K2fly has grown its annual recurring revenue (ARR) for a 13th straight quarter, revealing a 6 per cent jump up to $7.9 million in the company’s latest financial disclosure … and it says there is still room to expand.
Management says that when compared with the corresponding quarter last year, its ARR was up 22 per cent and its revenue of nearly $3.5 million represented an increase of 29 per cent. It describes ARR is its “key value indicator” and puts its continued growth down to its “land and expand” strategy.
The asset management consulting and software services company’s total contract value (TCV) at the end of the most recent quarter was $17.7 million and it had a closing cash balance of $2.9 million.
K2fly, which has recently secured contracts with local mining goliaths such as BHP, Fortescue Metals Group (FMG), Rio Tinto and Roy Hill, says its focus on its chosen resources industry sector had underpinned its ARR growth.
While its total revenue was down from nearly $4.9 million in the immediate past quarter, management says the figure was impacted by “lower one-off implementation fees”. Several projects had gone “live” during the previous quarter.
K2fly chief executive officer Nic Pollock said: “We continue to successfully execute on our ‘land and expand’ strategy building on our customer relationships in Australia and globally, adding a second solution to Roy Hill. Operationally, I’m particularly proud of the progress we have made in our software development function (Product Development Group) and the successful launch of the Product Release Process (PRP) which will benefit our customers greatly but also drives predictability, development efficiencies and scale in our business which are key drivers of our path to more customer contracts, revenue growth and breakeven. The value of the revenue opportunity grows as adjacent markets such as oil & gas and asset intensive sectors are developed.”
Operationally, the company says it has received positive feedback from customers regarding its new streamlined and synchronised product release process that improves predictability for operations and marketing and also flows on to client operations.
During the quarter, K2fly inked a five-year material contract with Roy Hill for its “ground disturbance” solution to be employed at that company’s integrated iron ore operations in Western Australia’s Pilbara region. The TCV is $2m, with ARR of $300,000.
Additionally, after the close of the September quarter reporting period, the company signed a six-month software development services contract with FMG worth $700,000, It previously provided that company with similar services, including a now-completed $1.2 million contract last year.
Management says it sees further opportunity for revenue growth through what would be a natural expansion into related or adjacent markets such as oil and gas and potentially other asset-intensive sectors. It also expects the myriad of increasing ESG obligations, compliance and regulatory framework to present new market opportunities.
The company cites example the imminent updated JORC code, which is expected to be confirmed next year for market reporting of resources and related matters, as being an area which will require familiarisation by all companies … and maybe some help from K2fly.
The company is already on a winning streak with the consistency of its ARR growth. But with internal estimates indicating its ARR from mining related-industries could reach up to $62 million, management is adamant more positive financial reports are ahead.
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