially focused on the research and development of technology to harness wave power to supply mainland electrical grids.
The company has since pivoted from relying on product sales for revenue generation to instead focusing on its data-as-a-service and power-as-a-service offerings: removing the requirement for customers to purchase OPT’s technology by enabling subscriptions and, in turn, recurring revenue opportunities.
“This is especially appealing as the model creates the potential for recurring revenue and builds long-lasting customer relationships,” noted the analysts.
OPT’s PowerBuoy (PB3) systems generate clean power off-grid. The company also offers Wave Adaptive Modular Vessel (WAM-V) technology, which enables roaming capabilities for uncrewed maritime systems, subsea battery solutions, strategic consulting services, software, controls, sensors, and marine installation services.
The company says that its products emit no carbon during operation, pose no substantial danger to marine life, and produce no contaminants. As a result, its environmental impact is minimal. Significantly, the US Department of Energy (DOE) awarded OPT a grant to develop the next generation of wave energy conversion systems.
Well financed
“The company is well financed, with the liquidity of $52.1 million in cash and equivalents, which management believes is sufficient to fund its planned expenditures,” said the analysts, while adding that the firm "carries no debt."
OPT acquired Marine Advanced Robotics Inc (MAR) in November 2021, and Water Tower said it has “quickly” provided OPT with an established, inshore, nearshore, and offshore product line.
“WAM-V sales contributed $0.3 million of the $0.7 million total 1Q 2023 revenue,” pointed out Water Tower.
OPT has so far deployed more than 70 WAM-Vs across the globe for commercial clients and government organizations.
Moreover, the acquisition of 3Dent Technology LLC in February 2021 has transformed the company’s strategic consulting division by adding a team of specialist consultants and designers. “This division contributed ~$365,000 (>50% of revenue) in 1Q23 revenues,” added the analysts.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive