IKE - IKE GPS Group

[Left Field]

Nice update..... cash burn halted.... cash pile growing.

ikeGPS Group Limited (IKE) (NZX: IKE / ASX: IKE) is pleased to release an update for Q1 of FY23 to 30 June 2022 (all figures in NZD). IKE will host a webinar Friday 22 July 2022 at 9am AEST / 11am NZT to discuss this performance. Please register using the link in the announcement.

Highlights for the quarter:
� Revenue in Q1 FY23 of ~$6.8m (+162% vs pcp). Within this, recurring Subscription and reoccurring Transaction revenue was ~$5.7.m (+167% vs pcp).
� Gross margin in Q1 FY23 of ~$3.9m (+116% vs pcp) representing a Q1 FY23 gross margin percentage of ~57%.
� Signed contracts in Q1 FY23 of ~$8m (+31% vs pcp). The signed contract backlog has continued to grow and it is estimated that $13-15m of this backlog will be delivered and recognized as revenue in the FY23 period.
� Cash and receivables as at 30 June 2022 was ~$27.7m, comprised of $23.3m cash and $4.4m receivables, with no debt. This position is just ~$1.2m lower than six months prior (at 31 December 2021) evidencing the operating leverage in the business.

https://www.nzx.com/announcements/395672

Go Ike!!

[lorraina]

A lot to like.
Doing what they said they would do.

[winner (n)]

May as well post this over here as well

ANZ cloud companies median valuation is 3.3 times last 12 months revenue.

25th percentile is 1.6 times and 75th percentile is 6.3 times

Drivers of what to apply are Gross Margin % and Revenue Growth - IKE about the middle of pack re Gross Margin % and above average growth. But IKE is a relativity small outfit and this tends to 'discount' the valuation a bit.

So one could say that on what the market values cloud companies these days IKE is worth say 5 to 6 times last 12 months revenues - say $105m to $126m or 66 cents to 80 cents a share

But then multiples have fallen significantly over the last year or so - get back to the glory days maybe 2 bucks

Source my mates at Clare Capital

[Left Field]

Thanks for posting Winner.

Key take away for me is that there is a lot more upside potential than downside. I reckon a 10x's is more realistic  than your 5 to 6 x's given the tailwinds for USA infrastructure investment. SP easily worth $2. Just a question of when!

As a long term investor that's a nice feeling.

[Ferg]

An issue I grapple with is credibility for IKE.  This starts with the CV of the CEO, Glenn Milnes.  His profile page states:
"Before entering the business world, Glenn played professional cricket in New Zealand, England, and The Netherlands, representing New Zealand at various levels."

This gives the impression he represented NZ at a high level and it sounds like he played county cricket in England.  The website cricinfo has stats on all cricketers, including Glenn Milnes.

There is no mention of him representing NZ or any English counties there, or the Netherlands.  Their stats are comprehensive*.  However the wikipedia page (probably set up by himself) says he represented NZ at junior levels.

*A mate of mine played 5 games for Hertfordshire in the 1980s.  An unremarkable career and unremarkable stats (no offence Peter) but his stats are on cricinfo.  Nothing for Glenn Milnes that I can find with 5-10 minutes searching online.  Maybe the stats are out there but I cannot find them.

I expect underlings to pad their CV, not CEOs.

[Left Field]

Chart looking auspicious since the large volume share sale in early July ( Just saying..)

You cannot view this attachment.You cannot view this attachment. 

[Left Field]

The tail winds that should propel IKE's SP in the next few years.

Details of the USA $42.5 billion Broadband, 5G and fibre infrastructure spend.

The federal government plans to pour more than $42.5 billion into broadband as part of the Infrastructure Investment and Jobs Act signed into law in 2021. The money, which is being distributed through the US Commerce Department's National Telecommunications and Information Administration directly to states, is supposed to ensure all Americans have access to affordable, consistent high-speed internet.

https://www.cnet.com/tech/mobile/why-fiber-is-the-key-to-getting-faster-5g-everywhere/

IKE 'well positioned'.

[winner (n)]

From an NBR article - what they heard in the investor call post announcement:

Asked on today's call whether the potential incidence of a recession in the US and elsewhere would adversely affect the business, Milnes said it would not. "We're fortunate because of the industry that we're in; it's very defensive to those types of recessionary headwinds.

"I think the exception to that may be how [fast] the communications companies ... keep building their next-generation networks if they're fearful of underlying consumer behaviour. But the customers we're supporting and the projects we're supporting are generally multi-year capex and opex projects that are very well committed-to already."

Milnes said the outlook looks "robust" and he expected FY23 to be "another significant period of growth", given the contract backlog will be delivered in the period.

[Left Field]

From an NBR article - what they heard in the investor call post announcement:

Asked on today's call whether the potential incidence of a recession in the US and elsewhere would adversely affect the business, Milnes said it would not. "We're fortunate because of the industry that we're in; it's very defensive to those types of recessionary headwinds.

"I think the exception to that may be how [fast] the communications companies ... keep building their next-generation networks if they're fearful of underlying consumer behaviour. But the customers we're supporting and the projects we're supporting are generally multi-year capex and opex projects that are very well committed-to already."

Milnes said the outlook looks "robust" and he expected FY23 to be "another significant period of growth", given the contract backlog will be delivered in the period.

Thanks Winner, I listened to this presentation last week.... in addition to the above tailwinds, another takeaway that I liked was his stressing that IKE was very focussed on a robust balance sheet going forward (ie managing costs, building cash on hand, not debt.)

There's a lot to like about this company..... dare we say "inflection point."

[KW]

Asked on today's call whether the potential incidence of a recession in the US and elsewhere would adversely affect the business, Milnes said it would not. "We're fortunate because of the industry that we're in; it's very defensive to those types of recessionary headwinds.

"I think the exception to that may be how [fast] the communications companies ... keep building their next-generation networks if they're fearful of underlying consumer behaviour. But the customers we're supporting and the projects we're supporting are generally multi-year capex and opex projects that are very well committed-to already."

Is anything really recession proof?

https://www.bloomberg.com/news/articles/2022-07-21/at-t-tops-subscriber-estimates-lowers-2022-cash-flow-forecast
AT&T Inc. fell the most in 20 years after saying some customers are starting to put off paying their phone bills, which contributed to the wireless carrier cutting its forecast for free cash flow this year by $2 billion.

The emerging economic strain on consumers is adding to pressure the company had already been facing from deep discounts on new phones and higher spending on network equipment.

AT&T shares fell as much as 11%, their biggest slide since 2002. The rout erased the stock's gain for the year and sent phone company peers Verizon Communications Inc. and T-Mobile US Inc. lower.

[winner (n)]

KW - recession proof companies?

Remember this headline in the Herald about Plexure

'We're Covid 19 recession-proof' brags CEO

Hope IKE doesn't go the way of PLX

[KW]

KW - recession proof companies?

Remember this headline in the Herald about Plexure

'We're Covid 19 recession-proof' brags CEO

Hope IKE doesn't go the way of PLX

My motto 
https://c.tenor.com/xIK0QA7WQiUAAAAd/house-doctor.gif

[lorraina]

Is anything really recession proof?

https://www.bloomberg.com/news/articles/2022-07-21/at-t-tops-subscriber-estimates-lowers-2022-cash-flow-forecast
AT&T Inc. fell the most in 20 years after saying some customers are starting to put off paying their phone bills, which contributed to the wireless carrier cutting its forecast for free cash flow this year by $2 billion.

The emerging economic strain on consumers is adding to pressure the company had already been facing from deep discounts on new phones and higher spending on network equipment.

AT&T shares fell as much as 11%, their biggest slide since 2002. The rout erased the stock's gain for the year and sent phone company peers Verizon Communications Inc. and T-Mobile US Inc. lower.

I look at the telcos  being like us car owners,possibly reducing the mileage we do,while IKE are more like a road builder, such as Fulton Hogan.Price of petrol is not going to stop roading infractructure growth.
The big growth roadway in US for telcos is 5g.
The company helping the construction builders is IKE.
So as near as recession proof as you can get,helped by the fact IKE also service the power companies...

[Left Field]

I don't recall him saying 'Recession proof' and that is certainly not  what the quote above says, ie "we are in an industry that is very defensive to recessionary headwinds." By that I take it he means: "We are in an industry where there is $US42 Billion in USA  infrastructure spending underway to mitigate climate change, improve fibre broadband services plus additional spending for 5G."

He did talk about forwards orders tho'.... and repeated what was said in the presentation, that IKE's forward contracts/commitments are close to their projected annual FY23 revenue already (with no account of any 'new' business.)

IKE and PLX no comparison IMHO.

[Left Field]

You cannot view this attachment. I'm liking IKE's TA at the moment. Perhaps even an 'inflection point'.