Simble grows revenues, slashes costs
Simble Solutions Ltd’s (ASX:SIS) quarterly result for the three months to June 30, 2019 demonstrates that the company is approaching a significant inflection point with revenues poised to break above the group’s diminishing cost curve.
Particularly in the last 12 months, the company has substantially reduced its operational costs.
However, this hasn’t placed a drag on the company growing the business as evidenced by the sharp uptick in receipts from customers in the June quarter.
As the following chart indicates, receipts from customers grew fairly rapidly off a low base after the company listed on the ASX and then as is fairly characteristic tended to stabilise over the ensuing six months.
Importantly, the company has negotiated significant multi-year agreements in recent months which provide recurring income and earnings visibility.
Commenting on the companys increasingly robust financial position, chief executive Fadi Geha said, “Simble’s operating cash flow improved by almost $1 million compared to the same quarter last year, as we continue to grow the business while simultaneously realising operational efficiencies across all business units.
“Net cash used from operating activities shrunk to $150,000, the lowest level since our IPO and an 86% improvement compared to twelve months ago.
“We have signed deals of up to $7 million of contracted revenue in the last six months as demand for our energy analytics software solutions continuesd to grow.
‘’We will now strategically deploy capital to grow that number significantly through diligent execution of our partner-led growth strategy.’’
Recurring income provides revenue predictability
Simble provides investors with a reasonable degree of revenue predictability as it generates a significant proportion of revenue from providing solutions to the essential services sector.
The Simble Energy Platform or ‘SimbleSense’ is an integrated hardware and real-time software solution that enables businesses to visualise, control and monetise their energy systems.
The company’s Software as a Service (SaaS) platform has Internet of Things (IoT) capabilities and empowers enterprises and consumers to remotely automate energy savings opportunities to reduce their energy bills.
Simble operates in the small to medium enterprise (SME) and residential markets, managing the distribution of its platform through channel partners.
The company has had strong success in the UK, having forged important corporate relationships in that region.
However, it is also represented in Australia and Vietnam.
Preparing to accelerate growth, especially in UK
Management’s outlook statement indicated that the company is ready to step up a gear in terms of increasing its presence in existing markets and breaking into new areas.
On this note, Fadi said, “Moving forward, we will further strengthen our UK presence as our solutions continue to resonate with the utility and energy brokers in those markets.
‘’We have a high-quality pipeline and have put in the work to validate and de-risk these opportunities so that investors can be confident that our growth trajectory will continue to accelerate.
“We have invested in our people and technology to capitalise on the enormous opportunity in the global energy market as technology’s role is only set to expand in coming years.
‘’Our IP sits at the core of this opportunity and we are at an inflection point of our growth strategy.’’