K2fly review nearing completion

Staff reporter

ASX-listed mining and utility software company K2fly has lifted second-quarter revenue 21% year-on-year to A$3.4 million and started concerted cost-control measures during the period in a bid to cut net operating cash outflow.

The company, which appointed Argonaut PCF and Atrico last November to “assess alternative capital structures” after it highlighted a perceived gap between its financial and public market performance, expects to update investors on the strategic review in the current quarter.

K2fly has a current market value around A$20 million and is 17.7% owned by Maptek, one of the world’s largest mine planning and geology modelling software companies.

Users of its governance software include a bunch of the world’s largest mining companies and power and water utilities.

Annual recurring revenue (ARR) topped $8 million in the December quarter, 16% higher than a year earlier.

“K2fly maintained our very strong record of 14 continuous quarters of ARR growth despite a relatively flat sales quarter in Q2 FY24,” CEO Nic Pollock said.

“The flat quarter is a result of disruptions to our sales function in calendar 2023 and is not representative of a decline in demand.

“In October 2023 we appointed a new global sales leader and our pipeline and forecast for the second half of FY24 has strengthened considerably.”

Pollock said the company’s new resource disclosure product, which was being implemented at three customer sites, opened up “numerous benefits for K2fly”.

“Firstly, it has now triggered the commencement of the program of migration of the 16 RCubed installed-base clients to the new platform, starting with Newmont Mining,” he said.

“Secondly our mineral resource governance suite has expanded significantly and we can now offer our migrating and new clients additional functionality with the new platform alongside additional modules to further expand our footprint within those clients.

“Finally, the timing of the launch coincides with the imminent release in 2024 of the revised JORC  code, which will prompt many companies to adopt what is now the industry standard in mineral resource governance, the K2fly resource disclosure solution.”

Pollock said net operating cash outflow rose 8% yoy in the first half of FY24 at $1.7 million despite heavy growth spend and inflationary pressures.

The company had cash on hand of $2.5 million at the end of December, and an undrawn $2 million working capital facility.

K2fly’s total contract value (TCV) at the end of December was $16 million.


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