IKE - IKE GPS Group

[Minimoke]

Latest update out

https://announcements.nzx.com/attachment/430318.pdf


I try my best to get enthused over IKE but my chart monitoring it makes it hard to be enthusiastic

The line just doesn't seem to line up with the hype they churn out .....huge growth, macro tailwinds, AI enhanced blah blah

Maybe I just don't get it

Sorry untamed

You cannot view this attachment.

Over all trend is up, along with their other metrics

[Untamed]

Maybe I just don't get it

Sorry untamed

No need to be sorry, but I will admit, I do think that's the case 

Having said that, you are an experienced investor with many years of investing behind you. I am not. You understand, and use charts to support your decision making. Charts make zero sense to me, so I don't base my investing decisions on them.

Who is right? Does it even matter? Investing is not a competitive sport for me. I don't need to be right about anything. I hope I am right about IKE, but only time will tell. I think this is a positive result, and I am more than happy with it. I agree with Glenn's comments in his email too. As much as I would love to see IKE be profitable  - he is right.

Profitability: we could be profitable tomorrow if we wanted to be.  However the long term value of winning and then retaining these very large utility customers is so significant, our view is that we need to continue to invest in customer acquisition and also product-extensions – that increases annual revenue per customer.  We can balance these items on short notice but at present we have a balance sheet / investment backing that supports growth vs the former.

As an investor, I support this decision.

[Untamed]

Some takeaways from the webinar, that make me happy

• 179% increase in seat licences in last year
• There are an estimated 10,000,000 current double wood vulnerabilities - easy to see the value of their Double Wood Product
• Picking up around 1.5 new customers a week
• Flipped one of the 5 largest IOUs from another competitor
• Customer Council - this is a smart initiative on IKE's part. Customers are treated as "partners" and IKE gets insight into exactly what customers need/want, straight from the horse's mouth. Glenn mentioned the council has requested a new product (or maybe a variation of an existing one - couldn't quite pick that up) and IKE is committed to exploring that.

I see nothing in this report that isn't positive. It is a good result.

[Greekwatchdog]

Thanks Untamed for your input on this. I like what I am seeing and look forward to the projected growth going forward. Still lots of work to be done.

This is not an investment for everyone as everyone has a different Philosophy on their investing strategies.

This is for the patient investor just like ATM was for me when I invested in 2010. Sometimes you just need to research and believe to be rewarded.

[Greekwatchdog]

For Bars review

ikeGPS (IKE) announced good progress in its 1H25 performance update. Total recognised revenue in the period rose +16% over 1H24 to ~NZ$12.2m, driven by continued momentum in Subscriptions and a moderate rebound in transactional activity. Subscriptions growth is tracking broadly in line with our expectations for FY25, with the timing of some PoleForeman customer conversions likely to be the key swing factor in IKE achieving its guidance of >+40% revenue growth for the segment. IKE's cash balance is now NZ$6.8m, having declined by only ~-NZ$3m over the last twelve months. The company is confident its cash position can support its breakeven ambition, supported by (1) cost-out initiatives during 1H25 (cash operating expenses fell -4%), (2) continued top-line growth, and (3) reduced development spend with key products now in market. IKE also expects the positive trend in gross margins to continue, with the product mix shifting towards higher-margin Subscription revenues. We raise our blended spot valuation +1cps to NZ$0.84 on tighter cost-control. In a takeover scenario, we suggest an acquirer would likely pay greater than the ~5x average EV/Sales for our Nasdaq emerging cloud index peer set (relative to IKE on ~3.3x FY25 now), given its data edge, blue-chip customer base and its exposure to strong industry tailwinds in North America.

What's changed?
Earnings: We make minor changes to FY25/FY26/FY27 which sees little change to our estimates.
Spot valuation: Our blended spot valuation rises +1%  to NZ$0.84, on tighter cost-control.
Subscription growth accelerates as the next–gen PoleForeman structural analysis product takes hold
Annualised run rate (ARR) on Subscription revenues reached ~NZ$13.2m, up +34% on the pcp, with growth largely attributed to adoption of IKE PoleForeman. Many customers are opting for a per-seat model — with IKE adding +3,800 new subscription seat licences, a +179% increase. Total Contract Value (TCV) associated with IKE PoleForeman subscriptions exceeded NZ$12.5m by the end of 1H25, showcasing strong uptake. We are comforted by a return to solid net total enterprise customer growth over the quarter. A net +16 were added over 2Q25 to 436 - representing solid +4% quarter-over-quarter growth. IKE's retention rate remains at ~95%.

Transactional revenues turn the corner — as expected
Transactional revenues in 1H25 grew +6% , to ~NZ$4.0m as compared to the same period last year, on volumes +13%. Gross margin in dollar terms, however, rebounded +107% in the six months as gross margin was 37% in 1H25 (versus 19% in 1H24). IKE expects transactional revenues will strengthen in 2H25, based on the current contracts in place and positive guidance from key customers.

Cash falling but should support EBITDA breakeven
IKE's cash balance was NZ$6.8m as of 30 September 2024. While there is now less room for error, this level of cash should support IKE's ambition of reaching EBITDA breakeven, provided growth materialises as expected. IKE executed -NZ$0.6m of cost-out during 1H25 and development spend should slow after a period of strong investment with key products now in-market, supporting our view.

Earnings revisions
We make minor earnings revisions following IKE's 1H25 update. We make very minor cuts to our Subscription growth estimates in FY25 and FY26, as we account for risks surrounding the timing of PoleForeman conversions. IKE commented "a delay in the up-sale close processes, with various existing customers, could lead to slightly lower revenue recognition in FY25, but we remain very confident that this revenue would be recognized in subsequent periods." These changes are offset by lower cost assumptions, with cost-control stronger than anticipated during 1H25.

[winner (n)]

Untamed, it's good that you ask questions and even better the CEO responds.

Glenn says "..we could be profitable tomorrow if we wanted to be." but says they need to continue to invest to grow.

That begs a follow up question like '... if you stopped spending and became profitable how long would IKE survive?'

The answer probably is not that long which to me would imply they possibly need to keep spending more and more forever and never become profitable.

Just my view but will keep following

[Untamed]

Untamed, it's good that you ask questions and even better the CEO responds.

Glenn says "..we could be profitable tomorrow if we wanted to be." but says they need to continue to invest to grow.

That begs a follow up question like '... if you stopped spending and became profitable how long would IKE survive?'

The answer probably is not that long which to me would imply they possibly need to keep spending more and more forever and never become profitable.

Just my view but will keep following

Actually, Glenn didn't say they "need" to. He made it very clear that they are "choosing" to continue to invest in customer acquisition and further product development.

.... the long term value of winning and then retaining these very large utility customers is so significant ....

This sentence is the important one. The potential market for IKE is huge. They know that, we know that (well some of us do anyway). Why would you choose to stop now, and do yourself out of so many more potential customers/contracts?

IKE has always made it clear that their goal is to become the standard for the electricity distribution, and telecommunications sectors. They want all the "big boys" if they can get them. Can you even begin to imagine how big an achievement that would be? Once you have the big players onboard, the small players will more than likely follow. Not to mention the flow on effect of customers requiring their subcontractors to use the IKE platform.

As I said earlier, I am not trying to convince you to invest in IKE. I am simply trying to help people understand what IKE actually does, the significance of that in the North American market, and the vision they have for their business.

[Buzz]

That begs a follow up question like '... if you stopped spending and became profitable how long would IKE survive?'

The answer probably is not that long

Can you explain why/how a business that is profitable and not spending on growth, would not "survive" for long?

[Untamed]

ikeGPS Group Limited (IKE) (NZX: IKE / ASX: IKE) is pleased to announce, following the release of its 1H FY25 Interim Financial Statements on Thursday, 21 November, the Company's CEO Glenn Milnes will host an investor webinar on Thursday, 28 November at 1pm AEDT, 3pm NZDT.
 

https://www.nzx.com/announcements/442187

[Ferg]

ikeGPS Group Limited (IKE) (NZX: IKE / ASX: IKE) is pleased to announce, following the release of its 1H FY25 Interim Financial Statements on Thursday, 21 November, the Company's CEO Glenn Milnes will host an investor webinar on Thursday, 28 November at 1pm AEDT, 3pm NZDT.

There was a hint if there ever was one...."pleased to announce".

They are also "pleased to announce" their last half year result:
https://www.nzx.com/announcements/442293

I haven't looked at the numbers in detail but the topline numbers appear ok with sales +16%, Gross Margin at 67% up on last year's 59% and a reduced cash burn.

[Untamed]

ikeGPS Group 1H FY25 Investor Webinar – change of date
21/11/2024, 15:40 NZDT, MKTUPDTE
ikeGPS Group Limited (IKE) (NZX: IKE / ASX: IKE) announces that the Company will be hosting its 1H FY25 Investor Webinar on Wednesday, 27 November at 1pm AEDT, 3pm NZDT.

[Greekwatchdog]

For Bars Review

keGPS (IKE) delivered a solid 1H25 result in revenue terms, which was pre-released in October. Group revenue growth of +16% was underpinned by robust growth in Subscriptions, as total enterprise customers rose +21 over the period to 436. Gross margin improved from 59% in 1H24 to 67% in 1H25, reflecting: (1) the mix-shift towards higher-margin Subscription products, and (2) productivity gains from IKE Analyze's support centre in Mexico. However, operating costs were higher than anticipated. Expensed R&D was elevated as IKE invested in new product development, and capitalisation fell to near zero. Despite this investment, cash burn moderated in 1H25. Cash has fallen only ~NZ$3m over the past 12 months to NZ$6.8m. We make amendments to our cost assumptions, but leave our revenue estimates relatively unchanged. Our blended spot valuation falls -1% to NZ$0.83.

What's changed?
Earnings: FY25 NPAT estimate falls -NZ$1.7m, from -NZ$9.4m to -NZ$11.1m. FY26 and FY27 NPAT fall -NZ$1m.
Spot valuation: Our blended spot valuation falls -1cps to NZ$0.83, with higher opex partially offset by reduced capitalisation and higher peer multiples.
Subscription revenue climbs on strong utility demand
Subscription revenue rose +28% against the prior year to ~NZ$6.5m, driven by continued momentum in IKE's core Office Pro product and adoption of the IKE PoleForeman product. IKE signed ~NZ$12.5m in total contract value for the PoleForeman product during 1H25. The annualised subscription revenue run rate increased to ~NZ$13.2m (+34%) by the end of 1H25. IKE's customer retention rate remained strong at ~95%, reflecting the value and stickiness of its offerings. Guidance for subscription revenue growth in FY25 remains at ~40% or greater, but will be reliant on the timing of customer conversions.


Transaction revenue finds stability through major deals, with Hardware revenues flat
Transaction revenue increased by +6% against the prior year, reaching ~NZ$4.0m, underpinned by a +13% rise in transactional volumes. Segment gross margin improved significantly to 37% from 19%, driven by productivity gains of moving the IKE analyse support centre to Mexico. The signing of a multi-year NZ$19m transaction contract may reduce some segment revenue volatility, although outcomes are contingent on customer project schedules. ��������������Hardware and other revenue was ~NZ$1.7m (in line with 1H24).�������

Outlook — substantial tailwinds for 2H25
The outlook for 2H25 remains promising, with growth expected across both the Subscription and Transaction segments. IKE retained its FY25 forecast for Subscription revenue to grow by ~+40% or more, particularly driven by PoleForeman and now helped by a weak NZDUSD cross rate. Transactional revenue is expected to build on 1H25 gains, though variability will persist. The supportive industry environment in North America, including ongoing grid resiliency programmes and the introduction of new AI-driven capabilities and cost efficiencies, positions the company well to maintain its growth trajectory.

1H25 results review
IKE's 1H25 result saw gains in both Subscription and Transaction revenue segments, improved gross margins, and significant contract wins. Total revenue rose +16% versus 1H24 to NZ$12.2m. Despite gross profit rising +NZ$1.9m or +31% to NZ$8.1m, IKE reported a wider net loss of -NZ$7.1m, against the prior year's -NZ$6.9m. This was largely driven by: (1) a +16% rise in sales and marketing costs to NZ$4.6m, and (2) an +11% lift in R&D to NZ$5.9m. This meant total expenses rose +9% in 1H25 as compared to 1H24. Cash used in operating activities halved to ~NZ$2.6m, and IKE now has NZ$6.8m in cash. Divisionally:


Subscription: Revenue grew +28% against the prior year to NZ$6.5m, driven by the adoption of PoleForeman and ongoing subscription customer wins (+12%). Total contract value was �NZ$12.5m during 1H25, boosting the annualised subscription revenue run rate to NZ$13.2m (+34%). Customer retention remained high at ~95%, highlighting the strong value IKE's platform provides to enterprise customers. Gross margin for subscription revenue held at a robust ~87%.
Transaction: Revenue increased by +6% against the prior year, totalling NZ$4.0m on transactional volume — up by +13%. Staffing costs contributed to the improved gross margin of 37%, up from 19%, with efficiencies from IKE Analyze's contract team in Mexico City. IKE's recently signed NZ$19m multi-year transactional contract will help stabilise segment revenues.
Hardware and other services: Revenue for hardware and other services remained steady at NZ$1.7m, in line with the prior year, with gross margin down slightly at 58% from 60% in 1H24.

[Greekwatchdog]

Did anyone get a chance to listen in to todays webinar? If so any comments? Thanks GWD

[Untamed]

Did anyone get a chance to listen in to todays webinar? If so any comments? Thanks GWD

I did. Financials were pretty much a recap of what we already know. A few comments from Glen that I noted:

There is no need for a capital raise. Someone brought that up again and Glen was very clear that it is not needed. He reiterated the fact that revenue is growing, gross margin is growing, costs are reducing, and the balance street is strong and on track.

Oct-mid November has seen a continuation of sales momentum. They closed contracts of 3 million, in relation to IKE Pole Foreman and  6.6 million closed, across all products over that period.

They had a presence at a recent industry show (electricity utilities) and "sat down" with a number of current customers, all of whom expressed that they are very happy/satisfied - Glenn used the word "delighted." I can't recall his exact words but from what he said, it seems these customers have had their expectations well and truly met, if not, surpassed.

They continue to work with their Customer Council of leading North American electricity utilities - who represent delivery of electricity to over 70 million customers. This partnership is invaluable in terms of IKE understanding what customers want and need, so they can tailor solutions and continue to use to develop additional tools as needed.

The tone was positive and Glenn once again confirmed that everything is on track and as per their projections.

Edit: and seat licences are up 179% for the year.

[Greekwatchdog]

I did. Financials were pretty much a recap of what we already know. A few comments from Glen that I noted:

There is no need for a capital raise. Someone brought that up again and Glen was very clear that it is not needed. He reiterated the fact that revenue is growing, gross margin is growing, costs are reducing, and the balance street is strong and on track.

Oct-mid October has seen a continuation of sales momentum. They closed contracts of 3 million, in relation to IKE Pole Foreman and  6.6 million closed, across all products over that period.

They had a presence at a recent industry show (electricity utilities) and "sat down" with a number of current customers, all of whom expressed that they are very happy/satisfied - Glenn used the word "delighted." I can't recall his exact words but from what he said, it seems these customers have had their expectations well and truly met, if not, surpassed.

They continue to work with their Customer Council of leading North American electricity utilities - who represent delivery of electricity to over 70 million customers. This partnership is invaluable in terms of IKE understanding what customers want and need, so they can tailor solutions and continue to use to develop additional tools as needed.

The tone was positive and Glenn once again confirmed that everything is on track and as per their projections.

Edit: and seat licences are up 179% for the year.

Thanks Untamed much appreciated.