ikeGPS Group Limited

Good morning and welcome to Ike GPS first half financial year 2026 performance update as released on the NZX and ASX this morning. Just a reminder that you can ask questions through the Q&A button once we get through Glenn Milne's managing director and CEO's presentation. But with that, Glenn, I might just hand it over to you for the performance. Thank you. Great.

Thanks, Simon. And thank you, everyone, for taking the time to meet today. We want to be very efficient with your time. First thing, though, is I'm pleased to introduce Paul Cardosi. Paul's based in our Colorado headquarters alongside the leadership team. So introducing Paul, he started right at the end of September.

Hello, everyone. It's good to meet everyone today. Thanks, Glenn.

Great. So, look, what we'll do for today's session is go through the performance and the numbers themselves. It's been a very strong quarter for the business, which has been pleasing. I want to talk about the market because market timing is everything in terms of, I think, our growth stakes and where we're sitting and also introduce some of the go-to-market and also the new product functionality that we've introduced that we think should materially impact our subscription revenue base. So please take note of this important notice. for this presentation, the agenda we just talked to. Paul will take you through the numbers in terms of the following charts. Just covering those last three points, I think it's important for our shareholders to understand that we've maintained our cash operating expenses are materially flat versus the prior calendar period, so we've been able to grow the business and scale without adding additional people costs in particular. We've got a strong balance sheet now with $34 million on the balance sheet. We've got no debt. We're fortunate to be very well supported through a capital raise process in the second quarter, both institutional, new and existing institutional support, and also a high level of support from our retail investors And the last point is tied to the ASX All Ords Index. We were promoted there towards the end of September with the 500 largest companies on the ASX by market cap. So with that, I'll hand over to Paul and he'll take you through some of the headline numbers. I think actually before we transition there, we are reiterating guidance in terms of platform subscription revenue. This is going to be at approximately 35% or greater through this year. We're in good shape to deliver that. We're still committed to EBITDA break even on a run rate basis within the second half of this year, which we're now well into October. Paul, over to you.

Thanks, Glenn. I'm going to start with the exit annualized run rate of our platform subscription revenue. We're very pleased at the 47% growth rate that you see on the slide. Key takeaways around our platform subscription revenue growth are really the strengths and the continued growth we see around our Ike Office Pro and Ike Performance subscription products. So great growth there. You can see it here on the 47% growth for the latest subscription revenue. If you go to the next slide, Glenn, the next slide represents our six-month year-to-date subscription revenues. And this is giving you a look at our first half performance. You can see on a compounded annual growth rate, we're at 30%. But faster than that, you can see our year-over-year growth year-to-date versus the year-to-date prior calendar period was a 35% growth rate. reiterating that guidance Glenn mentioned earlier, continuing to see, you know, 35% plus growth rates across our subscription business. If we go to the next slide, Glenn, we'll talk a bit about seat growth. These are the user seats that we sell for our subscription products, 55% growth over prior calendar period. I would say as we continue launching products, as well as the products we have launched, we do sell on a per-seat basis, a per-user basis, so you can see, Really, I see this as seed adoption, user adoption, and really strength in the number of users we have across our subscription products. So, 55% growth rate there for our subscription business. Moving to the next slide, Glenn. This is our transactions revenue. This is a services business that's heavily influenced by the number of polls that we manage for customers. Our customers perform themselves. This business is down. It's a lower margin business for us. You can see that the 32% decline in transaction revenue. There's volatility in this business. There's a lot going on with the new U.S. administration around, you know, fiber or high-speed communication in rural networks. I would say there's some volatility in this market right now in terms of the timing of the funding. We do expect this to rebound. The timeline is, I would say, in the medium term, but again, A lot can happen that's really in the macro U.S. economy. So overall, this business is down. It is impacting our overall revenue growth. But again, we expect as, you know, legislation moves through, we'll see a rebound at some point in the, you know, I would say the medium term here. I don't know, Glenn, if you want to comment on this or want to just keep going?

Yeah, no, that's a good summary. You know, we're seeing the Tier 2 fiber and Tier 3 fiber folk have been asked by the new government administration to re-bid for the contracts that had been awarded. And that's created some uncertainty, but this infrastructure has to be built. So we're confident it comes back. It's difficult for us to predict when we stay in very close contact with our core customers here. Again, this business generated just under $3 million of revenue through the first half of the year, and we're able to adjust our cost base and make sure it stays profitable and has a good margin profile.

Okay. Thank you. This is a revenue mix slide. So again, looking at the different sections of this chart, you can see that we're now at 90% of our revenue coming from both our recurring revenue streams and reoccurring revenue streams. And I would highlight that the subscription portion of this hit 69% of our revenue. So, you can see the purple. Hopefully, you can see it on the screen. The subscription makes up a much larger, you know, portion of our revenue. It's a very highly profitable portion. We're at about 93% margin on that revenue. Again, that is the focus that the business has had and has, and you can see it's really taking effect with the amount of subscription revenue that's really dominating the mix of our revenue. It's nice to see that. If I move on, we'll enter the next one. I'll wrap up with these are the key metrics we typically show. It's really a summary table for you to digest, comparing your first half this year versus last year. One thing I would note is the third line down, the subscription customer count. It grew only 2%, but I would point out that we had about 40 very small customers that didn't convert yet to full foreman, so we've counted those as temporarily lost. But if you compare the 2% subscription customer growth with the 35% revenue growth, the takeaway from that is the customers we are adding are higher annual contract value customers. So, again, small customer count really leading to that 2% growth. But overall, with the customers we are adding and the price we're getting per customer is really growing significantly well. And I think with that, Glenn, I'll hand it over for the update.

Great, yeah, and I think just on that number of subscription customers, you see prior year actually dropped down when we took out those tiny little legacy Paulman products, so it's going to bounce right back in terms of that percent change. What I wanted to do is we've got quite a number of slides here, and I do want to be respectful of time and get to Q&A quickly, but there's just some new market data that I think matters. looking at what's happening across the North American electric utility space and communications market, which I wanted to touch on. Again, just the size of the market opportunity over the next decades is enormous, more than $2 trillion of capital coming into grid modernisation, and to do this successfully aging workforce, aging infrastructure, it does require technology and digital grid intelligence. That's what Ike focuses on as a business. So there's some data here to absorb as appropriate. And again, the numbers are quite staggering, more than 130 million wooden distribution assets getting to almost 50 years and at failure thresholds. And again, we helped design and engineer and maintain these distribution assets. So it's a really interesting time and a pretty monumental engineering task to achieve what the US has to achieve over the next decade or two. And a lot of the, it's not just, there's a lot of private capital coming into this market for grid resilience. There's a lot of federal funding coming in and it is focused heavily on distribution network capacity, you know, more power on the network. and, excuse me, and capacity and hardening, which is where, you know, where Ike plays. Again, the broadband industry has had this slowdown with regulatory uncertainty where the Trump administration was looking to make some of these decisions, technology neutral was, you know, potentially going to favour Musk and, you know, the the satellite industry I think that's reversing pretty fast just because of performance for customers but again a lot of capital coming in these fiber and small cell attachments go on to distribution networks and again we help that process go much faster and more efficiently and this is this is what we're in essence building in terms of capability as a company it's so looking to be able to engineer a network right through its life cycle. So to go out and digitize and to see what matters on a power network, then to assess what's at risk, you know, how vulnerable is your network, how can you make sure you meet code compliance and keep the network safe for your customers and for the environment, and then to be able to design and engineer with confidence. And that's the way that we're building our product portfolio today. I think everyone knows about some of the macro factors, just the power requirements from having to charge electric vehicles, AI data centres, et cetera, just so much engineering that needs to be achieved. Then with climate change, we've got wildfires, storms. These things are happening just much, much, much more regularly. And so you need a hard power network that doesn't fail and cause the next wildfire or takes the city out from a power supply perspective. And the market in North America, we've published this slide previously, the market is really large. If you just look at our top eight customers, It's almost four times the size of the Australian market in terms of the number of homes and businesses that these groups are delivering to. So it is a really profoundly large market opportunity in terms of the networks that we're supporting and starting to get alongside as a partner for these customers. Again, maps that we've published previously, there's 106 investor-owned utilities across the country. These are the really big... big networks that are all interconnected, but they serve their own service territory. They're generally publicly traded companies. And then more than 2,800 municipality and cooperative electric companies, but they all represent quite large customer opportunities for us, and they deal with the same problems. So we've just started to really scratch the surface in terms of customer penetration and also new logo acquisition. I'll go fast through here because I think many of you are familiar with much of this information. Again, how do you help a customer follow the bouncing ball in terms of engineering a network through its lifecycle, go and assess the asset, design the asset, Be able to, at really high scale, be able to assess your entire network using technology so you understand where your vulnerabilities are. And then we have our iCanalyze service just to help customers get some scale. And we focus a lot also on training and education, not because we want to be a services training and education business, but it lets us get in front of our target customers, and we get in front of hundreds and hundreds and thousands of engineers and help teach them around best practice for the distribution grid. So we really, I think, understand where we're going. We're extremely focused on North America and distribution grid assets, and we've got some clear goals in terms of being the most trusted company delivering software solutions into the distribution grid. over the next 10 years. And what is interesting, this is actually a global private equity firm went and surveyed 40 of our customers. They didn't actually ask us to do it, but they came back and gave us the results. Our MPS score is 91%. You know, it goes from minus 100 to plus 100. It's the Boston consulting framework that's pretty common these days. So it's working in terms of our go-to-market performance. We focus very hard on customer experience and leading with people in process as well as obviously technology. We're winning. We're in eight of the ten largest investor-owned utilities. We're adding new logos consistently. We've got five of the ten largest communications companies at stages of adoption on the communications side. Our software is in every state in the United States in terms of its use. And we're managing more than 20 million overhead assets now in our system. And that doesn't mean there's 200 million distribution assets. It doesn't mean 10% of the market is done. These assets get engineered over and over and over again for different purposes and different requirements. So again, we're sort of early in terms of market development. And growth is going to come from winning new logos. We've got about 6% of the logos in North America today, and we think we're about 20% penetrated in the 6% we've got. So it's account development and it's new logo acquisition. Just some examples here around how we're getting to market. And we have focused heavily on education and training. We've got a program that looks at the National Electric Safety Code and how customers can make sure that they're applying best practice. And we've trained more than 800 organizations over the last year and a half, more than 3,000 attendees. We run other webinars and we like certify engineers across utilities. So I think more than 1,700, it's close to 2,000 now, Attendees have been Ike certified in terms of OSHA training and National Electric Safety training. And again, the natural conversation leads to, well, how do you do this work with technology? And that's obviously how we cross sell the software part of what we're doing. Again, I'll go fast because I think there was a separate release that covered this topic quite well, but we're really excited in the second quarter to introduce some new AI-enabled capability inside of Mike Office Pro, so that's our core product. And simplistically, if you look at that photograph on the right, that's a pretty complicated power asset. That's all the communications infrastructure at the bottom. It's all the power assets at the top, and there's a streetlight. There's a transformer, and there's a whole bunch of drop points, etc., When an engineer is assessing this asset and they're trying to build more capacity on a line or whatever it might be, or they're trying to figure out if it meets the National Electric Safety Code for compliance, it's a very manual process typically. And we've built this automation capability that a computer with a click of a button can It's able to find and identify everything on that asset. So the level of productivity gain for these very expensive engineers that are sitting in a back office is quite profound. And so we're really excited to get this into market. It's been well received by customers that have, A, went through the trial process with us to make sure we sort of had product market fit correctly. correctly, but also now that we've got it, it's embedded in the product. It's not an opt-in option. This is additional APU, and it's cultury if you're using Ike Office Pro. So just into market towards the end of September, but we think really exciting, and we're going to add more and more capability in and around this product. Ike Pop Foreman continues to expand extremely positively. Again, it's been in market about 18 months. I know that there are questions around what's the ARR driving to Paul Foreman for this year. It'll be something close to 10 million by the end of this year, which is, you know, that's 20 times the level from when we rebuilt the product a couple of years ago. So that's travelling really well. We're going to keep winning some big and important customers. We're going to add more capability and increase pricing. So I will pause there. I know there's a lot of slides, but I think it's some important items. And Simon, I can hand over to you for if there's any questions.

Perfect. Thanks for that, Glenn. First up, we've got a question from James Lindsay at Forsyth Bar. I'm pretty good to it. Might just pause on that one. But the submitted question, Glenn, we've got, how much more penetration can you get out of existing customers?

Yeah, we think we're about 20% penetrated inside of the customer footprint if we take a holistic view. So there's probably another 80% potential. We're not saying we're going to get all of it, but that's the potential.

And James, Lindsay at Foresight Bay should be able to talk. Please go ahead.

Yeah, thanks, Simon, and good morning, team. Well done on the update. I was just wondering, I know it's still early birds with regard to the R&D progress on the new products. Just keen if there's any sort of change in your timing. I think you mentioned it was about 12 months away for the first of the two products to come into trial. Would that still be in place?

Yeah, we're making really strong progress, James, on essentially the bolt-on module. But like Paul Foreman, it can be sold standalone to any participant in the market, but also will integrate with Paul Foreman. And that's progressing well.

Okay, cool. Thanks so much. And then just with regard to the sort of continuation of net ads in the quarter, which I think was about 12 or so, so good progress there. Just interested in where it's coming from, if it's sort of in the core iCoffice product or in Pulpformin itself specifically?

Yeah, Pulpformin is going faster in terms of ads, and it's actually an important item. We focus... Initially, I'm winning the biggest investor in utilities in the country. And the interesting ecosystem effect now is they're mandating like Paul Foreman to anyone that touches their network. So if you're an engineering firm doing work for the utility, or if you're a communications company coming and putting fiber on their assets, they're requiring Paul Foreman. So we're really seeing that. kind of ecosystem flow through. And next quarter, because I know it's something folk are asking for is just more visibility into the latest performing numbers, ARR, total contract value, etc. So we'll provide that in 3Q.

And then obviously with the capital raise business in a lot better financial position, I was wondering if sort of an increase in sales and marketing? Is it a number of people on the ground with regard to sales? Is it likely in the next quarter or two?

Yeah, there will be over time, but we're very committed to the EBITDA target. And we've got a very efficient sales and marketing team at the moment. We're growing at these kind of rates in terms of subscription level, spending less than 30%. on marketing. So those metrics are tracking well for us. So we're in quite a scalable position. We're also, like every other company in the world at the moment, we're working really hard on being AI enabled, not just putting AI inside of your products, but driving important business processes with some of these pretty remarkable tools. So we've got a whole of the company training and education program tied to AI enablement as well from an operations perspective.

Thanks so much. And then I could have the whole pilot new product out there. Can you just add a little bit more maybe just to the pricing constructs? You talked about it being as part of Office Pro. Is it going to be done on a subscription basis or a seat basis and potential for sort of after uplift once sort of as it goes through the network?

Yes, the launch pricing is adding $200 per seat per annum. And as I say, it's not an opt-in item. It just is inserted into the pricing model. And as we add more capability and as we get better, fuller data on productivity benefits for customers, that price point will go up in terms of the uplift.

Yep, thanks for the detail. And then obviously on the transactional side, probably a little disappointing, but hard on the politics to... to get that working. Can you just give us an update when you think the re-contracting will sort of get firmed up and potential for later in the year or is it likely next year or the year after that transactions recover?

Look, James, I just get it precisely wrong, but we do have a view and we're talking to our customers a lot actually and talking to some of the bigger industry participants as well Again, what the federal government has required is they froze every rural fibre contract that was in place across the country and asked market participants to re-bid. It's tough for them to land on some hard dates. We haven't lost any of those customers. They're just waiting to get working again and then I believe that we'll pick back up. What we have been able to do though is we have really adjusted the associated OPEX costs with that business so it's generating positive margin at the levels it's operating at now and it adds value for our customers. They love having the additional capacity when they require it. So, yeah, it remains something that we'll continue to pursue.

Great. Thanks, Tim. I'll pass you back. Much appreciated.

Thanks, James. Next up, we've got James Bissonella from Unified Capital Partners. James, please go ahead.

Hey, guys. Congrats on the result and welcome, Paul, to the group as well. Maybe just a couple from me. Just looking at subscription ARR, if I back out FX just on my numbers, it looked like kind of a record quarter, around a couple million bucks of net ad. So I guess, firstly, can you confirm that I'm directionally accurate there? And then secondly, just confirm, was there any larger wins or anything as part of that number, just given it was a pretty strong result?

No, you're right. That's almost... Exactly correct, James, in terms of the numbers. You know, it was across a whole range of customers. There were some really interesting ads for groups like Exelon. So Exelon run five investor-owned utilities. They deliver power to all of Chicago and Illinois and various other states. And they had been an early adopter of Cole Foreman, and then they added another 130 licenses just as they get it more embedded across the business. Really interesting because, again, these guys are signing up for three-year or five-year terms, so it is really sort of long-term partnership business. But mostly it was just a consistent flow of sort of similar level contracts versus any single big item.

Cass? Excellent. And maybe just more on whole pilot, the AI product sounds really exciting. You mentioned that being a driver of platform adoption. So I guess, can you just confirm, is this more than an add-on? Like, are you getting inbound from potential new logos on the back of it? Or is it more just an upsell to existing customers?

No, it has caused a bit of a stir. You know, if you can make an engineer a fully loaded cost, maybe $100 an hour, you can make these folks go, say, 20%, 25% faster and better. And really, you know, it's amazing how you can remove the training burden to bring on new engineers to do this work when a computer gets you 30% of the way through an engineering task. Some of those benefits are quite compelling. So, yeah, we're excited and we're going to do more in terms of, you know, detections and automation, et cetera. So it's going to become more and more powerful over time and then If you fast forward and, you know, we're processing bulk data, you know, captured from, you know, Google Street View or whatever it might be, then all of a sudden, you know, you're really sort of shifting the needle on some of this workflow, which I think is going to matter a lot.

Okay. Great. That's it from me. Thanks, John.

Thanks, James. Next up, we have Jules Cooper from Shorin Partners. Jules, please go ahead.

Thanks, Simon. Glenn and Paul, well done on a great result. And thanks for taking the question. So just sort of following up on James's question there, in US dollar terms, the ERR added in the period was a record. I just wondered, when we look back over the last year, Glenn, we saw like the fourth quarter was particularly strong. Now we've got a strong sort of 2Q range. How should we think about seasonality? And you've obviously seen that the sales pipeline remains robust, but as you look into 3Q and 4Q when you're cycling, you know, some stronger numbers from last year, how do you see it sort of, you know, landing maybe relative to this year as a – sorry, this quarter as a – is this a sort of a new level for the business or, you know, just wanting to get your perspective on how you see the third and fourth quarter shaping up in seasonality?

Yeah, that's a good question. There's a little seasonality in our business, and it's because of the winter. So some parts of the US, you know, up on the east coast or in the north, there's a lot of, you know, bad weather, snow and ice, and you can't get outside and engineer and build in some of those conditions. It doesn't tend to have a huge impact. And then Q4 for us, which is from January through the end of March, tends to be very strong because... All of our customers, their financial year end is the end of the year. So they're budgeting to deploy new technology, new tools from the start of the next year, which is why we typically see that lift, if that helps.

Okay. No, no, that does. Good perspective. And if we just sort of pick up on PolePilot, you sort of mentioned, I think it was $200 a seat incremental. I just wanted to sort of connect what you said around you know, how your customers can adopt it? Is it just there and they can turn it on themselves or is there a selling motion behind it? If you could just go through that again, how, you know, they actually sort of pick up the product and start using it?

Yeah, it is just delivered into iCoffice Pro and pricing is increased automatically and we spend a lot of time running educational programs and For anyone interested, if you subscribe to our LinkedIn channel, like GPS, you'll just see the velocity and volume of training and education. So, you know, one of the programs at the moment is a lot of full-pilot education in terms of best practice and best use. So, yeah, it goes straight into the product. And we're just measuring at the moment elasticity just to understand – the level of A, acceptance of higher price points, or B, where you potentially can have churn if people don't see the value. So we're literally a couple of weeks into that pricing optimization this year.

Okay. No, that's good, Kala. And then just lastly, cash operating expenses, you said materially the same as the PCP. When should we expect that to start? you know, increasing as you sort of put, you know, the investment into the new products. When should we start to see that, you know, running through the business?

We do. We've got two, I think, extremely compelling new subscription product modules that we're building. Much of that investment will be capitalisable, so it won't be as visible from an OPEX perspective, but we will be investing. obviously in the process to build these new product modules. And then I think the go-to-market investment will flow just on the back of continued revenue growth. And as we hit these certain capacity breakpoints, if you keep adding dozens and dozens and dozens of new large infrastructure companies, you do have to have the people to be able to service those folk because we serve the market directly, which I think is a really important part of competitive advantage and why we've got those kind of MPS scores, etc. It's people in process, not just tech. So yeah, it will happen through Q3, Q4 into the following year, but we're obviously very well positioned balance sheet-wise to do that.

Yeah, absolutely. And just lastly on those MPS numbers, some of the highest I've ever seen, so well done to you and the whole team.

Yeah, thanks. It was a surprise to us. as well, Jules, to be honest. But it's good to see and it's just one data point. We measure it internally ourselves. We don't ever publish it because it's an internally measured thing. But we typically see 45% to 60%, which again is exceptionally good in our industry. But it was great to see that independent set of numbers.

All right. Thank you very much.

Thanks, Jules. We've just got a couple more submitted questions that will churn through, Glenn. What's the expected timing for existing customers to further penetrate? How long will it take you to access the 80% you don't have and what are some of the unlocks that would get you to that access?

I think the cross-sale component of what we do is very important. I think some of these automation tools that we're introducing matters a lot to these customers And then if we think about next generation products, which we are building, is having a fully integrated stack. Again, it's an extremely exciting time to be a software growth company without extensive legacy products. And that's the opportunity for us. All of our products can be to be sold separately but integrated in a platform with a thin UX layer sitting over the top in terms of these AI tools. I mean, that's the big opportunity, I think, and that's what we're pursuing, and I think that will help a huge amount with cross-selling.

And just a last question from Sinclair Carriot. Thinking about growth opportunities as either from ARPU growth or winning new customers, is one a greater opportunity than the other?

The biggest dollar opportunity is new logos. We've got 94%, 93% of the market still go get. So we have focused on the largest in terms of the biggest network operators. Yeah, there's another 85 investor-owned utilities that we're not in today. And, yeah, it does take time to develop them, but that's the biggest opportunity. But we've got teams. I mean, go-to-market, we've got teams. One's focused on account development and expanding inside the customers we're in. We've got another group that's focused on new logos. So it's sort of a separate process.

Thanks, Brendan. Thanks, Paul. I'll just hand it back to you for closing remarks. Glenn, we'll finish up there.

No, thank you. No further closing remarks. Paul and I are available always for email questions or calls, so you're happy to pick anything up that's useful. Perfect. Thanks so much all for attending, and thanks, Brendan and Paul.

Have a good day.

Goodbye.