ikeGPS FY20 Half Year Results

ikeGPS (IKE) today released its unaudited financial statements relating to performance for the six-month period to 30 September 2019 (all figures NZD). Key metrics delivered are ahead of prior market guidance: + Record revenue of approximately $5.25m. Above guidance of $5m. + EBITDA breakeven Q2 FY19. + Total cash and receivables at 30 September 2019 of $4.9m. Above guidance and approximately equal to 31 March 2019. ? Noting that total cash & receivables were approximately $7.9m at 31 October 2019. + Success and growth of IKE Analyze has resulted in improvement in the quality, predictability, and sustainability of earnings with approximately 62% of revenue from IKE Analyze transactions or recurring software subscriptions. + Record gross margin of approximately $3.8m and with gross margin percentage of 72% (increased against PCP of 65% and above guidance for 70%). + Continued progress with the targeted customer base, now with ten of the largest 15 Communication and Cable companies in North America in deployments or pilots (increased from eight in the September 2019 update). + The emergence of a substantial new market opportunity for IKE Analyze around 5G mobile network developments, with important lead customers contracted. + Market timing, forward contracts, and ongoing transactional revenue provides confidence in outlook in 2H FY20 and beyond. The charts attached further set out momentum; Takeaways; + IKE's revenue mix has shifted materially the past 12 months. + Greater than 70% of revenue is expected from transaction & recurring sources in FY20 (blue bar). + This is an important transition in terms of increasing revenue quality and predictability to underpin growth. + Noting that 2H FY19 represented the launch of IKE Analyze, which delivers a lower upfront revenue component but a higher long term revenue profile per customer. Takeaways; + The expansion of the IKE Analyze product is driving revenue and gross margin growth. + Record revenue 1H FY20 from the Communications & Utility segment of approximately $4.9m, continuing the positive performance trend of the past 24+ months. + High customer retention rates exceeding 90% have supported subscription revenue growth. + The above factors have translated to gross margin percentage growth from 51% in FY18 to greater than 70% 1H FY20. Takeaways; + IKE is accessing increasingly large and long-term account opportunities via IKE Analyze. + A typical IKE Analyze account delivers transaction & subscription revenue on an ongoing basis. + IKE's sales run rate has been adding approximately five Engineering Service Providers and approximately one Communications Infrastructure Owner per quarter. Takeaways; + The positive momentum of the past 24 months has continued through 1H FY20 with respect to revenue, gross profit, and EBITDA growth. + Record total revenue of approximately $5.25m in 1H FY20. + EBITDA breakeven Q2 FY20 (period ending September 2019). + Total Cash & Receivables approximately equal to the level 31 March 2019. IKE CEO Glenn Milnes commented; + "1H FY20 has been our strongest period yet with the continued growth of revenue and gross margin from our core Communications and Utility segment. + We delivered EBITDA breakeven performance in Q2 FY20, noting that both the months of May and June were also EBITDA positive. + We are pleased that greater than 70% of FY20 revenue is now expected to be generated from IKE Analyze transactions - a "transaction" represents the analysis & processing of an asset within the IKE cloud pole platform - or recurring software subscriptions. This is a positive development in terms of revenue quality and has resulted from the extension of our market offering with IKE Analyze. + Ten (updated from eight in September) of the 15 largest communications and cable companies in the U.S. market are IKE customers or are in pilots. We are focusing on revenue expansion opportunities within these accounts and developing new pipeline sales opportunities. + An additional market opportunity for IKE Analyze was validated in the period, specific to 5G mobile network development and we are contracted into one of the largest businesses building 5G infrastructure across the U.S. The 5G market opportunity in the U.S. is large and is expected to grow over the coming five or so years. This is an additive market to the large fiber market opportunity where IKE Analyze has established a clear value proposition and customer proof points. + More generally, we are winning customers and driving transactions across the IKE platform because our solution enables networks to be deployed faster, more cost-effectively, and with a higher quality data standard. + Subsequent events in October and November 2019 included closing the acquisition of certain assets of PowerLine Technology Inc (one of the leading structural analysis software companies in North America), the successful close of an oversubscribed capital raise of $6.5m, and the appointment of Mark Ratcliffe (former CEO of Chorus and Chief Operating Officer Wholesale & Technology of Telecom New Zealand) as a new independent non-executive director." ENDS IKE seeks to be the standard for collecting, analysing and managing pole and overhead asset information for electric utilities, communications companies, and their engineering service providers. Contact: Glenn Milnes, CEO, +1 720-418-1936, glenn.milnes@ikegps.com End CA:00345176 For:IKE Type:HALFYR Time:2019-11-29 09:44:22