Knosys Limited (ASX:KNO) Managing Director John Thompson provides an update on the company, discussing demand drivers, recurring revenue and growth strategy.Melissa Darmawan: Thanks for tuning in to Finance News. I'm Melissa Darmawan. Joining me from Knosys
(ASX:KNO) is Managing Director John Thompson. John, welcome back to the network.
John Thompson: Hi, Melissa. Nice to be back.
Melissa Darmawan: It's great to have you. The mission statement of Knosys is to empower organisations to make smarter connections with their information. Can you tell us a bit more about this and your solutions?
John Thompson: Yeah, sure. Our mission is really simple and clear. We deliver solutions that empower businesses of all sizes, be they small or large enterprise, to make smarter connections to their information. Now, we do this through a portfolio of software as a service-based solutions.
Our first solution is KnowledgeIQ, which is predominantly used in contact centres and support desks and businesses with branch offices to help employees and customers find the information they need and to support the employee in their engagement with their end customers.
Our second solution is GreenOrbit Intranet, which focuses very much on an organisation's own employees. It's a platform that enables employees to communicate, collaborate, and share within the organisation in order to build a productive and a very friendly work experience for those people.
The third solution we have is our library management system, LIBERO. Now, it's designed to enable library staff and members to access the resources and materials that they need to conduct transactions and to borrow information assets.
Melissa Darmawan: Can you explain the key drivers of demand for your product portfolio, then?
John Thompson: We predominantly have four key drivers that are really generating demand for our solutions. Firstly is the increase in remote workers. Now, this started before COVID, it was accelerated over the past few years during COVID, and is now moving to the hybrid office home-work model that a lot of organisations are implementing.
The second driver for demand of our solutions is that customers expect consistent information across all channels offered by a business. By this, I mean the physical office of a business, its contact centre, customers coming to that business via their mobile phone, via their websites, or via their chat bots.
The third driver is governance compliance, which is really important for organisations that operate in a highly regulated environment. These organisations need to be able to track and trace all information used to interact with the customer.
And finally, content explosion and information overload. This is a real big driver for our solution whereby we're trying to simplify and prioritise what information an employee, a worker sees. In effect, we're providing a magnifying glass of information tailored to that particular user.
Melissa Darmawan: Thanks for that, John. You've made two acquisitions over the past year. What impact has this had on your recurring revenue base?
John Thompson: Over the past year, our annualised recurring revenues has increased significantly from $3 million to about $9 million. Now, this increase was primarily driven by the acquisition of GreenOrbit in March 2021 and the acquisition of LIBERO in August 2021. As a result of these two acquisitions, we significantly diversified our revenue base by product, but also by geography. We now generate revenue from three different product lines, and we generate revenue in key geographies around the world -- not only Australia-New Zealand, which is our historical home base, but now the US and Europe. Although the acquisitions have been important in diversifying our revenue, it's important to note that our underlying business continues to perform well, and we have underlying organic growth supporting the acquisition revenues as well. So, as an organisation, we operate on a shared services model. By this, I mean that we've centralised our product development, our sales and marketing and our customer service. And we expect this model to deliver increased organic growth as we move forward.
Melissa Darmawan: Last question from me, John. What is your growth strategy for the next financial year and beyond? And if you can provide some colour around your financials, that would be good too.
John Thompson: Not a problem. At the end of last year, around September, we publicly released our strategic goals for 2024, which were to be recognised as a leading solutions provider in each of the three key markets, to increase our customers towards the 1,000 mark and ultimately to have one million contracted users. In order to achieve this, we defined a growth strategy, which is five core components. The first is grow revenue from existing customers, and we've spent really the last 9, 12 months focused on our existing customers and the customers delivered through the acquisitions to grow the revenue that we derive from them. In FY23, our focus switches really very much towards new customer acquisitions from the existing markets and new markets that we intend to open up. We're also going to grow our brand awareness because that helps with the objective number two, in terms of attracting new customers. And we are also investing in our solutions in terms of new features, capabilities to increase the intellectual property and make them more attractive to those new customers. And we always are on the look-out for acquisition opportunities. However, the next 12, 18 months are very focused on our organic growth as an organisation.
It's really important to note also that our growth strategy is fully funded. We have approximately $3 million in cash reserves. And a lot of our investment in growth is being funded from our operating cash flow. So, in summary, we believe we have a fantastic portfolio of information solutions, which are currently in great demand in the market, and we are fully funded to continue our strong organic growth moving forward.
Melissa Darmawan: John, thanks for the update. I look forward to catching up with you again.
John Thompson: My pleasure. Thank you.
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