Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Platform subscription revenue showed strong growth with a three-year CAGR of 38%, reaching $6.5 million in the first half of fiscal year 2025.
- The company's exit run rate for annualized platform subscription revenue grew by 34% year over year, with expectations of 40% or greater growth by the end of fiscal year 2025.
- Seat licenses have grown over 179% in the last year, with approximately 6,000 active licenses, indicating strong customer adoption.
- Blended gross margin improved to 67% in the first half of fiscal year 2025, up from 59% in the previous year, driven by higher margin subscription revenue.
- The company has a strong balance sheet with $11.1 million in total cash and receivables, and no debt, allowing for continued investment in product development.
Negative Points
- Cash reduced by $3 million over the last 12 months due to substantial investment in new product development.
- Platform transaction revenue growth was modest at 6% over the prior year, indicating potential challenges in this segment.
- The company's growth is heavily dependent on customer adoption and timing, which can be variable and customer-dependent.
- Despite strong growth, the company faces constraints in scaling delivery to large utility customers due to its size.
- The process of converting large utility customers to new products like IKE PoleForman can be slow due to established operational practices.
Q & A Highlights
Q: Was the second quarter uplift in enterprise customer wins primarily due to the PoleForman product?
A: It's been a mix. Many wins were tied to IKE PoleForman, but others were related to Office Pro. Approximately two-thirds were due to IKE PoleForman and one-third to Office Pro. We are adding about 1.5 new customers per week. - Glenn Milnes, CEO
Q: Can you discuss the quality of the new customers and your penetration among top investor-owned utilities?
A: Customers vary in size. There are over 3,000 electric utilities in North America, but only 110 are large investor-owned utilities. We've recently switched one of the five largest utilities to IKE PoleForman, indicating significant productivity benefits. - Glenn Milnes, CEO
Q: What drives the conversion of large utility customers to IKE PoleForman?
A: Large utilities have established processes, so conversion takes time. Our sales focus on simplicity and clarity, making it easier for design engineers to work efficiently. The industry is moving faster due to grid hardening and resiliency needs. - Glenn Milnes, CEO
Q: How is the partnership with Google impacting your data usage and revenue?
A: We are currently using Google's data to enhance our applications for power poles and infrastructure. This partnership allows us to leverage bulk data for better asset management and is already in customer hands. - Glenn Milnes, CEO
Q: What has driven the recent improvement in transactional gross margins?
A: We reduced costs by shifting production to a dedicated team in Mexico, which is more cost-effective. Additionally, internal process improvements have enhanced our efficiency and margins. - Brian Musfeldt, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
