A Flick through SenSen’s (ASX:SNS) Spectacular Journey in FY 2020

Summary

• SenSen published its annual report for the period ended June 2020 on the ASX.
• The Company did not face any material delays or disruptions to client deliveries and support in FY20 that highlight its exceptional execution capabilities.
• During the period, SenSen announced the acquisition of first US-based flagship customer, secured new orders and multi-year contracts and continued to advance SenGame technology.
• The Company finished FY20 with a strong cash position of ~A$2.5 million, marking a 25% surge on FY19 cash position.
• The Company expects its ARR to grow in the order of ~75% to ~A$3.5 million in FY21.

Australian-headquartered SenSen Networks Limited (ASX:SNS, OTCQB:SNNSF) has recently released its annual financial report for the period ended June 2020 on the ASX. During the financial year, the Company continued to follow an aggressive growth strategy to diversify revenue streams, expand internationally and commercialise new product lines while retaining revenue momentum.

Subsequent to the release of the annual report, the Company’s stock price rose by ~2.3% to A$0.088 on 1^st October 2020.

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Despite COVID-19 induced challenges with 90% of staff working remotely, the Company did not face any material delays or disruptions to client deliveries and support in FY20 that highlight its exceptional execution capabilities.

The Company’s FY20 report primarily outlines significant marketing and business development activities undertaken by SenSen during the past financial year. Having said that, let us quickly shed light on these activities in some detail below:

Announced Acquisition of First US-Based Flagship Customer

SenSen earned persistent and growing support from its Smart City clients in Australia as well as other key international markets during the period. Significantly, the Company won its first commercial US customer, City of Las Vegas, securing ~A$2.5 million contract for a term for five years. The contract includes the utilization of 80 Gemineye units by City officers who are patrolling streets and car parks on enforcement vehicles, Segways, and Go4 scooters.

While the deployment and installation started in April 2020 with software commissioning of the multi-dimensional SenSen, the handover of the project is anticipated to complete in September.

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Secured Additional Multi-Year Contracts

SenSen secured several additional contracts in Singapore, Australia and other territories during the period, which include:

• A collaborative services contract with Chicago Parking Meters, LLC to enhance management efficiency of parking space in the City of Chicago, US
• A five-year Singapore government contract, in conjunction with ATT Systems Group, to prevent traffic congestion and deter illegal parking,
• A multi-year extension to maintain and support software at Singapore-based Changi International Airport with Asian system integration partner, Beaqon Systems,
• A three-year deal, in conjunction with Duncan Solutions, to deliver automated parking enforcement solutions to Victoria-based Geelong City Council, and
• A three-year deal with Queensland-based Tweed Shire Council, in collaboration with Duncan Solutions, covering the City’s purchase of an initial SenFORCE mobile parking, with upfront revenue for the software, systems and commissioning of the unit.

Received Several New Orders

The Company attained several new orders from different jurisdictions during the period, which comprise:

• First orders from NZ with an initial five Gemineye licences obtained by Nelson City Council via a reseller arrangement with NZ-based Integrated Technology Solutions,
• Gemineye orders (an initial 10 units of Gemineye Kerbside) from the Canada-based City of Calgary via its Canadian distribution partner, ParkPlus,
• Additional Gemineye orders for real-time car counts at entry and exit spots for car parking in Qatar,
• Orders from TfNSW for SenSen’s average speed detection and enforcement technology,
• First international commercial order for its Artificial Intelligence-based False Alarm Reduction and Management (AI-FARM) software,
• An additional SenFORCE system from Queensland-based Logan City Council to augment their existing SenFORCE system to further improve regulatory and compliance services.

In addition to these developments, the Company continued to undertake trials for the Gemineye offering across the globe and is currently in commercial discussions with several parties in NZ, Australia, India, the US and the Middle East. Based on the response from the US institutions and customers, the Company anticipates improving its North American presence once travel restrictions are fully relaxed after COVID-19.

Developments in Retail & Leisure Segment

During the period, SenSen continued to advance the SenGAME gaming solution technology by building additional modules to fulfil client requirements.

Despite COVID-19 driven disruptions, the Company obtained orders for the installation and hardware of SenGAME 3.0 on an additional 76 tables under present arrangements. For these new deployments, the Company received advance payments of over ~A$450k.

Besides, the Company terminated the exclusive Distribution Agreement with its exclusive distributor of SenGAME 3.0 worldwide, Angel Japan Co Ltd in June 2020. The Company is now investigating other distributor and value-added reseller arrangements and re-visiting current casino opportunities via direct SenSen’s engagement with casino groups.

The Company expects the contracted monthly recurring revenues for SenGAME 3.0 software licences on appropriate additional gaming tables to start upon completion of installations in Q1 2021.

In addition to these activities in Smart Cities and Retail & Leisure sectors, the Company appointed Mr Jon Cook as its Acting Chief Financial Officer. In order to pursue its global expansion strategy, the Company has also initiated a search to add suitably qualified senior-level Directors to its board.

Review of Financial Performance

Despite coronavirus, SenSen recorded a minor year-on-year (Y-o-Y) increase in its revenue to ~A$3.76 million in FY20. While the Company recorded a net loss after tax of ~A$3.7 million in FY20, it was 30% less than the loss of ~A$5.3 million noted in FY19.

Besides, the Company finished FY20 with a strong cash position of ~A$2.5 million, marking a 25% surge on FY19 cash position. The Company’s Y-o-Y cash position improved on the back of highest ever quarterly customer cash receipts of ~A$1.43 million in the June 2020 quarter. The Company’s total annual recurring revenue (ARR) also increased by ~33% to ~A$2 million in FY20 with many existing customers ordering additional software and services.

SenSen expects its ARR to grow in the order of ~75% to ~A$3.5 million in FY21. Moreover, the Company anticipates that it is likely to remain profitable in the current financial year, with confirmed overall contracted revenues of ~A$5.6 million for FY21.

As on 12 October 2020, SNS is trading at A$0.086 at 12:39 PM AEST, up by 2.380% from the previous close.