IQGeo Group Plc (LON:IQG) said it expects to make further progress in profitability and cash flow generation in 2021 as recurring revenues continue to grow.
The spatial software group’s results for the past calendar year showed revenue increasing 17% to £9.2mln, of which £3.2mln or 35% was recurring, up from £1.6mln or 21% a year earlier.
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At the end of 2020, the exit rate of annual recurring revenue of £5.3mln was up 165% year-on-year, including £2mln from the acquisition of US-based OSPI in December.
The acquisition of OSPI in December, a profitable US geospatial software business with a customer base of more than 200 fibre network operators, opened up a new market for IQGeo of smaller Tier 3, Tier 4 and private network operators, the company said., OSPI has little crossover with the IQGeo product line targeting Tier 1 and 2 telco and utilities customers across North American, Europe and Japan.
The group's customers end markets have remained resilient, it said, as telecoms and utility network operators have become more critical to governments and communities responding to the Coronavirus (COVID-19) pandemic.
After pre-tax losses were cut to £4.4mln from £6.2mln, as revealed in January, there was £11.1mln of cash in the coffers at the end of December, which was topped up with another £2.5mln in early 2021 from the sale of a minority stake in an old business.
“The group has a strong balance sheet, which combined with the added scale and opportunities that the OSPI acquisition brings, along with our strong market dynamics and broad product offering, means I am confident we can continue our growth trends in the coming year,” said chief executive Richard Petti, adding that the material step up in the exit rate provides better visibility of future revenues and cash flows.
With the group’s enterprise customers increasingly demanding cloud technology, Petti said 2021 is likely to see IQGeo sell an increased percentage of software subscriptions that include hosting services from one of the group’s partners, while on the SME side OSPI will launch its first product extensions in the cloud, with a view to migrating its entire customer base to the cloud over the next three years.
“2021 will see us expanding the OSPI product range to match the IQGeo 'office-to-field' positioning and in addition we shall be enhancing the network design capabilities for our utilities market where we see continued opportunities of growth,” he added.