ikeGPS Group FY 2018 Results presentation

Measuring Up
IKE FY18 results. FY19 growth opportunities and guidance.
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IMPORTANT NOTICE
This presentation is given on behalf of ike
GPS
Group Limited (Company Number NZ 1292732; NZX & ASX:IKE)
Information in this Presentation:
•is for general information purposes only, and is not an offer or invitation for subscription, purchase, or recommendation of securities in
ikeGPS Limited;

•should be read in conjunction with, and is subject to, ike’s FY18 financial statements, market releases, and information published on
ike’s website (www.ikegps.com);

•includes forward-looking statements about ike and the environment in which ike operates, which are subject to uncertainties and
contingencies outside of ike’s control – ike’s actual results or performance may differ materially from these statements;

•includes statements relating to past performance, which should not be regarded as a reliable indicator of future performance; and

•may contain information from third parties believed to be reliable – however, no representations or warranties are made as to the
accuracy or completeness of such information.

All information in this presentation is current at the date of this presentation, unless otherwise stated.

All currency amounts are in NZ dollars unless stated otherwise.

Receipt of this Document and/or attendance at this presentation constitutes acceptance of the terms set out above in this Important Notice.
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INVESTOR CALENDAR
Audited Financial
Statements
30 May*
Annual Report

30 June*
Annual General
Meeting
4 September*
* Dates New Zealand Time
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Results
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Significant improvement across all key metrics.

-Recognised revenue of $7.7m, with additional deferred IKE4 revenue of $1.2m.
-Approximately 37% higher recognised revenue against PCP (FY17 $5.7m)

-Operating cash flow targets met.
-Operating cash used in the 12 month period of $2.8m.
-69%, or $6.2m, improvement against PCP (FY17 $9.0m operating cash used)
-Approximately $1.2m operating cash flow positive Q4 FY18, impacted by positive timing differences on receipts and payments
-Approximately $0.25m operating cash flow negative 2H FY18
-$2.6m cash on hand at end of period

-Gross margin in the period of $4.0m.
-76% higher against PCP (FY17 $2.3m)
-FY18 gross margin also impacted by one time non-cash charges of $420k
-IKE branded Products consolidated margin (adjusted for write offs) of approximately 64% verses revised guidance of 65%.

-Operating Expenses of $10.8m.
-Reduction of $2.4m against PCP

-Net loss after tax for the period of $6.7m.
- 37% improvement against PCP (FY17 $10.7m)
- 2H FY18 net loss of $2.3m, a 49% improvement against 1H FY18 net loss of $4.4m

Significant improvement across all key metrics cont.

-Record IKE4 sales with $5.0m revenue from a total of 476 systems (including 46 rental contracts) into the U.S. Communications and
Electric Utility market, with a $1.2m additional deferred revenue from IKE4 subscriptions.
-110% system volume sales growth against PCP (FY17 210 systems)
-Record 243 IKE4 systems shipped 2H FY18
-Important in-market progress with Target Accounts:
■Sales and deployment into AT&T Inc., the largest communications company in the U.S., Verizon Communications
Inc., the second largest communications company in the U.S., Cox Communications Inc., a national fibre operator,
and some other key communications businesses.
■The IKE4 platform has now been sold into all investor-owned utilities in the States of California and Washington
■Growth of an engineering services company supporting national fibre & communications companies to have
approximately 80 IKE4 systems deployed by the end of Q4 FY18.

-The new ‘IKE Analyze’ product was launched and delivered 2H FY18, providing the potential for IKE to significantly increase revenue
within some target accounts.

-Spike sales, primarily into the Signage market, were steady against FY17.
-Approximately $1.2m revenue from 2,206 total units shipped (against PCP unit volume of 2,077).
-New solution partner, ESRI Inc., established for the Geospatial market to expand the verticals that Spike will address FY19.

-8,849 Stanley Smart Measure Pro units shipped FY18 as expected (against PCP of 30,500 units)

Positive revenue and gross margin momentum
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Significantly improved net loss and operating cash profile
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Five drivers of cash generation
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Drivers
Improved
revenue quality
Transitioned from low margin OEM sales to higher
margin & value IKE-branded products.
Diversified tier-1 customer base developing.
Cash accretive
IKE4 system
sales
Momentum with enterprise-level customers.
Accretive IKE4 Subscription Renewals.
Diversified revenue streams developing from the
IKE4 platform offering.
“Lean”
operating model
Lowered corporate and engineering costs.
Continued investment in sales & marketing.
Investment into
focused product
development
Enhancing solution offerings to facilitate higher
revenues per customer: additional software for
deeper customer workflows, SDK’s to enable further
integrations.
Working capital
efficiency
Inventory and Prepayments reduction in the period
of $1.3m.
Improving Days Sales Outstanding.

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37% growth against PCP
Gross Profit
improvement 51%
verses PCP 40%;
increased IKE-branded
products and services
$2.4m improvement
against PCP
37% improvement
against PCP
Positive Operating Results in FY18

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Increased volume of
IKE-branded products
and services
OPEX reduction
combined with Supply
Chain efficiencies
Continuing to invest in
development
Focussed OPEX and Working Capital Management

Outlook
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FY19 guidance, KPI’s and commentary
Metric/factorExpectation at commencement of FY19
Revenue and gross
margin growth
Greater than 30% revenue growth against FY18:
❏IKE4 revenue components to be from the delivery of a fuller solution:
❏New IKE4 system sales
❏Recurring subscriptions from existing customers
❏ikeAnalyze sales
❏Noting that no FY19 revenue is expected from Stanley Smart Measure Pro sales, the OEM mobile product.
CashOperating cash flow breakeven for FY19.
EBITDA EBITDA breakeven by Q4 FY19.

Operating expenditure Operating costs will be similar in absolute dollar terms against FY18.
Sales and marketing costs will be higher than FY18, as investment toward growing existing customers and market
share continues.
Engineering and corporate costs will decrease relative to FY18.
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FY19 guidance, KPI’s and commentary cont.
Metric/factorExpectation at commencement of FY19
Maximizing the revenue &
profit from the opportunity
for IKE4 in the
Communications market
A significant opportunity is in front of IKE specific to the U.S. Communications market, addressable over the
coming c 48 months with respect to IKE4 sales into the top ten U.S. Communications operators.

IKE may have the opportunity to invest in additive growth activities at the appropriate time to:
❏Build or acquire software capability to add further value to the IKE4 solution, that can increase the
potential revenue opportunity within target accounts.
❏Accelerate sales and business development processes specific to these ten target accounts.
❏More fully resource IKE4 deployments, post-sales account management & customer success activities, to
de-risk the adoption process and maximize long term account value.
❏Fund working capital growth commensurate with sales growth.
Sales cycle Increasing recurring subscription revenues will continue to smooth revenue and gross margin profiles.
New business development wins may have some lumpiness, reflecting the sales cycles to onboard target accounts
and shift customer work practices away from incumbent methods.
Market communication
cadence
IKE will report KPI’s and other core metrics to the market quarterly, noting IKE’s view that the primary value driver
in the medium term will be progress with target IKE4 accounts rather than a quarterly IKE4 unit volume.
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Momentum & growth
opportunities

A US$200B tailwind for IKE4 in the U.S Communications market
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Addressing more of the ‘pole’ value chain.
Short term value drivers in place via the current IKE4 solution offering...

Specialist field tools and
mobile app workflow
software, delivering upfront
revenue.

Integration software for
Pole Load Analysis and
other backend systems,
delivering subscription
revenue.

Information management
and dashboard reporting,
providing the potential for
new revenue streams.

IKE Analyze, delivering
‘per pole’ transaction
revenue.

Pole people & pole
expertise, delivering
training & deployment
services revenue.

Cloud-based
measurement, analysis
and pole management
software, delivering
subscription revenue.

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A US$200B market tailwind, being invested into fiber networks.
The majority of this deployment to be on overhead infrastructure.

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Customers can deploy fiber faster with IKE4.
2x faster field engineering and 5x faster make-ready-engineering processes. .
Actual customer productivity data from IKE4 program at one of the world’s
largest communications companies.
Minutes/pole:

field engineering
(incumbent work
practice)

Minutes/pole:

field engineering
(IKE)

Minutes/pole:

Digital design and
MRE engineering
(incumbent work
practice)

Minutes/pole:

Digital design and
MRE engineering
(IKE)

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❏A common standard for how pole data is
captured and analyzed.

❏A central location for multiple parties to
store and access information about an
asset.

High value from standardising pole data in the IKE4 cloud.
The ‘pole depot’ for an asset owner or any pole project .

The IKE4 cloud today manages >3.25m pole captures, >0.8m pole
records, and has up to 3,000 additional asset records added each day.

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A pole management system that’s growing fast.
More than 3.25m pole captures have been processed to date in the IKE4 Cloud.....

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Positioned in front of the major players.
With line-of-sight to the growth of existing accounts and the path to winning new ones.....

IKE4 customer FY18

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Opportunities to introduce further solution value.
Potential long term value drivers.....

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A summary of the U.S. Communications market opportunity.
Directly in front of IKE over the next 48 months.

❏The US$200b fibre investment super-cycle in the U.S. provides an extraordinary market tailwind for the IKE4 solution.
❏A bottoms-up view of ten U.S. Communications companies, engaged with IKE either as a customer won in FY18 or as an
active sales prospect, indicates a very large revenue opportunity is directly in front of the business.
❏Simplistically, the IKE4 solution enables Communications companies to deploy their network faster and at higher quality.
❏While IKE is a small part of the overall fiber construction process, speed of make-ready engineering is a primary pain
point that provides a clear incentive for market participants to engage with IKE.
❏By winning any Communications-type customer, IKE is winning their asset records and the asset records of the pole-owner to
which they have attached their network. Often this is a electric utility.
❏The approximately 3,200 electric utilities in the U.S. remain the big prize for IKE in the long run.
❏IKE’s near term sales focus, aside from the Communications & Fibre players, are the Joint-Use departments within
electric utilities - who are under pressure to efficiently process approvals for pole attachment requests from
Communications & Fiber operators.
❏IKE’s go-to-market approach is direct sales, direct services and direct support, as a complete solution provider..

A continuing focus on the $300-500m signage market.
Via the Spike product platform.
signage businesses relying on Spike every day to
improve their business processes, saving time &
money.

6,000+
another 144,000 businesses to serve

150,000
6,000+
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Additional option value in the large Geospatial market.
Via newly established product partnership with Esri and associated GIS distribution network.

THANKS
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