Netlinkz revenue surges in September ahead of strong growth in 2021

By Trevor Hoey. Published at Oct 20, 2020, in Technology

Virtual Secure Network (VSN) company Netlinkz Limited (ASX:NET) has generated record receipts from customers for the quarter ended 30 September 2020, driven by increasing demand for the company’s VSN platform, particularly in China.

Netlinkz is an Australian software company specialising in secure virtual network solutions.

It has been refining its data security products since 2014 and its core product is a globally-patented, award-winning technology called the Virtual Invisible Network (VIN); a popular network security solution gaining traction around the globe.

This is no more evident in its growing receipts.

Read more about Netlinkz: NET accelerates growth as it hits significant milestones

Receipts from customers surged from $3.1 million in the June quarter to $5.8 million in the three months to 30 September, 2020, an increase of 89%.

Management also confirmed a significant increase in recurring revenue, providing income predictability as the company appears poised to expand rapidly in 2021.

This is the third consecutive quarter of strong growth in receipts from customers this calendar year, and Netlinkz is on-track to meet its previously stated guidance of circa $15 million of receipts from customers by 31 December, 2020.

It is worth noting that the September quarter run rate represents annualised revenue of $23.2 million.

The industry outlook also looks buoyant with strong growth opportunities across a broad range of geographic regions as indicated below.

Expect a continuation of strong share price momentum

This news should provide additional share price support for Netlinkz after an already strong run that has seen its shares increase 50% since mid-August.

In any circumstances this would be considered an excellent performance, but in Netlinkz’ case it has also raised considerable capital during that period, a factor that can stall share price momentum.

However, the company is poised to generate exponential income growth in the near to medium-term following the expansion of its operations in China, and this is no doubt driving positive investor sentiment.

Importantly, fiscal 2021 will be the first full financial year where Netlinkz reaps the full benefits from its China expansion which is an interesting story in itself.

Netlinkz reached a decision with iSoftStone Information and Technology (ISS) to move to 80% ownership of iLinkAll in December 2019, and it was at that time that management upgraded its revenue forecast for the 12 months to December 31, 2020 to $15 million.

Since inception, iLinkAll has made substantial progress in China with the joint venture company securing a diverse number of agreements that have expedited VSN uptake and considerably enhanced and diversified the revenue base.

Client portfolio spans multinationals and essential services sector

The VSN is being used in several sectors, including water utility management, logistics, medical data management, robotics, retail and manufacturing.

With a number of clients being multinational companies operating in China and others coming under the essential services banner, it could be argued that Netlinkz’ revenue predictability is particularly strong compared with other players in the broader tech sector.

Netlinkz executive chairman and chief executive James Tsiolis highlighted the significance of these developments and also pointed to a healthy pipeline of new business in multiple markets in saying, “Netlinkz is very pleased to report continuing top line growth and the September quarter is another record performance.

‘’We’re excited about the large market opportunity we have in China, with the rest of the world to follow, as commenced with the Natsoft partnership.”

“A key focus for our team right now is to deliver our greatly enhanced VSN 2.0 platform which is now being rolled out to customers.

‘’Enhancements to the platform ensure that we maintain a market-leading position and deliver high levels of tendering success.

‘’We look forward to reporting on progress, as well as some other pleasing growth initiatives we are close to delivering.”

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