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K2fly record quarterly invoices a 94% improvement on corresponding quarter

The increase brings the total invoicing for this financial year to nearly $4.75 million, which already exceeds the previous full financial year’s invoicing of $4.15 million.

K2fly Ltd -
The K2F board expects company to be cash flow positive for the June quarter

K2fly Ltd (ASX:K2F) has raised record invoices valued at approximately $1.63 million in the March quarter, an improvement of 94% over the corresponding quarter of 2019.

The figure for Q3 FY20 follows on the back of Q2 invoicing, which was also more than $1.6 million.

This brings the total invoicing for this financial year to nearly $4.75 million, which already exceeds the previous full year’s (FY19) invoicing of $4.15 million.

The Q3 performance comes against a background of a normally quiet January and includes March, which has seen global economies in turmoil.

Shares up

This positive financial result and the recent announcements of new name contracts and contract extensions with existing clients points to a robust FY20 performance by K2fly.

Shares are more than 17% higher at 20 cents, up from 13 cents at close on March 20.

As at March 31, cash at bank was around $820,000 with around $1.28 million in receivables from Tier-1 clients and more than $500,000 of contracted implementation work with existing clients, which will be invoiced on delivery.

SaaS contract growth

In terms of K2fly’s Software as a Service (SaaS) contracts for its own software, RCubed and Infoscope, which now accounts for 52% of total revenues:

  • Annual Recurring Revenue (ARR) has grown 25% in Q3, so ARR is now $1.8 million;
  • ARR compound annual growth rate (CAGR) is now at 247%;
  • Total Contract Value (TCV) has grown 41% in Q3 as more customers take up three- and five-year contracts; and
  • TCV now more than $4.7 million, a CAGR of 793%.

Leading companies using software

As at the end of March 2020, K2F’s SaaS offerings RCubed and Infoscope have been deployed or are being deployed in 52 countries, with more than 40 commodities and across more than 390 sites.

Four of the world’s top 10 gold companies are using the company’s RCubed Resource Governance solution and three of the world’s big four iron ore miners use K2fly’s SaaS solutions across Resource Governance and Land Management.

K2F and its clients featured prominently at the recent PDAC conference in Canada, the world’s premier mineral exploration and mining convention.

Several encouraging sales leads emerged from that event and K2F is actively pursuing these opportunities.

Currently, K2F is in discussions or negotiations for SaaS solutions with three other major mining companies.

COVID-19 response

The world is being impacted by the COVID-19 virus and most businesses have been affected by the changing environment.

As working remotely was a normal part of K2fly’s operating model, it was relatively easy for the company to shift fully to a work from home state.

Indeed, its software development teams in Australia and South Africa have been working from home since the early news surfaced about the growth of the virus.

K2F is also fortunate that it has been historically growing the proportion of its revenue mix from its SaaS business, and this trend has, to some extent, sheltered it from the negative impact of COVID-19.

Cost management measures

In response to these uncertain times and turbulent capital markets, K2F's board has implemented prudent cost management measures and cost reductions, including:

  • In March reduction of staff /personnel by approximately 10 FTEs;
  • Until at least June 30 the board has deferred all their remuneration and the CEO voluntarily agreed to defer 50% of his remuneration with some senior executives voluntarily deferring part of their remuneration; and
  • Significant reductions in travel, marketing, promotional and non-essential expenses.

The company is also assessing the stimulus measures announced by the government and where possible it is availing itself of benefits it can apply for.

Barring any major unexpected jolts during these turbulent times, the board is confident that the implemented cost reduction measures will bring K2F to a cash flow positive position for Q4 FY20 and beyond.

Quick facts: K2fly Ltd

Price: 0.215 AUD

ASX:K2F
Market: ASX
Market Cap: $17.9 m
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