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Geo Improves Earnings As Operational Changes Deliver

Thursday 27th August 2020

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• Experienced management team starts in H2 with a focus on execution, selling a simplified product suite to key addressable vertical segments. The combination of lean operations and tight focus delivers meaningful improvements in the momentum and results in H2, including customer acquisition metrics.

• Net losses from operations improve 62.6% to $2.1m(1) ($5.5 m in FY19), EBITDA(2) losses improve 12.4% to $1.2m ($1.4m in FY19), while operating and investing cash outflows reduce 40.5% to $1.4m ($2.4m in FY19) on a 14.7% reduction in Group revenues (down from $5.6m to $4.8m).

• Costs reduce significantly during H2 through a combination of permanent efficiencies and temporary reductions in salaries, rent and marketing spend. Stripping out the impact of temporary cost reductions and COVID-19 subsidies, Q4 FY20 operating and investing cash outflows are 39% improved on Q4 FY19.

• Core Geo product customers are largely unaffected by COVID-19. Licence numbers decrease by 9.4% primarily due to a pause in customer acquisition activities during the pandemic lockdown. Year-end Average Revenue per User (ARPU) for core product increases by 4.1% from June 2019 to $17.79.

• Geo for Sales customers’ field sales operations  are  significantly  impacted  by  lockdowns  in Australia and New Zealand, leading to a 51.1%  decrease  in  subscription  revenues.  This  product now accounts for less than 10% of group revenues and is held at zero value in the balance sheet.

• Focus on priority customer segments is driving material improvements in the quality of leads, cost-per-lead metrics and customer enquiry. Head of Sales recruited from hipages, Australia's leading tradie demand-side platform.

• The Company's operations are expected to be funded through early 2021 from the combination of $0.3m cash at hand, $0.3m in undrawn convertible notes and $0.5m in annual R&D grants. As temporary expense reductions are gradually reinstated, GEO sees its monthly cash burn stabilising at ~$130-$140k from late 2020.

• While GEO is not providing guidance, the focus and cadence within the business provide confidence to Directors that growth will resume in FY21, with the rate of top line growth dictating the amount of incremental capital required to reach cash flow break even. Illustratively, at 20%-40% top line growth rates the company would require ~$1.0 - $2.5m in incremental capital.

See the link below for full report

GEO FY20 Results Announcement

Source: GEO

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