IKE - ikeGPS performance update Q3 FY24

Thursday 8th February 2024

ikeGPS Group Limited (IKE) (NZX: IKE / ASX: IKE) is pleased to release an update for the nine-month period to 31 December 2023 (all figures in NZD).

IKE will host a webinar 8 February 2024 at 11am AEDT/1pm NZDT to discuss performance and outlook. To register, please click:

https://us02web.zoom.us/webinar/register/WN_k6Z1Ze4oSampfz-39DwurQ

Highlights:

 YTD revenue of ~NZ$15.3m (-34% pcp).

 Subscription revenue of ~NZ$7.9m (+24% vs pcp).

 Transaction revenue of ~NZ$5.1m (-65% vs pcp).

 YTD gross margin of ~NZ$8.8m (-28% vs pcp), with a gross margin percentage of ~58% (up from pcp of ~53%).

 Total cash and receivables as of 31 December 2023 of NZ$15.2m (vs NZ$16.3m at 30 September 2023), comprised of NZ$8.0m cash and NZ$7.2m receivables, with payables of NZ$0.8m and no debt.

 Noting that as at 31 January 2023, cash increased to NZ$11.0m and receivables decreased to NZ$3.5m.

Commentary and outlook:

IKE CEO Glenn Milnes commented, "Q3 FY24 was a stronger period at IKE. Customer wins and growth in recurring subscription revenue was strong, and the adoption of our recently released IKE PoleForeman product by key clients underscores its value & capabilities and sets a precedent for further adoption across our expansive customer network in the coming quarters.

Recent subscription sales highlights included:

- Signing a ~NZ$3.7m subscription contract with a Fortune 150 Company and one of the ten largest Investor-Owned-Utilities (IoU’s) in the U.S., upgrading them from IKE’s legacy product to our new IKE PoleForeman structural analysis platform. Over the coming five years, this long-term customer commitment means over 1,000 engineers at this utility will use IKE PoleForeman’s advanced capabilities for network design. This upsell signifies a more the tenfold increase in annual recurring revenue from this customer versus IKE’s legacy product (~NZ$70k p.a. increased to ~NZ$700k p.a. subscription revenue), demonstrating the value of the product to the customer.

- Early Q4 we closed another large U.S. electric utility to a ~NZ$450k three-year subscription contract for IKE PoleForeman, representing a five-fold increase in annual recurring revenue from this customer versus our legacy product.

- In addition, we signed a large national engineering firm to a ~NZ$0.5m three-year subscription contract, also for the new IKE PoleForeman product.

o The signing of these long-term subscription contracts, at dramatically increased revenue levels and with multi-year commitments, demonstrates the value of this new product and validates our ability to transition tier-1 infrastructure customers. Additional large subscription contracts from U.S. utility groups are imminent over the coming months.

- Subscription deals for our IKE Office Pro included signing 12-month contracts for ~NZ$0.2m with one of the largest communications groups in North America, a ~NZ$0.3m subscription contract with a national engineering group, and a ~NZ$0.25m subscription contract with another national engineering group.

In terms of transaction revenue, positively, we have seen an uptick in closed contracts as well as various outsize pipeline opportunities being progressed. Recognized revenue continued to be low in Q3 relative to pcp however. This slow-down has been well signaled to the market, with several major IKE customers in the U.S. communications segment having network projects slowed, mostly with unrelated regulatory impediments. We continue to reiterate that these long-term customers are not lost, and they have communicated their expectation that the multi-year outlook for use of the IKE platform is robust.

For further performance information, graphs, and detail please see the attached release.

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