icetana reports strong growth in Q2 FY24 with record revenue and expansion

icetana Limited (ASX:ICE), a leading artificial intelligence video analytics software company that aids security and IT teams in managing large-scale surveillance networks, has released its quarterly report for the period ending December 31, 2023 (Q2 FY24). The company reported significant achievements and robust growth during the quarter.

Key Highlights

• icetana achieved an annualised recurring revenue (ARR) of $1.8 million as of December 2023, marking an impressive 11% increase compared to the previous year and a 0.5% increase quarter on quarter.
• Quarterly revenue for the December quarter soared to $2.2 million, a remarkable surge of 425% year on year and an impressive 392% quarter on quarter. This substantial growth can be attributed to the successful execution of a $1.5 million hardware contract.
• Despite a loss of a legacy customer, icetana maintained a strong net ARR retention rate of 97% during the quarter.
• The company successfully completed the second tranche of its $2 million placement, reinforcing its financial strength.
• Despite a net operating cash outflow of $286,000 for the quarter, icetana remains well-capitalised with $2.6 million in cash reserves.

Remarkable Revenue Growth and Customer Success

During Q2 FY24, icetana achieved a substantial increase in cash receipts from customers, totaling $1.6 million. This represents a remarkable 513% increase compared to the previous quarter and a 271% surge compared to the same quarter in 2022. The surge in cash receipts was primarily driven by a significant hardware sale, although it had a slight adverse impact on the gross margin for the quarter.

Kevin Brown, CEO of icetana, expressed satisfaction with the quarter's achievements, highlighting the successful deployment of next-generation AI software across 17 shopping malls for the company's largest customer. He noted that 13 out of the 17 deployments had been completed by the end of 2023.

The company continued to make significant progress in expanding its market presence and investing in its sales and marketing functions. icetana is poised to reap the rewards of these efforts in the upcoming quarters, with a strong pipeline anticipated for the June 2024 quarter.

Strategic partnerships are also on the horizon, with icetana actively engaging in talks with video management system providers, potentially leading to a significant scaling opportunity.

Investment in Sales Function

Following a recent placement, icetana has been actively investing in expanding its sales and marketing capabilities. New territory managers have been recruited in the Middle East, a region that has shown promise for substantial growth opportunities.

Customer Success and Retention

The company continued to receive orders, renewals, and deployments during the quarter, including a significant sale to global security company Certis in Singapore. Additionally, orders from the Japanese market and expansion orders with existing customers in the Middle East and Kuwait contributed to the quarter's success.

While the loss of a legacy contract in the aircraft industry impacted the net ARR retention metric for the quarter, icetana remains focused on expansion sales from existing customers through its customer success efforts.

Product Development

icetana made notable progress in product development during the quarter, with a strong focus on improving user experience and technical enhancements. User interface improvements received positive feedback, and new features, such as loitering detection algorithms and event day functionality, have been deployed, offering enhanced security capabilities and potential applications in larger camera deployments, including stadiums and conference facilities.

Financial Stability and Cash Reserves

Over the past year, icetana has maintained an average net operating cash outflow of $135,000 per month. As of the end of the quarter, the company had $2.6 million in cash reserves, providing a solid financial foundation to continue investing in its sales and marketing capabilities.

Summary of Expenditure

During the quarter, icetana reported total operating cash expenditure of approximately $1.9 million. This included expenditures on staff, research and development, sales, marketing, partner expansion, and administration. The company also made payments totaling approximately $55,000 to related parties, covering gross salaries, superannuation, and fees to executive and non-executive directors.

icetana's impressive growth in Q2 FY24 and strategic initiatives bode well for its future prospects as it continues to innovate and expand its presence in the video analytics software market.