ikeGPS Group Limited

Good morning, and welcome to ikeGPS First Half Financial Year 2026 Performance Update as released on the NZX and ASX this morning. [Operator Instructions] Glenn Mills, Managing Director and CEO's presentation.

But with that, Glenn, I might just hand it over to you for the performance. Thanks.

Great. Thanks, Simon, and thank you, everyone, for taking the time to meet today.

We want to be very efficient with your time. First thing, though, I'm pleased to introduce Paul Cardosi.

Paul is based in our Colorado headquarters alongside the leadership team. So introducing Paul, he started right at the end of September.

Hello, everyone. It's good to meet everyone today.

Thanks, Glenn.

Great. So look, what we'll do for today's session is go through the performance and the numbers themselves.

It's been a very strong quarter for the business, which has been pleasing. I want to talk about the market because market timing is everything in terms of, I think, our growth prospects and where we're sitting and also introduce some of the go-to-market and also the new product functionality that we've introduced that we think should materially impact our subscription revenue base.

So please take note of this important notice for this presentation. It's the agenda we just talked to.

I won't -- Paul will take you through the numbers in terms of the following charts. Just covering those last 3 points, I think it's important for our shareholders to understand that we've maintained our cash operating expenses are materially flat versus the prior calendar period.

So we've been able to grow the business and scale without adding additional people costs, in particular. We've got a strong balance sheet now with $34 million on the balance sheet.

We've got no debt. We are fortunate to be very well supported through a capital raise process in the second quarter, both institutional -- new and existing institutional support and also a high level of support from our retail investors.

And the last point is tied to the ASX All Ordinaries Index. We were promoted there towards the end of September, which tracks the 500 largest companies on the ASX by market cap.

So with that, I'll hand over to Paul, and he'll take you through some of the headline numbers. I think actually, before we transition there, we are reiterating guidance in terms of platform subscription revenue.

This is going to be at approximately 35% or greater through this year. We're in good shape to deliver that.

We're still committed to EBITDA breakeven on a run rate basis within the second half of this year, which we're now into -- well into October. Paul, over to you.

Thanks, Glenn. I'm going to start with the exit annualized run rate of our platform subscription revenue.

We're very pleased at the 47% growth rate that you see on the slide. Key takeaways around our platform subscription revenue growth are really the strength and the continued growth we see around our IKE Office Pro and IKE PoleForeman subscription products.

So great growth there. You can see here on the 47% growth for the latest subscription revenue.

If you go to the next slide, Glenn, the next slide represents our 6-month year-to-date subscription revenues, and this has given you a look at our first half performance. You can see on a compounded annual growth rate, we're at 30%.

But faster than that, you can see our year-over-year growth year-to-date versus the year-to-date prior calendar period was a 35% growth rate. So really reiterating that guidance Glenn mentioned earlier, continuing to see 35% plus growth rates across our subscription business.

If we go to the next slide, Glenn, I'll talk a bit about seat growth. These are the user seats that we sell for our subscription products.

55% growth over prior calendar period. I would say as we continue launching products as well as the products we have launched, we do sell on a per seat basis, a per user basis.

So you can see -- really, I see this as seat adoption, user adoption and really strength in the number of users we have across our subscription products. So 55% growth rate there for our subscription business.

Moving to the next slide, Glenn. This is our transactions revenue.

This is a services business that's heavily influenced by the number of poles that we manage for customers. Our customers perform themselves.

This business is down. It's a lower-margin business for us.

You can see that the 32% decline in transaction revenue. There's volatility in this business.

There's a lot going on with the new U.S. administration around fiber or high-speed communication in rural networks.

I would say there's some volatility in this market right now in terms of the timing of the funding. We do expect this to rebound.

The time line is, I would say, in the medium term. But again, a lot can happen that's really in the macro U.S.

economy. So overall, this business is down.

It is impacting our overall revenue growth. But again, we expect as legislation moves through, we'll see a rebound at some point in the, I would say, the medium term here.

I don't know, Glenn, if you want to comment on this or you want to just keep going.

Yes. No, that's a good summary.

We're seeing the Tier 2 fiber and Tier 3 fiber folks have been asked by the new government administration to rebid for the contracts that they had been awarded. And that's created some uncertainty, but this infrastructure has to be built.

So we're confident it comes back. It's just -- it's difficult for us to predict when we stay in very close contact with our core customers here.

Again, this business has generated just under $3 million of revenue through the first half of the year, and we're able to adjust our cost base and make sure it stays profitable and has a good margin profile.

This is a revenue mix slide. So again, looking at the different sections of this chart, you can see that we're now at 90% of our revenue coming from both our recurring revenue streams and reoccurring revenue streams.

And I would highlight that the subscription portion of this hit 69% of our revenue. So you can see the purple -- hopefully, you can see it on the screen.

The subscription makes up a much larger portion of our revenue. It's a very highly profitable portion.

We're around about 93% margin on that subscription revenue. Again, that is the focus that the business has had and has, and you can see it's really taking effect with the amount of subscription revenue that's really dominating the mix of our revenue.

So it's nice to see that. If I move on, Glenn to the next one.

I'll wrap up with -- these are the key metrics we typically show. It's really a summary table for you to digest comparing our first half this year versus last year.

One thing I would note is the third line down, the subscription customer count. It grew only 2%.

But I would point out that we had about 40 very small customers that didn't convert yet to PoleForeman. So we've counted those as temporarily lost.

But if you compare the 2% subscription customer growth with a 35% revenue growth, the takeaway from that is the customers we are adding are higher annual contract value customers. So again, a small customer count really leading to that 2% growth.

But overall, with the customers we are adding and the price we're getting per customer is really growing significantly well. And I think with that, Glenn, I'll hand it over for the update.

Great. Yes.

And I think just on that number of subscription customers, you see prior year actually dropped down when we took out those tiny little legacy PoleForeman products. So it's going to bounce right back in terms of that percent change.

What I wanted to do is we've got quite a number of slides here, and I do want to be respectful of time and get to Q&A quickly. But there's just some new market data that I think matters looking at what's happening across the North American electric utility space and communications market, which I wanted to touch on.

Again, just the size of the market opportunity over the next decade is enormous, more than $2 trillion of capital coming into grid modernization. And to do this successfully with an aging workforce, aging infrastructure, it does require technology and digital grid intelligence.

That's what IKE focuses on as a business. So there's some data here to absorb as appropriate.

And again, the numbers are quite staggering, more than 130 million wooden distribution assets getting to almost 50 years and at failure thresholds. And again, we help design and engineer and maintain these distribution assets.

So it's a really interesting time and a pretty monumental engineering task to achieve what the U.S. has to achieve over the next decade or 2.

And a lot of the -- it's not just -- there's a lot of private capital coming into this market for grid resilience. There's a lot of federal funding coming in, and it is focused heavily on distribution network capacity, more power on the network and capacity and hardening, which is where IKE plays.

Again, the broadband industry has had this slowdown with regulatory uncertainty where the Trump administration was looking to make some of these decisions technology neutral was potentially going to favor Musk and the satellite industry. I think that's reversing pretty fast just because of performance for customers.

But again, a lot of capital coming in -- these fiber and small cell attachments go on to distribution networks. And again, we help that process go much faster and more efficiently.

And this is what we're, in essence, building in terms of capability as a company. So looking to be able to engineer a network right through its life cycle.

So to go out and digitize and to see what matters in a power network, then to assess what's at risk, how vulnerable is your network, how can you make sure you meet code compliance and keep the network safe for your customers and for the environment and then to be able to design and engineer with confidence. And that's the way that we're building our product portfolio today.

I think everyone knows about some of the macro factors just the power requirements from having to charge electric vehicles, AI data centers, et cetera, just so much engineering that needs to be achieved. And then with climate change, we've got wildfires, storms.

These things are happening just much, much, much more regularly. And so you need a hard power network that doesn't fail and cause the next wildfire or takes a city out from a power supply perspective.

And the market in North America, we've published this slide previously. The market is really large.

If you just look at our top 8 customers, it's almost 4x the size of the Australian market in terms of the number of homes and businesses that these groups are delivering to. So it is a really profoundly large market opportunity in terms of the networks that we're supporting and starting to get alongside as a partner for these customers.

Again, maps that we've published previously, there's 106 investor-owned utilities across the country. These are the really big networks that are all interconnected, but they serve their own service territory.

They're generally publicly traded companies. And then more than 2,800 municipality and cooperative electric companies, but they all represent quite large customer opportunities for us, and they deal with the same problems.

So we've just started to really scratch the surface in terms of customer penetration and also new logo acquisition. Again, I'll go fast through here because I think many of you are familiar with much of this information.

Again, how do you help a customer follow the bouncing ball in terms of engineering a network through its life cycle, go and assess the asset, design the asset, be able to -- at really high scale, be able to assess your entire network using technology, so you understand where your vulnerabilities are. And then we have our IKE Analyze service just to help customers get some scale.

And we focus a lot also on training and education, not because we want to be a services training and education business, but it lets us get in front of our target customers, and we get in front of hundreds and hundreds and thousands of engineers and help teach them around best practice for the distribution grid. So we really, I think, understand where we're going.

We're extremely focused on North America and distribution grid assets. And we've got some clear goals in terms of being the most trusted company delivering software solutions into the distribution grid over the next 10 years.

And what is interesting, this is actually a global private equity firm went and surveyed 40 of our customers. They didn't actually ask us to do it, but they came back and gave us the results.

Our NPS score is 91%. It goes from minus 100 to plus 100.

It's a Boston Consulting framework that's pretty common these days. So it's working in terms of our go-to-market process.

We focus very hard on customer experience and leading with people and process as well as obviously, technology. We're winning and of the 10 largest investor-owned utilities.

We're adding new logos consistently. We've got 5 of the 10 largest communications companies at different stages of adoption on the communications side.

We're now -- our software is in every state in the United States in terms of its use. And we're managing more than 20 million overhead assets now in our system.

And that doesn't mean there's 200 million distribution assets. It doesn't mean 10% of the market is done.

These assets get engineered over and over and over again for different purposes and different requirements. So again, we're sort of early in terms of market development.

And growth is going to come from winning new logos. We've got about 6% of the logos in North America today.

And we think we're about 20% penetrated in the 6% we've got. So it's account development and it's new logo acquisition.

Just some examples here around how we're getting to market. And we focused heavily on education and training.

We've got a program that looks at the National Electric Safety Code and how customers can make sure that they're applying best practice. And we've trained more than 800 organizations over the last 1.5 years, more than 3,000 attendees.

We run other webinars, and we IKE certify engineers across utilities. So I think more than 1,700, it's close to 2,000 attendees have been IKE certified in terms of OSHA training and National Electric safety training.

And again, the natural conversation leads to, well, how do you do this work with technology? And that's obviously how we cross-sell the software part of what we're doing.

Again, I'll go fast because I think there was a separate release that covered this topic quite well. But we're really excited in the second quarter to introduce some new AI-enabled capability inside of IKE Office Pro.

So that's our core product. And simplistically, if you look at that photograph on the right, that's a pretty complicated power asset.

That's all the communications infrastructure at the bottom, it's all the power assets at the top and there's a street light. There's a transformer and there's a whole bunch of drop points, et cetera.

And this -- when an engineer is assessing this asset and they're trying to build more capacity on a line or whatever it might be or they're trying to figure out if it meets the National Electric Safety Code for compliance, it's a very manual process typically. And we've built this automation capability that a computer with a click of a button, it's able to find and identify everything on that asset.

So the level of productivity gain for these very expensive engineers that are sitting in the back office is quite profound. And so we're really excited to get this into market.

It's been well received by customers that have, a, went through the trial process with us to make sure we sort of had product market fit correctly. But also now that we've got it -- it's embedded in the product.

It's not an opt-in option. This is additional ARPU and it's compulsory if you're using IKE Office Pro.

So yes, just into market towards the end of September, but we think really exciting, and we're going to add more and more capability in and around this product. IKE PoleForeman continues to expand extremely positively.

Again, it's been in market about 18 months. I know that there are questions around what's the ARR driving to for PoleForeman for this year.

It will be something close to 10 million by the end of this year, which is that's 20x the level from when we rebuilt the product a couple of years ago. So that's traveling really well.

I think we're going to keep winning some big and important customers. We're going to add more capability and increase pricing.

So I will pause there. I know there's a lot of slides, but I think it's some important items.

And Simon, I can hand over to you for -- if there's any questions.

Thanks for that, Glenn. First up, we've got a question from James Lindsay at Forsyth Barr.

If we can get to it. I might just pause on that one.

But the submitted question, Glenn, that we've got how much more penetration can you get out of existing customers?

Yes, about -- we think we're about 20% penetrated inside of the customer footprint if we take a holistic view. So there's probably another 80% potential.

We're not saying we're going to get all of it, but that's the potential.

And James Lindsay at Forsyth Barr should be able to talk, please go ahead.

Well done on the update. I was just wondering, I know it's sort of still early birds with regard to the R&D progress on the new products.

Just keen if there's any sort of change in your timing. I think you mentioned it was about sort of 12 months away for the first of the 2 products to come into a trial.

Would that still be in place?

Yes. We're making really strong progress, James, on essentially the bolt-on module for IKE PoleForeman can be sold stand-alone to any participant in the market, but also we will integrate with PoleForeman.

-- and that's progressing well.

Okay. Cool.

And then just with regard to the sort of continuation of net adds in the quarter, which I think was about 12 or so, so good progress there. Just interested in where it's coming from, if it's sort of in the core IKE Office product or in PoleForeman itself specifically?

Yes. PoleForeman is going faster in terms of adds.

And it's actually -- it's an important item. We focused initially on winning the biggest investor-owned utilities in the country.

And the interesting ecosystem effect now is they're mandating IKE PoleForeman to anyone that touches their network. So if you're an engineering firm doing work for the utility or if you're a communications company coming in and putting fiber on their assets, they're requiring PoleForeman.

So we start -- we're really seeing that kind of ecosystem flow through. And next quarter, because I know it's something folks are asking for is just more visibility into the latest pro forma numbers, ARR, total contract value, et cetera.

So we'll provide that in 3Q.

And then obviously, with the capital raise business in a lot better financial position, I was wondering if sort of an increase in sales and marketing sort of number of people on the ground with regard to sales is likely in the next quarter or 2?

Yes. there will be over time, but we're very committed to the EBITDA target.

And we've got a very efficient sales and marketing team at the moment. We're growing at these kind of rates in terms of subscription level, spending less than 30% on sales and marketing.

So those metrics are tracking well for us. So we're in quite a scalable position.

We're also -- like every other company in the world at the moment, we're working really hard on being AI-enabled, not just putting AI inside of your products, but driving important business processes with some of these pretty remarkable tools. So we've got a whole of company training and education program tied to AI enablement as well from an operations perspective.

And then good to have the PolePilot new product out there. Can you just add a little bit more maybe just to the pricing constructs.

You talked about it being as part of Office Pro. Is it going to be done on a subscription basis or a seat basis and potential for sort of ARPU uplift once sort of as it goes through the network?

Yes. The launch pricing is adding $200 per seat per annum.

And as I say, it's not an opt-in item. It just is inserted into the pricing model.

And as we add more capability and as we get better fuller data on productivity benefits for customers, that price point will go up in terms of the ARPU uplift.

And then obviously, on the transactional side, probably a little disappointing, but hard on the politics to get that working. Can you just give us an update when you think the recontracting will sort of get firmed up and potential for later in the year?

Or is it likely next year or the year after that transactions recover?

Look, James, I'd just get it precisely wrong, but I do -- I mean we do have a view, and we're talking to our customers a lot actually and talking to some of the bigger industry participants as well. And again, what the federal government has required is they froze every rural fiber contract that was in place across the country and asked market participants to rebid.

And it's tough for them to land on some hard dates. We haven't lost any of those customers.

They're just waiting to get working again. And then I believe that will pick back up.

What we have been able to do, though, is we have really adjusted the associated OpEx costs with that business. So it's generating positive margin at the levels it's operating at now.

And it adds value for our customers. They love having the additional capacity when they require it.

So yes, it remains something that we'll continue to pursue.

Next up, we've got James Bisinella from Unified Capital Partners.

On the result and welcome, Paul, to the group as well. Maybe just a couple for me.

Just looking at subscription ARR, if I back out FX, just on my numbers, it looked like kind of a record quarter, around a couple of million bucks of net adds. So I guess, firstly, can you confirm that I'm directionally accurate there?

And then secondly, just confirm, was there any like larger wins or anything as part of that number, just given it was a pretty strong result?

No, you're right. That's almost exactly correct, James, in terms of the numbers.

it was across a whole range of customers. There wasn't -- there were some really interesting ads for groups like Exelon.

So Exelon run 5 investor-owned utilities they delivered power to all of Chicago and Illinois and various other states. And they had been an early adopter of IKE PoleForeman and then they added another 130 licenses just as they get it more embedded across the business.

Really interesting because, again, these guys are signing up for 3-year or 5-year terms. So it is really sort of long-term partnership business.

But mostly, it was just a consistent flow of sort of similar level contracts versus any single big item.

Okay. Excellent.

And maybe just one more on PolePilot, the AI product sounds really exciting. You mentioned that being a driver of platform adoption.

So I guess, can you just confirm, is this more than an add-on? Like are you getting inbounds from potential new logos on the back of it?

Or is it more just an upsell to existing customers?

No. It has caused a bit of a stir.

If you can make an engineer fully loaded cost maybe $100 an hour, you can make these folks go, say, 20%, 25% faster and better. And really -- and it's amazing how you can remove the training burden to bring on new engineers to do this work when a computer gets you 30% of the way through an engineering task.

Some of those benefits are quite compelling. So yes, we're excited.

And we're going to do more in terms of detections and automation, et cetera. So it's going to become more and more powerful over time.

And then if you fast forward and we're processing bulk data captured from Google Street View or whatever it might be, then all of a sudden, you're really sort of shifting the needle on some of this workflow, which I think is going to matter a lot.

Next up, we have Jules Cooper from Shaw Partners.

Glenn and Paul, well done on a great result. So just sort of following up on James' question there.

In U.S. dollar terms, the ARR added in the period was a record.

I just wondered, when we look back over the last year, Glenn, we saw like the fourth quarter was particularly strong. Now we've got a strong sort of 2Q.

How do we -- how should we think about seasonality? And you've obviously said here that the sales pipeline remains robust.

But as you look into 3Q and 4Q, when you're cycling some stronger numbers from last year, how do you see it sort of landing maybe relative to this year -- sorry, this quarter, is this a sort of new level for the business? Or just want to get your perspective on how you see the third and fourth quarter shaping up and seasonality?

Yes, it's a good question. There's a little seasonality in our business, and it's because of the winter.

So some parts of the U.S. up on the East Coast or in the North, there's a lot of bad weather, snow and ice and you can't get outside and engineer and build in some of those conditions.

It doesn't tend to have a huge impact. And then Q4 for us, which is from January through to the end of March, tends to be very strong because all of our customers, their financial year end is the end of the year.

So they're budgeting to deploy new technology and new tools from the start of the next year, which is why we typically see that lift if that helps.

Okay. No, no, that does.

Good perspective. And if we just sort of pick up on PolePilot, you sort of mentioned, I think it was $200 a seat incremental.

I just wanted to sort of catch what you said around how your customers can adopt it. Is it just there and they can turn it on themselves?

Or is there a selling motion behind it? Just if you could just go through that again, how they actually sort of pick up the product and start using it?

Yes. It's just delivered into IKE Office Pro and pricing has increased automatically.

And we spend a lot of time running educational programs. And for anyone interested, if you subscribe to our LinkedIn channel like GPS, you'll just see the velocity and volume of training and education.

So one of the programs at the moment is a lot of PolePilot education in terms of best practice and best use. So yes, it goes straight into the product.

And we're just measuring at the moment elasticity just to understand the level of acceptance of higher price points or b, where you potentially can have churn if people don't see the value. So we're literally a couple of weeks into that pricing optimization assessment.

Okay. No, that's good color.

And then just lastly, cash operating expenses, you said, materially the same as the PCP. When should we expect that to start increasing as you sort of put the investment into the new products?

When should we start to see that running through the business?

We do. We've got 2, I think, extremely compelling new subscription product modules that we're building.

Much of that investment will be capitalizable. So it won't be as visible from an OpEx perspective, but we will be investing, obviously, in the process to build these new product modules.

And then I think the go-to-market investment will flow just on the back of continued revenue growth. And as we hit these certain capacity breakpoints, if you keep adding dozens and dozens, dozens of new large infrastructure companies, you do have to have the people to be able to service those folks because we serve the market directly, which I think is a really important part of competitive advantage and why we've got those kind of NPS scores, et cetera.

It's people and process, not just tech. So yes, it will happen through Q3, Q4 into the following year.

But we're -- obviously, we're very well positioned balance sheet-wise to do that.

Yes, absolutely. And just lastly, on those NPS numbers, some of the highest I've ever seen.

So well done to you and the whole team.

Yes. Thanks.

It was a surprise to us as well, Jules, to be honest. But it's good to see, and it's just one data point.

We measure it internally ourselves, and we don't ever publish it because it's an internally measured thing. But we typically see 45% to 60%, which again is exceptionally good in our industry.

But it was -- yes, it was great to see that sort of independent set of numbers.

We've got a couple more submitted questions that we'll churn through, Glenn. What's the expected timing for existing customers to further penetrate?

How long will it take you to access the 80% you don't have? And what are some of the unlocks that would get you to that access?

I think the cross-sell component of what we do is very important. I think some of these automation tools that we're introducing matters a lot to these customers.

And then if we think about next-generation products, which we are building is having a fully integrated stack. Again, it's an extremely exciting time to be a software growth company without extensive legacy products, and that's the opportunity for us.

All of our products can be to be sold separately, but integrated in a platform with a thin UX layer sitting over the top in terms of these AI tools. I mean that's the big opportunity, I think, and that's what we're pursuing.

And I think that will help a huge amount with cross-selling.

And just last question from Sinclair Currie at MA Australia. Thinking about growth opportunities as either from ARPU growth or winning new customers, is one a greater opportunity than the other?

The biggest dollar opportunity is new logos. We've got 94%, 93% of the market still go get.

So we have focused on the largest in terms of the biggest network operators. But there's another 85 investor-owned utilities that we're not in today.

And yes, it does take time to develop them, but that's the biggest opportunity. We've got teams -- I mean, go-to-market, we've got teams.

One is focused on account development and expanding inside the customers we're in another group that's focused on new logos. So it's sort of a separate process.

Thanks, Glenn. Thanks, Paul.

I just hand it back to you for closing remarks, Glenn, and we'll finish up there.

No, thank you. No further closing remarks.

Paul and I are available always for e-mail questions or calls. So happy to pick anything up as useful.

Perfect. Thanks very much all for attending, and thanks, Glenn and Paul.

Have a good day.

Thanks.