Michael Malseed: Technology globally has been the big theme of the last 18 months, which has driven big returns offshore. Can you talk about the opportunities in the small cap space that are of any quality?

Dawn Kanelleas: Yeah. I mean, it's harder in the small cap space. They tend to be mainly in the mid cap space where you do tend to have those types of companies, obviously, NEXTDC, started as a micro-cap, became a small cap, is now mid cap, probably going to the top 20 soon with the amount of money that it has raised. But obviously, it is exposed to the second derivative of that. Maybe Megaport. But again, that's a revenue story and that is a network optimization story where demands for cloud and for cloud storage and for cloud access is driving the underlying metrics of that business. And it's got that first mover advantage and it's got the potential to scale globally. But it's one of the few that you can really say, oh, there's AI. And sometimes the small cap market gets lost as it did with Appen, which is basically a labor hire business that had a couple of contracts with large players in the cloud space and who were working on AI, but which was actually masquerading, if you like, in terms of the way that it was valued in the marketplace as an AI company when it had none of those qualities. So, you have to be very wary of the underlying business model and what it is actually, does it have pricing power? Is it actually exposed to those dynamics? But really, small caps, it would be great if we could have some really meaty exposures. And I always say to my team, gosh, I wish Atlassian had listed here, or we had similar types of businesses. But it's very difficult to get that exposure. Clearly, some of the telecommunications companies, like whether it's Superloop, whether it's TPG, through a second or third derivative, have some exposure to that demand cycle that's coming through.

Phil Hudak: Yeah. I mean, it's quite interesting to look at the AI thematic and the insatiable demand that is expected to come through. Although what we are seeing at the moment is not really any earnings uplift coming through in the short term. We've seen some quite high capital raisings being done by the likes of NEXTDC, as well as Macquarie Telecom, in order to meet that demand over the medium term. It's quite interesting that everybody is looking at Megaport as the proxy coming through there. But if you look at where the earnings have come through, has come through from cost out rather than top-line growth coming through as well. So, it's quite interesting that almost every company talks about AI and the earnings benefit that's coming through. At present, we have not seen that benefit coming through.

How we are looking to play the AI thematic is through the likes of Pro Medicus. That is a company that was in the small caps index and has recently migrated there. And we think that there's significant significance synergies with medical imaging as well as AI coming through there. But again, it is very difficult to quantify.

In relation to the technology space, it is a mixed bag. And looking outside of AI, Life360 is another great example where you see that it's got a significant market position which is growing, 64-odd million active users, 2 million that are paid and significant upside potential coming through on the advertising side, which the market is only factoring in. But then there's also plenty of high-quality IT companies that are on a defensive side. TechnologyOne, Hansen Technologies are other examples where they may be boring, but they're compounders and continue to grow.

Dawn Kanelleas: Yeah, and we would say something like Life360 is a location platform, which you can get on Apple for free. And what they're selling is actually road assist and they're getting through a third party. What is difficult to work out is how their active users, how they will be able to monetize that through the advertising model. But we would contend that its current market capitalization is completely factoring in complete success in that segment, which is obviously—it's fraught with difficulties if you're looking three years down the track and we want to be approximately right in three years. Is this business model even going to exist given I've got—I can track both my sons right now on Apple for free and I get road assist separately. So, it's a business model where you think, do you have a value proposition?

Malseed: Phil, what's your counter to that?

Hudak: Yeah. Look, I mean, the opportunities are absolutely enormous for Life360. So, looking at on an EBITDA basis, I think this company generated roughly about $20 million last year, expected to do $35 million, I think, for the upcoming 12 months. Now, if you look at the 64-odd million active users that they actually have, and they're looking to grow to 150-odd million users over time, if you look at peers in the US, the advertising that they can generate per active user can be anywhere between $0.50 all the way to $6. So, assuming a $3 mark there and over a base of 60-odd million users, that's about $180 million with margins that would be quite healthy that would drop down there. So, there is a material upside potential, assuming that they actually do get it right. And given the traction that it actually has, that we expect some success to come through.