viewK2fly Ltd

K2fly cash flow positive in quarter with FY20 invoices up 60%

Invoices for FY20 have totalled $6.626 million, an increase of 60% on the previous corresponding period due to an increase of sales during the quarter.

K2fly Ltd - K2fly raises invoices for $1.9 million in Q4 FY20
During the quarter, K2fly was granted a R&D tax refund of more than $88,000 from the Australian Taxation Office (ATO)

K2fly Ltd (ASX:K2F) has had a strong end to the 2020 financial year with operations being cash flow positive during the June quarter, invoices being 28% higher than the corresponding quarter of 2019 and invoices for the 12 months up 60% on FY19.

Invoices for the final quarter of FY20 increased to $1.9 million from $1.49 million in the same quarter of 2019 while for the financial year the company raised invoices totalling $6.626 million compared to $4.145 million in FY19.

As of June 30, the company had cash available of $2.9 million and in addition, there was $1.13 million in receivables from tier-1 clients.

Shares higher

Investors responded positively to the figures with shares up almost 13% to 22 cents.

The quarterly numbers also reflect the fact that K2F’s current operations achieved net positive cashflows with a strong $660,000 positive cash flow during the June quarter.

Increased sales

This encouraging number can be explained by increased sales in the quarter as well as cash receipts from customers, which is evidenced by the reduction in receivables from the previous quarter.

Between March and May 2020, the company raised a total of $1.719 million from the exercise of 8,596,096 listed options which expired on May 18.

The exercise of the options was partially underwritten (60%) by KS Capital Pty Ltd and pursuant to the underwriting agreement there was no discount to the option exercise price of $0.20.

Invoice growth over prior years

During the June quarter, the company was granted an R&D tax refund of more than $88,000 from the ATO. Also, where appropriate K2F has applied for subsidies and entitlements provided by governments in response to COVID-19.

Software as a Service (SaaS) Annual Recurring Revenue (ARR) has grown to $2.36 million, which represents a quarterly growth of 29% and Compound Annual Growth Rate of 177%.

The Total Contract Value (TCV) for SaaS contracts is now around $7.47 million, which is a quarterly growth of 57% and a CAGR of 663%.

New contract with Orano

K2fly recently signed a contract with Orano SA, formerly known as Areva SA.

Orano, which is a multinational nuclear fuel cycle company with uranium mining operations headquartered in France, signed a five-year contract to implement the RCubed resource governance solution.

The total contract value is more than A$300,000.

Contracts with mining clients 

Since the acquisition of RCubed, K2F has won several contracts with significant global mining clients including Imerys, Glencore Canada, Nexa Resources, Rio Tinto, Newcrest, Goldfields, Newmont, Sibelco, Kinross Gold, Orano and South 32.

In addition, existing SaaS clients of K2F’s RCubed and Infoscope solutions extended their licensing agreements: Teck Resources for a period of three years, Westgold for five years and AngloGold Ashanti for another three years.

The company believes that the addition of Kinross Gold, Sibelco, Orano and South 32 in Q4 has been gratifying as it is evident that more and more mining companies appreciate the benefits of its SaaS offerings.

Based on recent discussions and negotiations, K2F is confident that there will be more new name client announcements to be made in 2020. 

With the additional contracts in Q4 for K2F’s RCubed resource governance solution, net new annual recurring revenues for these contracts have exceeded $500,000.

This is the final milestone in the revenue acquisition performance milestones for RCubed, which were set to be achieved over a three-year period.

Quick facts: K2fly Ltd

Price: 0.355 AUD

Market: ASX
Market Cap: $33.02 m

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