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IkeGPS sees Analyse potential of 'up to 20x' revenue in step change for business

Tuesday 4th September 2018

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IkeGPS sees its new Ike Analyse product as a possible "step change" for the business, ramping up its recurring revenue from major clients.

Earlier this month, the company raised $5 million of shares at a 4 percent premium in an oversubscribed share placement, and it has a further $1.25 million share purchase plan in the works. The funds raised were to bolster working capital and enable more investment into potential contracts for Ike Analyse, which delivers pole analysis and asset reports, and further opportunities.

"Our mission was always to participate more and more in the value chain of what we deliver," chief executive Glenn Milnes said at the company's annual meeting in Wellington this afternoon. "Ike Analyse lets us take a lot of the analysis and design work that had been completed by external parties, and we can start to deliver that internally with our software. That's the step change Ike Analyse provides."

In the first quarter of 2019, Ike's revenue rose 48 percent to $1.9 million, and the Wellington-based company said two Analyse pilots had been concluded successfully and "follow-on contract opportunities have the potential to deliver significant revenue from Q2 FY19."

Milnes said based on a historical sale to the same customer, Ike Analyse could deliver up to 20 times more revenue and gross margin, "so it's a very large increment of greater potential revenue."

"Historically selling 10 Ike systems to a hypothetical communications customer: they would pay us $150,000 for those systems and $30,000 per annum for the subscription," Milnes said. "With Ike Analyse we start to process all that field data on their behalf and turn it into analysis and reports. That gives us the opportunity to turn a $200,000 deal to a $2 million revenue opportunity."

Milnes said Ike is targeting "really large" customers such as telecommunications company AT&T, which owns millions of assets, as it sees a US$200 billion market tailwind being invested into fibre networks, with the majority on overhead infrastructure. 

In the March 2018 year, Ike narrowed its net loss to $6.7 million from $10.6 million a year earlier. The company said at the time it expected to lift annual sales by more than 30 percent again and keep operating costs flat, leading to earnings before interest, tax, depreciation and amortisation breaking even. 

Ike today reiterated guidance to break even on an operating cash flow basis in the current year and on an ebitda basis by the fourth quarter.

The shares rose 3.8 percent to 55 cents, having already gained 26 percent so far this year.


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