A Lens over Splendid Performance of SenSen Networks in the June Quarter

Summary

• SenSen unveiled bolstered business performance and garnered attention for receiving highest ever quarterly cash receipts of A$1.43 million during the quarter ended 30 June 2020 (Q4 FY20).
• The Company experienced zero churn in customers number in the last two years and marked an impressive quarter despite COVID-19 restrictions backed by strong software sales to a globally diversified customer base.
• With confirmed contracted revenue of ~A$5.6m and Annual Recurring Revenue of ~A$3.5m for FY21, SenSen re-affirmed its guidance of the March quarter.
• SNS continued to invest in R&D and filed additional patents within Q4 FY20 to reinforce its technical leadership position within IoT, AI, and Video Analytic solutions space across the globe. Furthermore, SNS also has more patent applications in the pipeline.
• A strong sales orderbook and strengthened pipeline of new opportunities underpin the Company in registering positive cashflow and profitability in FY 2021.

The stock of world-class AI solutions provider empowering smart cities and efficient enterprises, SenSen Networks Ltd (ASX:SNS) marked ended in green on 14 July 2020 following the unveiling of its robust quarterly results for the period ended 30 June 2020 (Q4 FY20).

Despite the COVID-19 turbulent leading to the disruption of businesses across the world, SNS’s excellent execution capabilities and strong software sales to a globally diversified customer base acted as a catalyst for the bolstered financial performance.

Let us quickly gaze through the impressive financial performance of SNS:

Highest ever quarterly cash receipts

During June quarter, SNS recorded its highest ever quarterly cash receipts of A$1.43 million, a whopping increase of 150 per cent, from customers in comparison with the pcp.

These boosted cash receipts also illustrated an upsurge of ~90 per cent as compared to the quarter ended 31 March 2020.

Impressively, SenSen recorded two of it’s best-ever cash flow quarters in FY20.

Source: Company’s June Quarter ASX Announcement

Furthermore, SenSen secured cash receipts of ~A$472K from R&D tax credits during Q4 FY20 and is likely to receive ~A$1.6 million from the Australian Taxation Office in H1 FY21 as R&D tax incentive payment and FY20 lodgements.

Improved cash position

SenSen disclosed improved cash position which stood at ~A$2.48 million at the end of Q4 FY20, with an increase of ~A$127k from Q3 FY20.

Interestingly, this cash position was achieved without any material COVID-19 related government support.

Furthermore, the Company highlighted that its previously announced cost-cutting measures in Q3 FY20 were continuing; encompassing across-the-board 20 per cent reduction in salaries, and reductions in costs related to sales, office lease expenses, IT, marketing, and travel. These cost measures are expected to reduce yearly operating expenses by 35% to ~A$5.4M for FY21.

Growth in Annual Recurring Revenue (ARR)

SenSen’s government and corporate customers driving continuous growth in Annual Recurring Revenue (ARR)

The Company noted continued strong growth in its ARR profile. Notably, SenSen experienced zero churn (no loss of customers) in the last two years and witnessed more orders of software and services from numerous existing customers.

With locked-in government and blue-chip corporate customers gaining more strength in a year, SNS estimates contracted revenues of ~A$5.6 million and ARR of ~A$3.5 million in FY21.

Kalkine Image (Data Source: SNS ASX Update)

SenSen re-affirmed its guidance provided in the March 2020 quarterly report with strong sales orderbook and pipeline of opportunities expected to aid the Company in registering positive cashflow and profitability in FY21.

Let us now skim through key sales achievements defining Q4 FY20 as the remarkable quarter for the Company.

Kalkine Image (Data Source: SNS ASX Update)

Onboarded Former Non-Executive Director Ms Heather Scheibenstock

On 6 July 2020, Ms Heather Scheibenstock was appointed as Executive Director, Retail & Leisure Division and is expected to play an instrumental leadership role in the company. Ms Scheibenstock will be closely coordinating and working with the Board and senior leadership team in designing and implementing business strategies, procedures and plans aimed at driving growth in revenue and EBITDA of the Division.

Let us shed some light on the R&D and Product Development updates during the quarter ended on 30 June 2020.

The Company focuses on investment in its R&D pipeline with robust progress in the development of innovative and patentable products and solutions in Smart City as well as Casino Gaming applications.

Kalkine Image (Data Source: SNS ASX Update)

On 29 July 2020, SNS is trading at A$0.100 up ~11.111% as at 12:05
PM AEST. Market capitalisation of SNS was noted at A$40.55 million, with ~450.61 million shares outstanding. The Company has generated a total return of 30.43 per cent in the period of one month.