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Australia-based leading Consulting Systems Integrator, K2fly Limited (ASX: K2F) has announced on 2 December 2019 that the RCubed acquisition has crossed its first milestone of contracted annual revenue in under 6 months with the recent signing of Rio Tinto.
Nic Pollock K2fly Chief Commercial Officer pleasingly commented on this latest milestone stating that, âIn November 2019, K2fly has achieved some significant milestones including further validation by a tier 1 mining client (Rio Tinto) and our first customer based in Brazil (Nexa Resources) combining to exceed the contracted first year revenue performance milestones significantly ahead of schedule.â
K2fly Business Segments
The RCubed contract with leading global mining group Rio Tinto was announced on 19 November 2019 for around 20 sites worldwide. The total value of the contract was around AUD 1.45 million, including cost of implementation whereby Rioâs current inhouse systems were to be replaced by RCubed. This followed another contract, valued at around AUD 170,000, secured from Nexa Resources for the implementation of the RCubed Mineral Resource and Reserve software solution across 12 sites in different regions of the world.
Read More: Rio Tinto Signs RCubed Contract with K2fly; Stock Surges 21.62% Midday ; K2fly Signs Nexa Resources
Both contracts turned out to be revenue accretive and further increased the strong ARR (Annual Recurring Revenue) growth that K2flyâs SaaS business has been experiencing of 140% CAGR over the last four quarters, including a growth of 29% in Q1 FY20 from Q4 FY19. In the current quarter (Q2 FY20), K2fly ARR growth has already past 34% while the Total Contract Value (TCV) has also sharply risen by 159% in November 2019 to more than AUD 2 million as the contract terms extend.
Source: Companyâs Report
K2fly continues to have a rewarding journey with RCubed since its acquisition in May 2019 that was highly complementary to the companyâs owned software business segment which initially comprised Infoscope. With Rio Tinto and Nexa contracts signed in November, K2F comfortably surpassed the year 1 ARR milestone which was set at AUD 500,000. New or additional RCubed ARR have reached AUD 665,000 since the acquisition.
RCubed is supportive of different reporting codes (JORC, NI43101 and SAMREC) across 5 key stock exchanges (NYSE, LSE, TSX, ASX and JSE). Moreover, the overhaul of old disclosure requirements for mining company issuers by the US Securities and Exchange Commission (SEC) last year in October 2018 has shot up the demand for RCubed software as major mining houses listed on the NYSE like BHP Group Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO), Vale, Newmont Goldcorp, Anglo Gold Ashanti Limited (ASX: AGG) and Goldfields to name a few, would be required to follow the new regulation from fiscal year beginning on or after 1 January 2021.
There are more than 50 large mining companies listed on the NYSE. Thus, K2fly believes that this trend is expected to continue with more potential multi-year contracts in the pipeline, although still in negotiations. The company will update the shareholders upon finalisation of these contracts.
Stock Performance: K2fly has a market capitalisation of around AUD 17.15 million with ~ 81.69 million shares outstanding. On 2 December 2019, the K2F stock closed the trading session at AUD 0.230, climbing up 9.52% by AUD 0.020. K2F has delivered positive returns of 90.91% in the last six months, 61.54% Year-To-date and 40% in the last one month.
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