viewK2fly Ltd

K2fly aims to continue revenue growth through SaaS contracts and diversification in FY21

The company’s total revenue for FY20 was A$5.6 million, a growth of 48% on FY19 revenue and it aims to continue organic revenue growth for FY21.

K2fly Ltd - K2FLY aims to continue revenue growth through SaaS contracts and diversification in FY21
The company is also continuing to explore for complementary software solutions or businesses

K2fly Ltd (ASX:K2F) chair Jenny Cutri told this week's annual general meeting that FY20 had been an “extremely positive year for the company” despite the turbulent economic backdrop and impact of the COVID-19 pandemic.

The company’s total revenue for FY20 was A$5.6 million, a growth of 48% on FY19 revenue of A$3.79 million, which Cutri credited to the team’s commitment to excellent customer service and desire to find innovative and practical solutions for clients.

She said: “These qualities allowed us to succeed, despite the extraordinary challenges we faced with COVID-19 and provide us with a high level of confidence that we will have another successful year ahead.”

FY20 highlights

The company successfully implemented most of its FY20 strategies or made considerable progress towards achieving those strategic goals.

In FY20 quarter-four the company was A$700,000 cash flow positive from operations, which was followed up with FY21 quarter-one also being cash positive from operations by A$380,000;

Cutri said: “We continued to win new name clients for either our software solutions or consultancy services.”

New named clients included Newcrest Mining Ltd (ASX:NCM), Glencore PLC (LON:GLEN) Canada, Nexa Resources SA (NYSE:NEXA), Rio Tinto Limited (ASX:RIO), Gold Fields Australia (a subsidiary of Gold Fields Limited (NYSE:GFI)), South32 Ltd (ASX:S32), Newmont Corporation (NYSE:NEM), SCR-Sibelco NV, Kinross Gold Corporation (NYSE:KGC), Vale Australia, Orano SA, South Australian Water, Stanwell Energy and New Hope Energy.

Additionally, new and existing clients entered into multi-year contracts for the Infoscope or RCubed software solutions with an average contract term of more than three years.

SaaS revenue growth

The proportion of K2fly’s revenue from software and Software as a Service (SaaS) subscriptions business increased with the annual recurring revenue growing to over A$2.37 million (or a 177% compound annual growth rate) and the total contract value increasing to more than A$7.47 million.

Cutri said: “We added a dedicated sales resource in North America to aid in the sales of our software solutions.

“With the additional contracts entered into for K2F’s RCubed software solution, this resulted in the final milestone in the three-year revenue acquisition performance milestones for RCubed being achieved in just thirteen months from acquisition.”

Placement and partnerships

In FY20 Q1 the company completed a A$1 million placement.

Cutri said: “Notwithstanding the market volatility, in May we announced that we had entered into an underwriting agreement to partially underwrite 60% of K2F’s listed options (K2FOA) which were exercisable at 20 cents and due to expire on May 18.

“A total of A$1.719 million (before costs) was raised.

“In July we announced we had entered a memorandum of understanding with Decipher, a subsidiary of Wesfarmers Ltd (ASX:WES).

“K2F and Decipher have partnered together to develop a solution to aid in the monitoring and governance of tailings storage facilities.”

SATEVA acquisition

During the year, the company continued to explore for either complementary software solutions or businesses.

Cutri said: “In October we announced that we had acquired SATEVA, an entity that is involved in the mining technical assurance area.

“SATEVA is highly experienced in developing and providing innovative software solutions and IT consulting services to top tier mining, resources and rail industries including RIO Tinto Iron Ore, Fortescue Metals Group Limited (ASX:FMG) and Roy Hill.

“The Block Model Management (Model Manager) solution being developed by SATEVA is a particularly exciting solution.

“Model Manager will dramatically improve and simplify model management for multi-site global miners, as well as provide a direct line of sight and governance from the block model to the annual inventory report.

“Block models are aggregated to produce annual mineral resources and reserves reports, and therefore Model Manager is highly complementary to our RCubed software solution.”

SATEVA was successfully integrated into K2F within one month of the acquisition announcement and Model Manager was officially launched.

FY21 vision

Cutri said: “Our vision as a company is to be a trusted partner of choice to enterprise customers in asset intensive industries.

“We also want our people and our software to contribute to a more sustainable and transparent world.”

FY21 strategies include:

  • To grow organically by increasing annual recurring revenue (particularly SaaS) and diversifying revenue;
  • Continuing the ‘land & expand’ strategy with existing client base by demonstrating the increased benefits of adding K2F solutions together in the client’s ecosystem;
  • Operating in a financially sustainable manner;  
  • Continue to improve and broaden current software solutions in line with customer demand; and
  • Continue to grow inorganically, through complementary acquisitions.

Quick facts: K2fly Ltd

Price: 0.34 AUD

Market: ASX
Market Cap: $34.27 m

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