Simble poised to achieve strong revenue growth in 2020
Simble Solutions Limited (ASX:SIS), an Australian software company focused on energy SaaS solutions released a very positive March quarter business update at the end of February, but it was overshadowed by the wave of coronavirus news.
As a provider of hardware and software solutions requiring little face-to-face contact with clients, the company shouldn’t be unduly affected.
Furthermore, its core business revolves around the supply of essential services, leaving it less exposed than many companies that rely on the sale and supply of discretionary goods and services.
From an operational perspective, the company achieved a 5% increase in revenues for the 12 months to December 31, 2019.
Importantly, net cash used in operating activities in fiscal 2019 reduced from $5.9 million in the previous corresponding period to $3.3 million.
This was reflected in the significant reduction in cash burn that was achieved in every quarter, an important factor for companies that invest heavily in product development ahead of revenue generation.
Management noted that the significant reduction the group’s cost base could be attributed to operational restructuring and diligent fiscal management, indicating that the cost outs are sustainable.
While the company is yet to move to profitability, the underlying EBITDA loss of $2.4 million represented a 32% improvement on the previous year’s loss of $3.5 million.
New partnerships and products to drive growth in 2020
Simble has forged partnerships that have the potential to drive revenue growth over the next 12 months.
Meters under management supporting the SimbleSense platform grew by 50%, which has continued into 2020 with the recently announced BlueWater contract, ARENA rollout and Sylvania Lighting partnership.
Interest in CarbonView, Simble’s carbon and sustainability platform has increased as a result of an increased focus by corporations across the globe and specifically in the markets that Simble operates in.
This has potential to drive additional SaaS revenues over the coming months.
Subsequent to the year end, growth of meters under management supporting the SimbleSense Platform and subscriptions has continued with the growth rate increasing by a further 10% in two months.
Subsequent to year end Simble announced a three-year agreement with Sylvania Lighting to incorporate the SimbleSense Platform into all lighting projects to commercial customers, commencing in the UK, France, Germany, Spain and Italy.
Not only does this provide a robust platform for revenue growth, but it represents a strong endorsement of Simble’s products.
SimbleSense energy analytics platform will be embedded into Sylvania’s turnkey solution, providing “energy intelligence” to customers.
First app provider in smart energy rollout
The March quarter also saw Simble appointed as the first app provider in the ARENA-funded national smart energy rollout.
Australian Renewable Energy Agency (ARENA) is subsidising part of the estimated $8.2 million total cost of installing 5,000 homes and small businesses, plus 250 schools, with a grant of $2.7 million.
Simble and Wattwatchers will be targeting a broader roll-out in the Australian domestic market beyond the ARENA-backed project.
Government bodies and large corporates have been approaching Simble to assist them in in developing energy-efficient programs, as well as determining and understanding their actual energy footprint.
These groups have included the Department of Health and Human Services in Victoria, the RACV and a construction group with operations in Australia and the UK.
Synnex launched a new marketing campaign to promote the SimbleSense platform to its large reseller base including an online presence at Kogan.com and TrinityConnect.com.au.
Simble also expanded into New Zealand with the first installation of its SimbleSense platform occurring via its New Zealand channel partner Optimal Group.
While management didn’t provide quantitative guidance for 2020, chief executive Ronen Ghosh said, ‘’Our focus in 2020 will shift from foundation building to execution as we start to regrow our presence in UK and Australia through market opportunities, an improved commercial model and a world-class product offering.
‘’We have already started to see some good activity in the first quarter and believe that 2020 will be an exciting year in Simble’s journey.’’