ikeGPS’s (ASX:IKE) record unit volume sales of its IKE4 further reaffirms the group’s earnings growth as a comes on the back of recently upgraded guidance for fiscal 2018.
Circa 140 IKE4’s which collect, manage and analyse information for utilities were shipped in the third quarter of fiscal 2018 compared with 51 the previous corresponding period.
Total orders received were slightly above recently upgrading full-year guidance of 360 systems, indicating there may be a further upgrade.
On this note, depending on deal flow for the remainder of the year management said that it expects volumes could reach 420.
Growth being driven by take-up in the US
While ikeGPS’s products have applications across electric and communications utilities, the company has had particular success in the communications sector.
This included a first phase order for 112 systems from AT&T Inc. (NYSE:T), the largest communications company in the US, supporting their national fibre network roll out.
The deployment represents approximately NZ$1.3 million of recognized revenue in FY18 and circa NZ$400,000 per annum in ongoing subscription revenue.
A first phase order for circa NZ$200,000 into the largest communications company operating across Canada.
Recurring revenue provides income predictability
Management is expecting that more than NZ$300 billion of investment will be made in the next 10 years in the industry is services.
ikeGPS acknowledge that revenues can be lumpy because of the impact of large one-off projects and the timing of revenue recognition.
However, as subscription income builds the quantum of recurring revenues will to some extent help to offset this trend.