Skyfii Ltd (ASX:SKF, OTC:SFIIF) ended the 2021 financial year in an exceptionally strong position, with a 58% hike in recurring revenues in the fourth quarter and a 72% spike in total operating revenues from the previous corresponding quarter.
The ASX-listed omnidata intelligence company is in a strong position to push forward with its plans to deliver another year of double-digit recurring revenue growth in the 2022 financial year.
It is also targeting to be in a cash flow positive position in the 2023 financial year.
COVID-19’s strong macro-tailwind
Skyfii chief executive officer and managing director Wayne Arthur said: “Skyfii has exited FY21 in an exceptionally strong position.
“Our ARR of A$14 million, up 40% over the past 12 months, highlights the growth in our core business and our cash position of A$8.6 million provides a strong and flexible balance sheet to support future growth activities.
“The impact of COVID-19 has provided a strong macro-tailwind for our business delivering a significant opportunity to accelerate our growth efforts.
“The increasing global focus on venue density, crowd management and occupancy is driving elevated interest in our people counting & venue analytic products.
“We are taking advantage of this increased demand to fast track our growth initiatives by investing in our people, our products and our channel partnerships.
“The investment will drive an increased pipeline of opportunities, particularly internationally, delivering a step-change in our recurring revenue base.
“With a strong balance sheet and a market-leading product offering, we are in an exceptional position to accelerate our growth efforts to deliver a significant uplift in revenues in FY22 and beyond with the aim of moving to a cash flow positive position in FY23.”
Improving economic conditions in the northern hemisphere are delivering new opportunities and increased customer demand for its analytics platform, which are driving an expanding business development pipeline.
Skyfii will focus on an accelerated investment into growth in FY22 via an expanded business development team, a focus on developing the cross-sale opportunities from the CrowdVision acquisition and new product development to drive top-line revenue growth into FY22 and beyond.
With improving business sentiment, strong macro-tailwinds for venue analytics, computer vision and people counting technology across airports, stadiums, offices, universities, smart cities and commercial real estate, Skyfii remains focused on organic growth and new product development.
Arthur added: “The recent acquisition of CrowdVision has provided a counter-cyclical ability to grow in the lucrative airports, stadiums, transportation hubs and large-scale resort hotels and casinos verticals.
“The cross-sell of products and services between Skyfii and CrowdVision’s customer base provides further avenues for growth in our recurring revenues.
Skyfii’s integration of CrowdVision has performed ahead of expectations with the technology platforms aligned and all staff fully onboarded to Skyfii’s operating systems.
The rapid integration and strong resourcing synergies between Skyfii and CrowdVision resulted in better than anticipated cost performance during the quarter.
Post-acquisition, the CrowdVision standalone annualized pipeline grew from around A$9 million to around A$11 million as increased air travel is resulting in airports increasingly looking at crowd movement and density solutions within their venues.
CrowdVision has an opportunity to grow ARR via leverage into new verticals with similar use cases including stadiums, casinos, rail/transit hubs.
Over the past quarter, Skyfii has submitted responses to two requests for proposal (RFP) from major airport groups and it is in the process of submitting a third with the total contract value of these RFP’s expected to exceed A$3 million.
The integration and early-stage business development activities have reinforced the very strong strategic and revenue opportunities resulting from the acquisition.
In the full financial year 2021, the company saw annualised recurring revenue (ARR) of A$14 million, up 40% from the previous year.
Total operating revenues rose by 18% to A$15.9 million while recurring revenues stood at A$11.3 million, up 28%.
Operating EBITDA came in at A$1.57 million, down 25% from the previous year but this was in line with expectations, incorporating working capital investment into CrowdVision.
It has cash at bank of A$8.6 million as of June 30, 2021, with additional access to a A$2 million loan facility that remains undrawn.
In the fourth quarter, total operating revenues stood at A$4.9 million, which included the A$800,000 contribution from CrowdVision, a highly complementary Computer Vision and AI-driven video analytics company.
Recurring revenues for the quarter came in at A$3.3 million, inclusive of A$500,000, also from CrowdVision.
It saw strong international and domestic growth in the quarter, having secured new contracts with Virgin Hotels (North America); Land Securities (LSE:LAND) (EMEA); Pareto/Leap Serve (South Africa) and National Gallery of Australia (APAC).
Further, there was strong customer retention, with key renewals completed with GPT (APAC) and Nando’s (EMEA).
Outlook – catalyst for FY22 and beyond
FY22 will be a year of investment into Skyfii’s operating model to drive organic growth in all markets, which will be a catalyst for significant year-on-year revenue growth in FY22 and into FY23 and beyond.
The key areas of focus for Skyfii’s management team during FY22 include:
➢ Continued investment into marketing activities to drive quality leads across all markets and products;
➢ Increased investment into sales, support and services headcount to drive additional revenue growth in all regions;
➢ Focus on near-term conversion across CrowdVision and Skyfii sales pipelines;
➢ Expansion of our reach into the United Arab Emirates (UAE) region;
➢ Significant focus on key verticals including airports, stadiums, grocery, corporate offices, universities, schools and municipalities; and
➢ Integration of the CrowdVision technology solution into the Skyfii offering and retirement of the legacy platform.