Technology Company, K2fly Limited (ASX: K2F), providing software solutions and consultancy to asset intensive industries, has signed a three-year contract with SCR-Sibelco N.V. (Sibelco) for the implementation of RCubed Resource Governance solution across Sibelco’s 60 of the total 174 production sites in more than 30 countries with a team of over 8,500 people working globally. Sibelco, established in 1872, is a Belgium-based global material solutions company.
The new contract builds on the outstanding business momentum that K2fly’s RCubed Governance solution has created over the last few months and demonstrates continued demand for K2fly’s SaaS-based offerings during challenging macro-economic conditions. The annual contract value is not material as of date, but it further validates the Company’s position in the industrial minerals sector worldwide.
Consequently, K2fly’s Total Contract Value (TCV) for its own SaaS solutions (RCubed and Infoscope) has grown over AUD 5 million as the contract terms extend.
The year 2020 to date has been quite momentous for K2fly as it announced significant contract wins and sales.
As at the end of March 2020, the Company’s Software-as-a-Service (SaaS) offerings (RCubed and Infoscope) have been deployed or are in the process of being deployed across more than 390 sites (with more than 40 commodities) in 52 countries. In fact, four of the leading ten global gold companies are using RCubed Resource Governance solution. Additionally, 3 of the world’s big 4 iron ore miners have K2fly’s SaaS solutions deployed across their Resource Governance and Land Management.
In terms of K2fly’s SaaS contracts for its own software suite comprising RCubed and Infoscope:
- The Annual Recurring Revenue (ARR) has expanded 25% to $ 1.8 million in Q3 FY20.
- The ARR compound annual growth rate (CAGR) now stands at 247%.
- The Total Contract Value (TCV) has improved by 41% in this quarter and now totals more than $ 4.7 million, representing a CAGR (Compound Annual Growth Rate) of 793%.
Source: K2fly’s Q3 FY20 Operational Update
COVID-19 virus has taken the world by storm, impacting businesses and their operations. Interestingly, working remotely has always been a part of K2fly’s operating model. Thus, it was a smooth process for the Company to shift fully to a Work from Home state. In fact, K2fly’s software development teams in Australia and South Africa have been working from home since the news about the growth of the virus first surfaced in Australia and globally.
At the same time, the Company also emphasised that it has been historically growing the proportion of its revenue mix from its SaaS business and the trend has cushioned and sheltered the business from any adverse negative impact of COVID-19.
The demand for RCubed Resource Governance solution is primarily driven by regulatory requirements and any resource company has to report its mineral resources and reserves at regular intervals irrespective of the economic conditions. RCubed can be implemented remotely and is therefore not susceptible to any delays or restrictions on travel.
The Company’s Board has also implemented prudent cost management and reduction measures as a response to uncertain times and turbulent capital markets.
Going forth, K2fly expects the business momentum to continue with further multi-year contractual negotiations in the pipeline. Once the negotiations around these potential contracts materialise, K2fly would update the market in due course of time.
Stock Information: With a market cap of ~ AUD 19.96 million, the K2F stock closed the trading session on 20 April 2020 at AUD 0.230. K2G has generated positive returns of 60% in the last one year, 50% in the last six months and 41.18% in the last one month.
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