IKEGPS GROUP LIMITED — Earnings Release 2024

May 29, 2024

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FOR IMMEDIATE RELEASE, 30 May 2024

FY24 Financial Results

Multiple contracts closed expected to underpin >50% SaaS revenue growth in FY25

ikeGPS Group Limited (IKE) (NZX: IKE / ASX: IKE) is pleased to release an update for its financial results for the 12 months to 31 March 2024 (all figures in NZD). IKE will host a webinar on 31 May 2024 at 11am AEDT/1pm NZDT to discuss performance and outlook. To register, please click:

https://us02web.zoom.us/webinar/register/WN_RDSMC4RoStSTedS2PyBIJw

FY24 Results Highlights:

• • Revenue of ~NZ$21.1m (-31% vs pcp).
• • Subscription revenue of ~NZ$10.7m (+21% vs pcp).
• • Transaction revenue of ~NZ$7.3m (-61% vs pcp).
• • Gross margin of ~NZ$12.7m (-22% vs pcp), with a gross margin percentage of ~60% (up from pcp of ~53%)
• • Net loss of ~NZ$15m (vs FY23 net loss of ~NZ$7.8m).
• • Total cash and receivables as at 31 March 2024 of NZ$15.4m, comprised of NZ$10.2m cash and NZ$5.2m receivables, with payables of NZ$1.2m and no debt (up from the position 31 December 2023 of NZ$8.0m cash and NZ$7.2m receivables, and flat against the cash position 30 September 2023).

Commentary

IKE CEO Glenn Milnes commented, "Q4 FY24 was a stronger period again at IKE with more significant subscription contracts closed with tier-1 North American electric utility customers that, although not materially impacting recognized revenue in the FY24 period to March 2024, will substantially grow our FY25 subscription revenue run rates. This includes more than 2,500 additional subscribers to our IKE PoleForeman platform.

That said, the FY24 period also saw a substantial year-on-year reduction in revenue from our lower margin transaction revenue. A -61% reduction vs pcp was due to the FY23 period having outsized activity from certain customers. For context, this was up +191% on FY22 levels. Our three-year transaction revenue CAGR, or growth rate, is 47% and based on guidance from these long-term customers we expect transaction volumes and associated revenue to build into FY25.

With respect to core subscription revenue, since the Q3 launch of our new IKE PoleForeman product Total Contract Value (TCV) in closing has exceeded $12m from mostly tier-1 electric utilities in the U.S. market. In total, ~47 customers have subscribed to the platform, of which 28 were existing customers and 19 are new, including one of the 10 largest electric utilities in the U.S. We do expect further major customers to close in the near term and that IKE PoleForeman will ultimately be the standard for structural analysis in eight of the ten largest electric utilities in North America.

Examples of recent subscription contracts, totaling >NZ$12m in TCV, include:

• An agreement with the second largest electric utility group in North America for a fiveyear term that is expected to generate ~NZ$2.0m in total subscription revenue, or an additive NZ$0.4m ARR.

• A large U.S. electric utility signed a ~NZ$0.5m three-year subscription contract for IKE PoleForeman, representing a five-fold increase in annual recurring revenue from this customer versus our legacy product.

• A ~NZ$0.8M three-year subscription contract from a major east coast U.S. electric utility, which is a Fortune 500 company, to use IKE PoleForeman.

• A ~NZ$3.7m three-year subscription contract with a Fortune 150 Company and one of the ten largest Investor-Owned-Utilities (IoU’s) in the U.S., upgrading them from IKE’s legacy product to our new IKE PoleForeman structural analysis platform.

Over the coming years, these long-term recurring customer commitments translate to more than 2,500 distribution engineers across our customer footprint subscribing to IKE PoleForeman’s advanced capabilities for network design, and we expect to retain these customers for five years, ten years, or longer.

FY25 Outlook

Subscription revenue in FY25 is expected to grow strongly, at +50% or greater vs pcp to ~$16m per annum or greater. This outlook is based on the ongoing growth of our core IKE Office Pro subscription product, which has seen >30% CAGR over the past three years and with ~95% customer retention. It is also based on the the success of the launch of our new IKE PoleForeman product, with more than NZ$12m of TCV closed since its Q3 launch and an additive subscriber base of >2,500 users.

Transaction revenue in FY25 is expected to grow, but with a wider range of potential growth profiles and as such represents higher risk – both upside and downside. Transaction revenue at IKE over the past three years has grown at a ~45% CAGR, although FY24 levels were down against FY23 due to FY23 seeing outsized customer activity. Based on guidance from long-term customers we expect transaction volumes and associated revenue to build into FY25.

Overall, we closed ~NZ$27m of contracts in FY24, against approximately NZ$21m of recognized revenue. Our customer retention rate is excellent, at approximately 95% and our sales pipeline for new business is strong and is growing. We won 59 new subscription customers in the U.S. market over the past year, continuing a win rate of approximately one new customer per week. As a reminder of our business model, IKE generates additive transaction revenue, on top of subscription revenue, from some customers as they engineer more network assets in our system.

Our margin profile improved to ~60% in FY24, from ~53% in FY23, due to a continued shift in the product mix toward higher margin subscription revenue. We expect this trend to continue into FY25 with the growth in our subscription revenue outpacing other segments resulting in a material improvement in margins again in FY25.

During 2H FY24, we also reduced our cost profile to maintain the timeframe towards both EBITDA and cash positive operations. As consistently stated, management and the Board remain cognizant of the importance of maintaining a strong balance sheet position, executing against immediate revenue growth opportunities, whilst retaining the ability to manage costs appropriately. Our balance sheet remains strong, noting that the USD and AUD foreign exchange rates impact our reported NZD position each period.

FY25 is also an exciting period for IKE in terms of the expected introduction of new AI-based automation capabilities into existing and new products. IKE has invested significantly into

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building automation that is specific to distribution network workflows, and we look forward to putting this into our customers’ hands.

Macro-market tailwinds across North America remain supportive of the productivity products that IKE delivers, driven by the forecasted US$300B investment by electric utilities into building & maintaining distribution power network capacity and associated network hardening. To meet carbon-zero targets in the U.S. by 2050, analysts forecast that approximately 50% of the energy in the U.S. needs to be on the electrical grid, from a position of just 20% today. Overall, analysts forecast that capex and opex spend across distribution networks in the U.S. market will increase by +4% annually for the next decade. Further, the multi-year investment being made into building overhead fiber and 5G networks, IKE’s product suite drives productivity in support of these network engineering and capacity activities.

Performance across the business is set out in the following table and charts.

	FY24	FY 23	% Change
Total Revenue	$21.1M	$30.8m	-31%
Platform Transactions
# of Billable Transactions	279K	490K	-43%
Platform Transaction Revenue	$7.3M	$18.7m	-61%
Gross Margin	$1.8M	$7.2m	-76%
Gross Margin %	24%	39%
Platform Subscriptions
Total # of Subscription Customers	395	367	+8%
Platform Subscription Revenue	$10.7M	$8.8m	+22%
Gross Margin	$9.2M	$7.7m	+20%
Gross Margin %	86%	88%
Hardware & Other
Hardware & Services Revenue	$3.1M	$3.3m	-9%
Gross Margin	$1.7M	$1.5m	+11%
Gross Margin %	56%	45%

Customer Number Reconciliation:

Since 31 December 2023, IKE has changed its reporting of customer numbers from ‘All Enterprise Customers’ to ‘Subscription Customers’, reflecting only customers with recurring subscription revenue. The reconciliation between these two metrics will be reported for the next 4 periods to 31 December 2024. Reconciliation is as follows:

Customer Recon	FY 24	FY 23
Total # of Enterprise Customers	415	379	+9%
Less: Non-Subscription Customers	(20)	(12)	+67%
Total # of Subscription Customers	395	367	+8%

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Takeaways Significant growth in underlying subscription revenue. Three-year subscription revenue CAGR of 33%, During FY25, this is expected to increase materially, by greater than 50%, due to the successful FY24 launch & sellthrough of IKE’s next-generation IKE PoleForeman product.

Takeaways Three-year transaction revenue CAGR of 47%, but 61% lower in FY24 vs pcp due to FY23 seeing outsize customer growth and activity. Based on guidance from long-term customers IKE expects transaction volumes and associated revenue to build into FY25.

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Takeaways
Three-year revenue
CAGR of 31%
Recurring
subscription and
reoccurring
transaction
revenues (shown
by the green and
blue segments in
this chart)
dominate IKE’s
revenue mix, at
86% for FY24.
An expectation for
healthy growth in
the FY25 period.
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ENDS

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About IKE

We’re IKE, the PoleOS™ Company. IKE seeks to be the standard for collecting, analysing and managing pole and overhead asset information for electric utilities, communications companies, and their engineering service providers.

The IKE platform allows electric utilities, communications companies, and their engineering service providers to increase speed, quality, and safety for the construction and maintenance of distribution assets.

The core revenue engine for IKE is driven by the number of enterprise customers subscribing to the IKE platform and the volume of assets (called Transactions) being processed through IKE’s software.

Contact :

Glenn Milnes

CEO +1 720-418-1936 glenn.milnes@ikegps.com

Simon Hinsley

Investor Relations +61-401-809-653 simon@nwrcommunications.com.au

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ikeGPS Group Limited

329 Interlocken Parkway, Suite 329, Broomfield CO 80021, USA Office: +1 303 222 3218 www.ikegps.com