Announcement
FLLYR: IKE: ikeGPS Group FY21 Results announcement
04:26pm
IKE
31/05/2021 16:26
FLLYR
PRICE SENSITIVE
REL: 1626 HRS ikeGPS Group Limited
FLLYR: IKE: ikeGPS Group FY21 Results announcement
Solid performance in COVID-impacted FY21.
Record run rates for new contracts closed over the five months from January
to May 2021.
ikeGPS (IKE) is pleased to release key metrics from its performance for the
FY21 year and to provide an update on other recent performance metrics (all
figures NZD). The financial results presented are based on figures which are
unaudited. The audit is currently in process.
The IKE platform allows electric utilities, communications companies, and
their engineering service providers to increase speed, quality, and safety
for the construction and maintenance of distribution assets and networks.
Financial highlights for the FY21 year to March 2021:
+ Revenue in the year of approximately $9.3m (pcp of $9.8m).
? This performance is as previously announced, is at analyst expectations,
and reflects a solid outcome in the context of the Q1 and Q3 periods being
disrupted by COVID-19 impacts on customers and associated pole projects
across North America.
+ Gross margin of approximately $5.9m (pcp of $6.9m) with a gross margin
percentage of approximately 64% (pcp of 71%).
+ Loss of $7.4m (pcp of $6.1m)
+ Total cash and receivables 31 March 2021 of approximately $14m, with no
debt.
Takeaways from the graph shown in the attached announcement:
? IKE's revenue mix in this core segment has continued to trend positively
with greater than 75% of revenue generated from transaction & subscription
sources in FY21 (shown by the blue bar in the chart).
? This is an important transition in terms of increasing revenue quality and
predictability.
? Total revenue from this segment was approximately flat against PCP,
notwithstanding Covid impacts.
Additional key metrics within total FY21 revenue of $9.3m were:
o Total subscription revenue = $4.6m
o Total enterprise subscription customers = 282
o Total transaction revenue = $2.3m
o Total number of billed pole transactions = 53,000
These metrics will be reported quarterly moving forward.
Highlights for the Q4 FY21 period to March 2021, and Q1 FY22 update.
Approximately $8.8m of new contracts closed in the five months to 31 May
2021.
+ IKE has closed approximately $8.8m of new contracts in calendar 2021 as the
North America market has emerged from COVID-19 impacts and network projects
are accelerated.
+ The final quarter of FY21 to March was strong, with record new contracts
closed as project deferrals through calendar 2020 were eased.
? Approximately $5.4m of contracts were closed in Q4. A majority of the
associated revenue is expected to be recognized through IKE's FY22 period to
March 2022.
? New contracts won are supporting network projects for some important
underlying customers including AT&T Inc. (the world's largest communications
company), Crown Castle International Inc. (the largest shared communication
infrastructure company operating in the U.S.), Corning Optical Communications
Inc. (the world's largest fiber optics manufacturer), ALLO Communications (a
communications business operating across the states of Nebraska and
Colorado), and a Fortune 100 electric utility group.
? Several deferred projects from Q3, as detailed above, came online as
specific constraints of COVID-19 eased.
+ Sales momentum has continued in the initial eight weeks of Q1 FY22 to June
2021.
? Approximately $3.4m of contracts have closed in the quarter to date. A
majority of the associated revenue is expected to be recognized through IKE's
FY22 period to March 2022.
Market and customer development overview
The core revenue engine for IKE is generated from platform subscriptions and
additively when certain processes are used to analyse an asset using the IKE
platform (transactions). In the Q1 period to June 2020 and Q3 period to
December 2020, materially less engineering activity occurred on certain
network projects while COVID-19 response measures were put in place.
However, and positively, many deferred contracts are now transitioning to
delivery and new network projects are now being initiated.
IKE targets sales into North America's approximately 200 communications
companies, approximately 3,000 electric utilities, and their approximately
1,000 engineering service providers. Once a customer, IKE then aims to embed
and expand the use of IKE platform products inside of these accounts over
time. Several recent customer expansion examples help to explain this model
and point to larger future revenue opportunities. Examples:
+ In May 2021 IKE signed an extension to an important agreement with a
Fortune 100 U.S. electric utility group to help assess and design its power
distribution infrastructure. This follow-on contract is expected to generate
an additional approximately $1.2m revenue in IKE's FY22 (the period ending 31
March 2022). In total, the value of this customer contract is now
approximately $1.9m, increasing more than four-fold since October 2020.
? The customer will utilise the IKE platform to assess approximately of
350,000 power pole assets, a sub-segment of its network of approximately 1.3m
poles.
? This follow-on agreement followed a successful pilot and phase-1
programme and went live immediately.
? This Group has five other similar electric utility companies in its
portfolio in the U.S.
+ In January 2021 IKE signed a contract with an engineering service provider
(ESP) that is delivering network projects for AT&T. AT&T has standardized on
IKE for certain pole-based engineering tasks.
? This ESP initially contracted to use the IKE platform to deliver analysis
on approximately 100,000 poles over 12-18 months, that will generate
approximately $420k of revenue for IKE through FY22 and FY23.
? In April 2021, this ESP additionally contracted to the IKE Analyze
product to accelerate some advanced engineering assessment of 3,000 poles,
that will generate approximately an additional $120k revenue for IKE over the
coming approximately six months.
+ In May 2021, IKE signed a customer contract with another AT&T-focused ESP.
? This ESP has initially contracted to use the IKE platform to support pole
project delivery in two states for AT&T, in California and Arizona.
? It is expected that this will initially generate over $300k of
transaction and subscription revenue for IKE over the coming 12 months.
? This ESP has won multi-year contracts to deliver projects into AT&T
across 13 states.
+ In March 2021, IKE signed a material contract with an ESP linked to Crown
Castle International Inc. (CCI). CCI has standardized on the IKE Platform
for specific pole engineering applications.
? This ESP's use of the IKE Platform for CCI and other network projects is
expected to translate to approximately $700k subscription and transaction
revenue per annum.
? Concurrently, CCI has continued to roll out the IKE Platform internally
for its own engineering teams. To date, CCI have deployed approximately 55
IKE systems internally for their own engineering operations.
Broader market tailwinds continue to support the growth potential of IKE's
business, with more than $300b forecast to be invested into fiber and 5G
infrastructure over the next five plus years, with the potential for more the
$80b of government funding for rural broadband initiatives, and with more
than 3,000 electric utilities needing to address the challenges of network
assessments, strengthening, engineering, and maintenance. The IKE platform
delivers network assessment, execution and maintenance processes that are
faster, safer, and to a higher quality data standard.
Research coverage
Bell Potter (https://bellpotter.com.au), one of Australia's largest
full-service financial advisory firms, initiated research coverage on IKE in
January 2021. Their associated report outlines the growth potential of the
business.
Product and market extensions
A focus in 2H FY21 was the acquisition and integration of certain assets of
Visual Globe LLC, a US-based Artificial Intelligence (AI) and low code/no
code software company that specializes in the automated analysis of power
poles from very large data sets:
+ This strategic acquisition complements IKE's existing offering and aligns
with the Company's vision to be the Pole OS company and the standard for
collecting, analyzing and managing power pole information.
+ Visual Globe's AI platform provides the potential for IKE to grow its
addressable market within the electric utility and communication industries
and to significantly increase the number of transactions that can process
efficiently on its platform. New market applications specific to pole
projects include NESC Violation assessment, Right of Way encroachment
assessment, As-builts for future change detection, Joint Use assessment, and
others.
+ The addition of Visual Globe's technology and team will enable IKE to
process and analyze large volumes of pole data that can be collected from new
additional sources including drones and smartphones, making the Company's
platform even more attractive to electric utilities and communications groups
in the North American market.
Team and Talent. Brand and Customer Experience.
+ In calendar 2021 IKE has made several important appointments, including;
? Eileen Healy as non-executive director. Based in San Francisco, Eileen
is a communications industry leader and serial entrepreneur who has founded
two high-tech startups addressing the U.S. communications market: Healy & Co,
an innovative company providing outsourced engineering to the U.S. utility
market. Customers include AT&T Mobility, T-Mobile, Vodafone, Verizon
Wireless, Frontier Communications, and FirstNet. She also founded and sold
Telecompetition Inc., a data analytics company.
? Tom DuBois as VP Product Management. Tom brings product leadership
experience from several silicon-valley based growth companies and has also
held executive roles at Electronic Arts, Google, and most recently Intel -
from where he joined IKE.
? Jareth Hosskings as Head of Engineering. Jareth has been appointed to
lead all of IKE's engineering teams across the IKE Office, IKE Structural
(PoleForeman), and IKE Insight (formerly Visual Globe) solutions. Most
recently Jareth was Head of Engineering at AgilityCIS, where he led an
engineering team of 75 developers operating across a number of countries
specializing in software products for the utility sector.
? In September 2020, Bruce Harker however stood down as non-executive
director. The Board, and all of the IKE team, wish to thank Bruce for his
considerable contribution to the business.
+ Meaningful brand and customer experience milestones achieved through the
FY21 period included:
? The launch of a scalable online training, education and deployment
platform, called IKE University.
? The U.S.-based IKE team shifted to 100% remote working at the onset of
the COVID-19 pandemic. The company has worked consistently on implementing
and improving remote working best practices and performance. Although IKE
intends to return aspects of its operations to in-office - it is believed
remote working excellence can be a source of competitive advantage for
attracting and retaining talent moving forward.
IKE CEO, Glenn Milnes, commented, "The far-reaching impacts of COVID-19
across North America in 2020 created a period of challenge and high
uncertainty for our business and our industry. IKE's plan throughout this
pandemic however has been to seek to get on the 'front foot' wherever
possible. This has been in terms of strengthening our people, processes,
products, and financial position so to be able to execute on growth
initiatives, such as acquisitions. These strategic objectives were executed
on through the 2020 year. Positively, our customers and our market have
bounced forward strongly since January 2021 and we are pleased that IKE has
emerged in the strongest position it has ever been - in terms talent, an
extended product portfolio that allows more value to be delivered to
customers across new pole applications, balance sheet strength, sales
performance run rates and sales pipeline. We are excited about the growth
potential for FY22".
ENDS
About ikeGPS
IKE - the Pole OS company, 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:
Simon Hinsley, Investor Relations, +61-401-809-653,
simon@nwrcommunications.com.au
Glenn Milnes, CEO, +1 720-418-1936, glenn.milnes@ikegps.com
End CA:00373149 For:IKE Type:FLLYR Time:2021-05-31 16:26:40
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