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Universal mCloud Corp: DEEP DIVE

Universal mCloud's strong second quarter underlines IoT group's progress

The tech group is increasingly expanding its geographical reach and gaining traction in China
Universal mCloud's strong second quarter underlines IoT group's progress
OVERVIEW: MCLD The Big Picture
Among the many uses for Universal's technology, is in wind turbine management

The progress being made by IoT and Artificial Intelligence (AI) group Universal mCloud Corp (CVE:MCLD) was underlined by its recent second quarter results, which showed increased revenues and strong margins.

The firm is increasingly expanding its geographical reach and gaining traction in China, where it has now inked two tech deals - one for HVAC solution at a shopping centre.

Chief executive Russel McMeekin recently told Proactive after the publication of the second quarter numbers: "...the best news of the growth is its diverse growth - meaning multiple technology types that we've either acquired, or we're growing organically and geographically".

Revenues were no longer heavily dependent on one part of the US, but now throughout,  and also in Canada and Asia.

WATCH: Universal mCloud reports a 26 p ercent increase in Q2

What does the company do?

mCloud provides tools to monitor and analyse the health of equipment - or assets. Such assets include an HVAC (heating, ventilation, and air conditioning unit)  or a wind turbine.

The asset can be hooked up via the IoT to the company's real-time data platform, where experts can monitor and analyse trends, meaning it can be kept running well and cheaper. The firm also offers repair services.

Strong second quarter

McMeekin said in the regulatory release attached to the results: "We continue to build solid momentum in all aspects of our business and expect a robust second half of 2018 which will position us well for continued growth into 2019."

He has also pointed to growth in China has been better than expected, and that the group had inked large contracts with new customers, secured key contract renewals and connected Smart Building customers under its master reseller agreement with Telus for smart building solutions in Canada.

Revenue in the latest quarter came in 26% higher than in the first quarter at C$3.046mln against C$2.4mln, while gross margins remained strong at 64%, largely driven by the firm's acquisition of high-margin, innovative tech companies.

Recurring operating expenses were managed to drive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) toward break-even.

In June, the firm announced a deal to buy 100% of Flow Capital's (CVE: FW) royalty agreement with Agnity Global - the latter being a long-standing technology partner with mobile app capability.

"This transaction will allow mCloud to offer enhanced IoT capabilities to our customers, such as blockchain-based mobile security, while simultaneously doubling our high-margin recurring revenue base and positioning mCloud for profitability in the near term," McMeekin said.

During the second quarter, Universal also continued steps toward closing the January CSA transaction, which combined with the NGRAIN acquisition provides mCloud with a complete 3D solution, from data capture to Artificial Intelligence(AI) to support critical assets.

The Agnity and CSA  transactions will enhance AssetCare platform further and are expected to close before the year-end.

The share price

A cursory glance at the chart in recent months shows the traction the stock is getting in the market. It stands today on Toronto's venture exchange at C$0.56, having been at around C$0.32 on  April 9.

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