TZ celebrates silver anniversary, aims to become the gold standard
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Digital lock and data management platform TZ Limited turns 25 this year and is currently in the best shape of its life.
Established in 1996, the company has since become a globally significant player in the access control market, manufacturing digitally-enabled locks and locker banks for postal, corporate, and industrial purposes.
Their suite of leading edge technologies allow clients around the world to offer 24/7 access to parcel lockers, offices, data centres and more without the need for keys – while still improving transparency around access.
The data management platform developed by the company provides real-time information around who is using integrated locks, and when – and will even send reminders when doors are not properly closed or rooms are at incorrect temperatures.
With 2020’s pandemic condensing 5 years’ of eCommerce growth into only 12 months and forcing businesses to find new, contactless sales methods, demand for parcel lockers and remote access technology has surged.
Even so, traditional access control and last mile delivery methods remain relatively unchanged.
Apple, Google, Amazon, Microsoft, Disney, UPS, KPMG and numerous US universities have already adopted TZ’s technology in an effort to meet this rapid change in consumer preferences.
Despite the strong support for TZ’s products and services, the company has historically faced a number of challenges due to poor decisions made by previous management, the high cost of securing new business, and costly overheads.
These have all weighed on the company’s performance, and prevented TZ from living up to the operational and financial potential it has always shown.
However, in 2019 the company brought in Peter Graham – a proven corporate advisor with more than two decades of experience – to lead the board and reinvigorate the business.
Within the space of 12 months, the changes implemented by Mr Graham and managing director Scott Beeton (who joined shortly after Mr Graham in March 2020) delivered TZ its first profit in 25 years.
The company is now well-positioned to capitalise on a booming eCommerce market which has been hastened along by 2020’s devastating pandemic.
In their first year, the refreshed leadership team successfully reduced fixed operating expenses by $2.5 million through a series of cost cutting exercises.
These included a headcount reduction and the closure of the company’s Brisbane offices, allowing TZ to consolidate its operations to Sydney.
Further savings were achieved by reducing executive and senior management salaries.
The company also reprioritised its capital expenditure programs to focus on upgrades to TZ’s data security system, Centurion Enterprise, and on new sales and customer relationship management (CRM) software.
These investments have supported the company to improve operational efficiency and will provide a foundation for additional growth into the future by eliminating duplication across the business and enabling the company to scale up.
Mr Beeton and the TZ leadership team are also keeping a keen eye out for new areas the company can participate in to support further and rapid growth.
“As a company, TZ has reinvented the lock – and with these changes to our business, we are able to unlock our full potential,” Mr Beeton said.
The changes made by Mr Beeton and Mr Graham ensured the business became cash flow positive by the December quarter last year.
The company achieved EBITDA of $0.2 million for FY21, with recurring everyday revenues up to $2.5 million and notched up an 8% increase in first half revenues.
While this represents a marked improvement, Mr Beeton said there is more work to be done.
“Neither myself nor Simon joined this business hoping to deliver a small turnover – we were both excited to join because we see the global opportunity that awaits us and TZ,” he said.
“The business already has the market-leading technology to revolutionise this space and meet the growing, global demand for better access control and last mile delivery, and I believe we now have the team necessary to do just that.”
These changes allowed TZ to continue its rapid growth through 2020 despite the disruptive effects of the global pandemic.
The company signed on a number of new clients through the course of the year.
North American universities (including UNC Charlotte and Fairfield University) were quick to adopt TZ’s locker banks as parcel deliveries skyrocketed and legacy delivery models – students forced to wait in long lines at the post office – became untenable under strict anti-coronavirus laws.
Although those same restrictions did create delays in the installation timelines, TZ was able to secure several new contracts and by the end of 2020 had roughly doubled the size of its forward-looking sales pipeline compared to the same time in 2019.
These changes come at a time when demand for improved access control services is rapidly increasing.
The COVID-19 pandemic accelerated the shift to eCommerce by 5 years and postal agencies around the world were forced to contend with a significant upswing in parcel deliveries.
Early indicators suggest this trend towards online shopping is unlikely to reverse in the near term, and delivery service providers will need to adapt to this increased pressure on last-mile delivery.
The number of parcels shipped and delivered in 2019 broke 100 billion for the first time in history, and pre-COVID estimates predicted that number would swell to 220 billion by 2026 – with outside forecasts even breaking past 300 billion.
TZ’s parcel lockers represent a solution to the problems posed by traditional last mile delivery methods by enabling customers to request their goods be placed into a locker which can be securely accessed at any time of the day or night.
This means consumers can collect parcels outside normal business hours, without waiting in line, and eliminates the risk of theft or damage from the elements where a package is left outside their home.
These have proved popular with North American universities, shortening wait times for larger packages and freeing up floor space previously dedicated housing individual lockers for each student.
The global market for smart parcel lockers is expected to grow from USD 644.7 million in 2019 to become a $1,438.9 million by 2026.
Retailers can implement this same system to complete click and collect orders, leading to shorter wait times for customers, simplifying the returns process (customers can leave unwanted items back in the locker and notify the shop of their decision digitally), and reducing the time staff spend tracking down orders which have been placed aside.
TZ’s locks and platform are also being used by major data centres (including those operated by NextDC and Macquarie Telecom) to control access to servers.
The digital locks used in these cabinets also monitor the ambient temperature inside the unit, and can notify relevant users when the temperature is outside its normal range by sending digital warnings.
With the market for smart locks expected to reach USD 3.27 billion by 2025, this industry is on the cusp of immense growth.
TZ’s existing suite of hardware and software is a ready-made solution to the problems facing modern eCommerce and access control, but has historically been weighed down by overly-high operational costs and an inability to scale – issues the new management team are already working to overcome.
This article was developed in collaboration with TZ Limited, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.