IkeGPS expects to perform to prospectus in 2016   29 May 2015

Article - BusinessDesk

IkeGPS expects to perform to prospectus in 2016 financial year

By Pattrick Smellie

May 29 (BusinessDesk) - IkeGPS, the laser measurement tool developer, expects to meet its prospectus forecasts in 2016, despite under-performing on sales and running a month late on its new product rollout in the year ended March 31.

The Wellington-based company, whose senior management are now based in the US, reported a $5.1 million loss in its latest year, compared with a loss of $2.3 million a year earlier, and just below the loss of $5.33 million forecast in its July prospectus. Sales rose to $4 million, from $1.9 million, missing its projection of $6.4 million.

The company warned investors last month that revenue would miss guidance in the 2014/15 financial year, because anticipated sales of its new smartphone tool, Spike, fell in April instead of March, and would be counted in the current financial year's results.

However, while the company is expecting Spike units to "exceed the IPO offer document forecast for FY16 of 2,712 units and revenue of $2.9 million," it is not expecting this catch-up to boost total revenue for the current year, which it expects to be "in line with its IPO offer document forecasts, with revenues growing to $14.3 million."

The board says it is confident that the momentum from anticipated revenue growth of around 250 percent for the current year "will carry over into the 2017 financial year."

Like other software-based tech firms, such as Xero, Wynyard Group and Orion Health, ikeGPS is focused on building sales momentum in international markets ahead of profitability. The company expects to have $10 million in working capital available at the end of the current financial year to continue expansion.

Staff has grown from 20 at the time of the IPO to 63 full-time positions today, with the largest proportional growth in the sales and marketing force in the US and in development capability at its New Zealand base. Sales presences in China and Europe have also been established.

The company is also concentrating on building US institutional investor interest, although its statements to the NZX today make no mention of plans to list the stock in the US.

Presentation slides accompanying the result suggest ikeGPS shares are undervalued by as much as 121 percent on a price-to-book value basis, and 190 percent on a share-price-to-sales basis, compared to similar US-listed growth stocks. The shares, which have never traded above the $1.10 July IPO price, fell 2.5 percent at the opening of trade on the NZX to 78 cents.

Chief executive Glenn Milnes said the Spike smartphone product was now experiencing "strong online growth" following the launch of a sales site, and enterprise sales opportunities were emerging. IkeGPS had signed new corporate partnerships with GE Digital Energy and Stanley Black & Decker, two major players in the US market. It expects more such partnerships it said, without giving details.

The Spike tool was finding a ready market in the insurance, signage and real estate sectors, where its ability to make accurate measurements based on photographs was improving productivity, Milnes said.

Like other software as a service companies, ikeGPS is seeking a greater proportion of recurring, subscription-based revenue, although that is embryonic for now. Recurring revenues were nil last year and are estimated to be 4.9 percent of total sales in the current financial year.

The company expects government grants to decrease to a tiny fraction of total income this year, compared to previous years. It will be targeting gross margins on product sales of more than 65 percent as it moves toward a greater proportion of sales coming from software rather than hardware and will put 45 percent of its revenue investment into sales and marketing, and 35 percent into product development.

The process of selling to enterprises and new corporate partners was "intensive", said Milnes, and would produce "lumpy" revenue results.

"Product development costs will increase in absolute dollar terms as we introduce new software and hardware products, but are expected to decrease as a percentage of operating revenue," he said.

(BusinessDesk)

Add a comment

News

Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students

29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more

New Zealand reaffirms support for Flight MH17 judicial process

7 Mar 2020 News By Rt HON WINSTON PETERS
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more

Business

NZ Government's Economic package to fight COVID-19

17 Mar 2020 Business News By RT HON JACINDA ARDERN
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more

NZ Government announces aviation relief package

19 Mar 2020 Business News By Hon Phil Twyford
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more

Living

Diversity was Key at New Zealand Trade Tasting in London

6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall. It was the first... more

Kiwi author stuns Behind the Butterfly Gate

12 Jan 2022 Arts By Charlotte Everett
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...  New Zealand writer Merryn Corcoran’s... more

Property

Fairer rules for tenants and landlords

17 Nov 2019 Property By Minister Kris Faafoi
17 NOVEMBER 2019 The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more

New Zealand Government will not implement a Capital Gains Tax

17 Apr 2019 Property By RT HON JACINDA ARDERN
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more

Migration

Boosting border security with electronic travel authority – now over 500,000 issued

19 Nov 2019 Migration By Hon Iain Lees-Galloway
19 NOVEMBER 2019 We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more

Christchurch reinstated as refugee settlement location

18 Aug 2018 Migration
18 AUGUST 2018 HON IAIN LEES-GALLOWAY The announcement that Christchurch can once again be a settlement location for refugees... more

Travel

Gallipoli Anzac Day services cancelled

19 Mar 2020 Travel & Tourism By RT HON JACINDA ARDERN
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more

New Zealanders advised not to travel overseas

19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas more

Sport

The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners

27 Oct 2019 Cricket By Charlotte Everett
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more

PREVIEW: All Blacks v England semi-final

26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more

Columns

Gordon Campbell on the Gareth Morgan crusade

11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade First published on Werewolf The ghastly likes of Marine Le Pen in France and Geert ... more

Gordon Campbell on the US election outcome

10 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the US election outcome Well um.. on the bright side, there (probably)... more

Kiwi Success

Congratulations to Loder Cup winner

26 Sep 2018 People By Hon Eugenie Sage
25 SEPTEMBER 2018 The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more

Appointments to New Zealand National Commission for UNESCO

16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO HON JENNY SALESA Associate Education Minister Jenny Salesa is... more

Recruitment

Historic pay equity settlement for education support workers

14 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more

Historic pay equity settlement for education support workers

22 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more