K2fly Delivers Strong Quarterly Performance; Cash flow from Ops Positive

Summary

  • K2fly releases Q4FY20 operational update representing positive cash flow of AUD 0.66 million.
  • It reports a 28 per cent increase in the invoices raised in Q4FY20 as compared to the comparable quarter in FY19.
  • The company gained AUD 1.719 million (before costs) from the exercise of 8,596,096 listed options that expired on 18 May.
  • ATO granted K2fly an R&D tax refund of more than AUD 88k.
  • SaaS Annual Recurring Revenue (ARR) has increased to AUD 2.36 million.
  • Since acquisition of Rcubed, K2F has added many new clients. New contracts that were signed this quarter exceeded Year 3 acquisition performance milestone in mere 13 months.

Technology company, K2fly Limited (ASX: K2F) offers various services to asset-intensive sectors. It provides people, products and strategic partnerships centred on solving problems for clients. K2F owns the software solutions - RCubed and Infoscope.

On 6 July 2020, K2F announced its Q4FY20 operational update. It has raised invoices for AUD 1.9 million in Q4 FY20, an increase of 28 per cent over the comparable quarter in FY19. It implies that invoices raised for FY20 were AUD 6.626 million, an increase of 60 per cent when compared to the invoices raised in the previous financial year, which were AUD 4.145 million.

Image source: Company’s announcement

Image source: Company’s announcement

Positive Cash Flow, Equity Raising & ATO Tax Rebate

K2F has reported positive cash flow of AUD 0.66 million. As on 30 June 2020, the cash available was AUD 2.9 million. Also, there was AUD 1.13 million in receivables from Tier 1 clients. The Company was able to achieve net positive cash flow thanks to increased sales and cash receipts from customers in this quarter.

K2F raised (March through May 2020) AUD 1.719 million (before costs) from the exercise of 8,596,096 listed options that expired on 18 May. There was no discount offered to the Option exercise price of AUD 0.20. K S Capital Pty Ltd partially (60 per cent) underwrote the agreement.

Related: K2fly Enters $1.53 million underwriting agreement with K S Capital Pty Limited

In Q4, ATO granted K2F an R&D tax refund of more than AUD 88k. The Company has also applied for the government's subsidies and entitlements in response to the pandemic Covid-19. It reported no borrowings.

SaaS Engine Continues to Fire, New Clients Onboarded

Furthermore, Software as a Service (SaaS) Annual Recurring Revenue (ARR) has increased to AUD 2.36 million. It represents a quarterly increase of 29 per cent and Compound Annual Growth Rate (CAGR) of 177 per cent. The Total Contract Value (TCV) for SaaS contracts is now nearly AUD 7.47 million, a quarterly growth of 57 per cent and a CAGR of 663 per cent.

K2fly has mentioned that RCubed's takeover helped it win many contracts with significant global mining clients. It has recently inked an agreement with Orano SA (Orano), previously known as Areva SA. The company is a global nuclear fuel cycle company with uranium mining operations. It is headquartered in France. As per the agreement, Orano will implement the RCubed resource governance solution for five years. The total contract value is over AUD 300k.

K2fly's additional new clients are - Nexa Resources, Rio Tinto, Newcrest, Goldfields, Imerys, Glencore Canada, Kinross Gold, Orano, Newmont, Sibelco, and South 32.

Related: K2fly Confirms a 5 Year SaaS Deal with South32

Also, the existing SaaS clients of company's RCubed and Infoscope solutions have also extended their licencing contracts. Teck Resources and AngloGold Ashanti have increased the deal for three years and Westgold for five years.

It is evident from the addition of new clients Sibelco, Orano, Kinross Gold and South 32 in Q4 that mining companies are appreciating the advantages of K2F's SaaS offerings. Based on undergoing discussions and negotiations, the company is confident of adding more new clients in 2020.

Also read: K2fly Onboards Kinross Gold Corporation for RCubed Implementation Across 8 Mine Sites

After getting new contracts in this quarter for K2F's RCubed resource governance solution, the net new annual recurring revenues for these deals have exceeded AUD 500k. K2F was targeting to achieve revenue acquisition performance milestones for RCubed over three years, and with this yearly recurring revenues, it has reached its final milestone. The revenue acquisition performance events have now been achieved in a mere thirteen months since the takeover.

Stock Performance:

In the past 3 months, K2F has delivered its shareholders a healthy return of ~18%. On 6 July 2020, K2F shares closed the day’s trade 10%, up at AUD 0.220 with a market cap of AUD 18 million.


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