ikeGPS Group Limited (NZX: IKE) Q3 FY22 Performance Update

Tuesday 1st February 2022

ikeGPS Group Limited (IKE) (NZX: IKE / ASX: IKE) is pleased to release an update for the nine-month period to 31 December 2021 (all figures NZD).

Highlights to December 2021:

YTD revenue of approximately $9.9m (approximately 53% higher than prior calendar period (pcp)).

Q3 FY22 revenue of approximately $4.2m (approximately 100% higher than pcp).

Q3 FY22 subscription and transaction revenue of approximately $3.3m (approximately 95% higher than pcp).

New contracts closed in Q3 FY22 were >$7m (approximately 180% higher than pcp).

YTD gross margin of approximately $6.3m (pcp of $4.3m), with a Q3 FY22 gross margin percentage of approximately 63% (pcp of 67%).

Total cash and receivables 31 December 2021 of approximately $29m, with no debt.

IKE CEO, Glenn Milnes, said: “The Q3 FY22 period was the strongest yet for our business. The level of new contracts won in calendar 2021 total more than $23m, noting that these contracts are based on our customers entering into network projects and that the timing and delivery of this revenue is dependent on customer execution. However this level of demand and closed business is against FY21 full year revenue (to March 2021) of $9.3m, and as such provides us with a high level of confidence for the potential for substantial growth in FY22 (to March 2022) and FY23, notwithstanding timing risks around some customer projects as above.

Full commentary and momentum across the business is set out in the announcement.

Outlook

The substantial increase of new contracts won year-to-date points to a strong potential forward revenue growth profile. IKE’s sales opportunity pipeline has continued to develop robustly quarter over quarter.

The month of January 2022 has also been positive in terms of demand and continued momentum. This has included announcements of:

Signing an extension to a contract with an existing communications customer supporting fibre infrastructure deployment in the U.S. This customer is expected to now generate >$4m of transaction revenue for IKE in the coming 12-18 months.

Receiving an approximately $0.9m contract from a new tier-1 North American electric utility customer. This revenue will be fully recognized over the coming 12 months and at this initial level of platform usage, the expected ongoing software subscription revenue from this customer will be approximately $200k per annum.

In addition to the product deals closed above, in January 2022 IKE was also awarded a $0.6m co-investment cash grant from NZ Trade & Enterprise to support the go-to-market program for IKE’s AI Software solution, called IKE Insight.

IKE’s focus for Q4 FY22 (period to March 2022) continues on three core themes:

The delivery of contracts to recognize revenue from contracts in place,

The extension of revenue opportunities from existing customers, and

Building further market proof points behind IKE’s AI-software business segment, called IKE Insight. Certain pilot projects in process, if proven out, have the potential to disrupt the way that the electric utility sector completes network-wide structural analysis programs.

Customer and market commentary

IKE targets sales into North America’s approximately 200 communications companies, approximately 3,000 electric utilities, and their engineering service providers. Once a customer, IKE then aims to embed and expand the use of its three IKE solutions inside of these accounts.

As above, Q4 FY22 has started positively in terms of demand and revenue momentum.

Market tailwinds continue to support the growth potential of the IKE business in North America.

An additional US$60b of investment into broadband network development, as part of the Biden administration’s $1 trillion Infrastructure bill, is additive to more than US$350b forecasted to be invested into fibre and 5G infrastructure over the next five plus years as a baseline.

Additionally, more than 3,000 electric utilities are needing to address the urgent challenges of network strengthening and maintenance over the next five to ten years.

IKE solutions deliver network construction and maintenance processes that are faster, safer, and to a higher quality data standard.

Please see the link below for details

IKE Q3 FY22 Performance Update

Source: ikeGPS Group Limited

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