Subiaco, Western Australia-based, K2fly Limited (ASX: K2F) is a technology company and consulting systems integrator engaged in empowering businesses worldwide to digitally transform and achieve process improvement. With an excellent combination of people, products and strategic alliances in place, the company mainly caters to solving problems for clients operating in the asset-intensive industries such as Mining, Oil & Gas, Rail, Facilities Management, Water, Electricity, Gas, Aviation and Defence.
K2fly’s primary sources of revenues are from its three business segments comprising Owned Software, Third Party Software and Consulting Services (see figure below).
More on Infoscope Land Management system can be READ here.
K2fly has strategic alliances with global technology companies such as SAP (Germany), General Electric (USA) and Esri (USA).
Latest Financial Update
On 3 July 2019, the company announced it had delivered a strong performance for the quarter ended 30 June 2019 (Q4 FY19).
The invoices raised during the three-month period for the 4th quarter stand at approximately $1.49 million, which is an increase of around 52% as compared to the previous corresponding period (pcp) of Q4 FY18 when K2fly had raised invoices to the value of ~$978K.
Previously, the highest value of invoices was raised during the month of May 2019 at $718k, up 67% on $ 430k recorded in the pcp of May 2018. In April 2019, K2fly raised invoices to the tune of approximately $207K, reflecting a substantial increase of 158%, as compared to $80k in the pcp of April 2018.
The company had previously suggested that Q4 is usually the largest revenue quarter for K2fly and the trend has continued with the latest figures at hand.
The invoice growth trend depicted in the figure below reflects consistent upward movement over the last one year.
Source: Company’s announcement dated 3 July 2019
This marks the end of the financial year 2019 (FY19) for the company and the total invoices raised for the entire FY19 total to around $4.18 million, which is a marked improvement of more than 62% relative to FY18 when the company invoiced $2.574 million.
As of the end of the quarter (as at 30 June 2019), the available cash at hand was approximately $1.06 million with $850k in Aged Receivables, due from the existing clients, many of whom are Tier 1 businesses. In addition, K2fly also has $50k in Work in Progress with the existing clients, and it is scheduled to be invoiced only at the time of delivery.
During this last quarter, K2fly had also received a Research and Development (R&D) Tax refund of $82k from the Australian Taxation Office (ATO).
According to K2fly, Q4 FY19 has proved to be a record quarter in terms of the total invoices raised. These results for the quarter also reflect that K2fly is on the right path and its current operations are steadily moving towards achieving its key objective of growing revenue and move to net positive cashflow.
The significant uptick in the company’s financial performance can be attributed to the consistent product expansion and collaboration initiatives, that are supporting extensive market penetration and creating awareness about K2fly’s product offerings and services.
Key contracts finalised in the last six months
- On 3 June 2019, K2fly reported to have completed the acquisition of Resource Governance Software Solution, RCubed through a binding agreement signed with South Africa-based Prodmark Pty Ltd to acquire all of its assets. Prodmark designs and develops mineral resources compliance and reporting software for its clients. In addition, K2fly has also established a unit in South Africa with the existing staff and facilities in Centurion, outside Johannesburg.
- This acquisition is very complementary to K2fly and bolsters its proprietary Software-as-a-Service (SaaS) solution suite offering. The combination of Infoscope and RCubed is a single comprehensive solution for Resource and Energy sector companies to fulfil their Environmental, Social and Governance (ESG) obligations and develop sustainability reports to uphold their social license to operate.
Source: Investor Presentation
- Immediately following the RCubed acquisition, K2fly signed a contract with Imerys SA, a French multinational company, to provide the RCubed Software solution for its mineral sand operations in more than 80 locations in 25 countries worldwide. The implementation cost for this SaaS-based software contract is more than around AUD 150,000 in the first year, with recurring revenues to follow on an annual basis. This marked an encouraging start for K2fly.
- In early May 2019, k2fly reached a Reseller Agreement with Esri Australia Pty Ltd (Esri Australia) whereby Esri would distribute the Infoscope application – a land management system supporting organisations to maintain the license to operate on land. Esri Australia is the exclusive national distributor of global mapping giant Esri’s ArcGIS software, the world-renowned spatial analytics platform.
- The company also started consulting assignments with two Queensland-based clients- New Hope Corporation Limited (ASX: NHC) and Stanwell Energy in May 2019. Besides, additional work and contract extensions were also secured from the existing clients on board including, Fortescue Metals Group (ASX: FMG), Western Power, Arc Infrastructure, Programmed and Westgold Resources Limited (ASX: WGX).
- Earlier in March 2019, K2F was subcontracted to provide consultancy services to Totalmobile on a significant project with one of the world’s largest power companies – Electricité de France (EDF). The contract is a testimony to the company’s internationally recognised consultancy expertise and offers exposure to a new geographical location as the work would complete in the UK with locally-based staff.
- In January 2019, K2F signed an annual software agreement with mining services provider, Mineral Resources Limited (ASX: MIN), to implement the company’s Infoscope enterprise software package.
Stock Performance: K2fly has a market capitalisation of around AUD 12.43 million with approximately 75.35 million shares outstanding. The K2F stock last traded at AUD 0.165 (03 July 2019). K2F has delivered impressive positive returns of 47.48% for the last three months and 26.92% YTD.
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