By Gavin Evans
Nov. 28 (BusinessDesk) - Utilities measurement specialist IkeGPS said it remains on track to break-even at the operating level in the fourth quarter after lifting sales and halving its first-half loss.
The company today reported a $2.3 million net loss for the six months through September, down from a $4.5 million loss a year earlier.
Revenue increased 27 percent to $4.4 million, buoyed by good North American demand for its new Ike Analyse product.
Gross profit almost doubled to $2.9 million, reflecting both higher sales and a 20 percent decline in cost of sales. Operating expenses also fell about 14 percent to $5.1 million – mostly due to lower corporate and research and engineering costs.
Wellington-based Ike utilises GPS technology in its software and field equipment to measure and record pole and line data and make it easier for power and telecommunications firms to build and manage their networks.
Chief executive Glenn Milnes noted that gross margins as a percentage of sales rose to 65 percent in the half, up from 44 percent a year earlier, reflecting recurring software-as-a-service revenue. Subscription renewal rates exceeded 85 percent in the period.
Demand for the new Ike Analyse product has also been good, with revenue from it roughly doubling to an annual rate of $2 million in the second quarter.
“Based on contracts in place we expect this annualised run rate to continue to increase through Q3 FY19 and with the potential for IKE Analyze sales to deliver outsize revenue growth, acknowledging that we do expect ongoing lumpiness because of the nature of the contracts being pursued.”
The company reiterated its expectations for 30 percent-plus full-year revenue growth. It also expects to break-even before interest, tax, depreciation and amortisation in the fourth quarter and to deliver positive operating cash flow for the full year.
Shares of Ike, which listed four years ago, last traded at 59 cents and have gained about 40 percent this year. In September the company raised almost $6 million from new shares to provide working capital and help fund on-going product development.
The company had about $5.4 million of cash at Sept. 30.
Milnes noted the IKE Analyze product requires more initial working capital than the firm’s other products. A stronger balance sheet is also important given the size of business Ike is now selling to or targeting, and the critical infrastructure data and asset records it has to host for them, he said.