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IkeGPS still sees breakeven this year, expects lumpy revenue to 2018 and beyond

Friday 17th February 2017

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IkeGPS, the laser measurement toolmaker, maintained its breakeven forecast for 2017 but won't achieve projected sales growth after a weak first half, and expects lumpiness in its revenue to 2018 and beyond.

In November, IkeGPS posted a wider first-half loss at $6.8 million from $4.4 million a year earlier, with operating revenue falling to $2 million from $4.3 million. The company today said Ike4 sales into the US electric utility and communications market had strengthened in the third and fourth quarter, but it doesn't expect to achieve 50 percent year-on-year unit volume growth due to the "very soft" first half. The Ike4 is the company's fourth-generation field data collection product for use by utility, engineering and telecommunications companies to inspect utility poles.

"Ike believes that the long-term market opportunity for its Ike4 solution is significant, growing and over the long run will deliver consistent revenue growth and profits," the company said. "However, the time to close larger contracts is lumpy and these have been slower than anticipated in the FY17 period ... Ike expects that this lumpiness will continue and that it may create both half yearly upside and downside in revenue performance through FY18 and beyond."

Chief executive Glenn Milnes said the first half of 2017 was very difficult for the company, but it is looking to grow sales in 2018 after taking a healthy cash position.

Another product, the Stanley Smart Measure Pro, is the result of a licensing agreement for a Stanley-branded mobile software app agreed in late 2014. Sales of that product in the construction market are expected to reach 39,500 units, representing 58 percent volume growth from the previous year. In November, Ike said about $2.8 million of sales of the product expected for the first half had been pushed out to the second half due to a supply-chain glitch.

Revenue and volume sales for its Spike product, which largely come from sales into the signage market, are expected to grow between 25 percent and 50 percent year-on-year, a downgrade from the company's projections when announcing its first half results when it said sales momentum had remained strong and was on target for 50 percent annual growth.

Ike is putting in place recurring revenue models with subscription add-ons available for all its products, meaning revenue and margin per sale have increased over two to three years after the sale but there is lower upfront revenue, the company said. 

The company's shares gained 8.6 percent to 38 cents, extending the recovery from a record low 32 cents on Feb. 3, and have declined 46 percent in the last 12 months. The shares were sold at $1.10 apiece in its 2014 initial public offering.

BusinessDesk.co.nz



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