Mining technology business K2fly has delivered a 20 per cent boost to its annual recurring revenue (ARR), with new sales and contract renewals driving the key performance metric from $7.5 million in the fourth quarter of FY23 to $9 million in the fourth quarter of FY24.
The company’s latest quarterly financial report also shows that cash receipts from customers of $4.6 million also jumped by 28 per cent during the same period.
The welcome lift in ARR stemmed from new client acquisitions and growth in the company’s “Americas” geographic segment. In particular, Brazilian mining titan Vale and diversified Canadian base metals mining group Lundin Mining contracted onto K2fly’s “Resource Disclosure” platform for a combined $653,000 in additional ARR.
K2fly also recorded a 24 per cent increase in ARR for a three-year contract renewal from an unnamed “tier-one” client that is using the group’s “Mine Geology” solution.
Notably, the latest results build on a steady ascent in the company’s total ARR, which has now nearly tripled since clocking in at $3.4 million three years ago. K2fly ended the fourth quarter with an impressive $17 million in its total contract value.
Revenue of $2.9 million for the period remained flat compared to the previous quarter. However, management says the muted outcome stems from the completion of implementation projects in prior periods, resulting in lower services revenue.
Meanwhile, the rise in cash receipts saw the company generate a net operating cash inflow of $1.2 million during the quarter, marking a substantial improvement from a $700,000 outflow a year ago. The strong performance in that metric was aided by cost management initiatives designed to achieve operating cash breakeven.
The positive outcome helped boost K2fly’s coffers, with the company ending the period with $2.4 million in cash and an undrawn $2 million working capital facility. In comparison, it held $1.5 million in cash at the end of March.
The solid financial performance in the June quarter comes amid recent revelations that K2fly is set to be taken over by globally-renowned, technology-focused investment firm Accel-KKR. Under the binding scheme implementation deed signed by the two parties in June, K2fly shareholders will be entitled to receive 19c per share – representing a colossal 90 per cent premium on the company’s previous closing price of 10c.
The K2fly board of directors unanimously recommended shareholders vote in favour of the scheme, if no superior proposal is received.
K2fly chief executive officer Nic Pollock said: “The offer from Accel-KKR (when concluded) will provide K2fly with the best partner to continue the journey with our current and future customers to deliver net positive Resource Governance solutions for our current and future clients and a stronger company for our staff to continue to thrive.”
Pollock said that the offer is supported by K2fly’s most significant shareholders, who control nearly half of the company’s voting shares.
K2fly’s suite of resource governance solutions have been adopted by a legion of esteemed mining companies, helping to steer recurring revenue for several years. It comes as little surprise that Accel-KKR has spotted the potential for the Perth-based business to maintain its growth journey well into the future.
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By Bart Bogacz
