Simble grows SimbleSense and makes sustainable cost cuts
Shares in Simble Solutions Limited (ASX:SIS) opened 10% higher on Monday morning after the company released an impressive June quarter report and management provided a promising business update.
Simble is an Australian software company focused on energy management, mobility and Internet of Things (IoT) solutions.
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.
Over the three-month period to June 2020, the number of meters under management on the SimbleSense platform increased by 4.2%, resulting in annual growth of 37% since June 2019.
The growth rate of meters under management is expected to accelerate through the September quarter as a result of recently signed contracts with Sylvania Lighting and Bluewater Shopping Centre in the UK, as well as recent wins in Australia driven by the NSW and Federal Government energy efficiency grants.
Recurring revenue looking robust
This is an important area of the business for the company as it generates recurring revenue, providing predictability of income as opposed to the lumpy earnings that can come with one-off contracts.
As indicated in the following graph, annualised recurring earnings have stayed above the $500,000 mark for the last 12 months, and over the last six months and they have increased by nearly 20% during that period, pushing above $600,000 in May.
During the quarter Simble continued to on-board customer sites and meters under management to its energy data analytics platform, with each installation delivering recurring Software-as-a Service (SaaS) revenue which is recognised on a pro-rata basis over the life of the contract.
Orders of the Simble Energy platform also include hardware components, which are recognised on an upfront basis.
From a broader perspective, the company’s cash burn profile has improved dramatically over the last 12 months and management expects to consolidate and maintain the reduced cost base.
Gross cash outflows from operating and investing activities (excluding non-recurring costs) declined year on year to $780,000, a 39% improvement on June quarter 2019.
Whilst this measure was slightly higher than the March quarter due to variable cost of sales on June quarter mobility revenues, operating and investing overheads (gross cash outflows excluding cost of sales and non-recurring costs) have continued to reduce for the third quarter in succession.
These developments, along with important client retention and new business wins leave the company well-placed as it works towards a solid result in fiscal 2020 (SIS reports on a calendar year basis).
When the experts at Next Investors have a stock pick, it may pay to listen.
The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.
They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.
Click the link below to see what they are currently investing in.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.