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Quarterly Report and Appendix C: 30 June 2019

CURRENT HIGHLIGHTS

Growing recurring revenue base: Recurring revenue growth of 71% in 12 months, with an annual recurring revenue run rate of over $2.9 million as at 1 July 2019
Growing licensed user base: Total licenses on issue of 40,430, up 35% in the past 12 months
• Pipeline building for KIQ Cloud: Onboarding of new KIQ Cloud customers and strong inbound interest for product demonstrations
Expansion into Asia Pacific: New Singapore office opened to support sales and marketing activities in Asia
Moving towards cashflow positive: Our cash balance of $2.9 million at 30 June 2019 increased to $4.0m at end July 2019 and our operational leverage continues to increase

Knosys Limited (ASX: KNO) (“Knosys” and “Company”) is pleased to report on its June 2019 quarter.

Growth in recurring revenue

Knosys continues to grow its recurring revenues, with a 71% increase from FY18 to FY19. We now have an annualised recurring revenue run rate of over $2.9 million, as at 1 July 2019.

image 1 Quarterly report June 19

 

Growth in Licensed Users

The total license count at June 2019 was 40,430, representing a 35% increase compared to June 2018. The number of licensed users continues to build with increased usage from existing enterprise customers and mid-market customers.

image 2 QR June 19

 

KIQ Cloud pipeline building

We launched our new Software-as-a-Service product, KIQ Cloud, in Q4 and we have now onboarded our first mid-market customer to this new product. There has been an increase in inbound interest in KIQ Cloud and we have increased the number of customer demonstrations during the quarter, which positions the business well for further success in FY20.


Opportunities in FY20 to expand Enterprise customers

Knosys continued to invest in sales and marketing capability in the June quarter in order to pursue multiple enterprise opportunities. Knosys has been shortlisted for a number of these enterprise customers and we expect additional tender opportunities in FY20.

We continue to have a positive relationship with our enterprise customers including ANZ Bank, Optus and Singtel and these existing customers continue to be a source of revenue growth as we experience demand for additional licences and services. Our market feedback confirms that we have a relevant and robust enterprise level knowledge management solution for the market. Our sales effort in FY20 will remain focused on building upon this solid base through direct sales initiatives and partner relationships.

Knosys Managing Director John Thompson said, “In the past quarter, our internal focus has been on marketing initiatives to support sales. During the period we attended multiple conferences associated with Customer Experience and Contact Centre operations and we are ramping up our digital presence to increase brand awareness and facilitate more engagement with potential customers. We will replicate this approach in Singapore in FY20 to increase our addressable market by expanding into the Asia Pacific region.”

Expansion into Asia Pacific region

The set-up of the Singapore office has been finalised and sales initiatives in the Asia Pacific region have now commenced. Knosys now has sales offices in Sydney, Melbourne and Singapore, giving the business the ability to access the wider APAC market, in order to support its growth strategy and service its customers. The Singapore office will expand our relationship with Singtel in the region and should secure additional new customers in Singapore and surrounding countries. 

Appendix 4C Quarterly statement of cash flows

The ASX Appendix 4C quarterly statement is attached to this report.

The cash balance at 30 June 2019 was $2.9 million with net cash outflows of $0.4m for the quarter. Inflows for the quarter included $0.5m from the annual Research and Development tax rebate and $0.15m from customer receipts. Further June quarter inflows of over $1.4m from customer receipts were expected in June, but were received in the month of July 2019, giving a healthy cash balance of $4m at end of July 2019.

Gross cash outflows included an increased spend on development and sales and marketing as well as final capex payments for new premises.
As required in Section 9 of the Appendix 4C, gross operating outflows for the September 2019 Quarter are estimated at $1.3m, including some accelerated development expenses to enable integration and connectivity to major third-party platforms, such as Salesforce. The Appendix 4C does not allow for estimates of operating cash inflows, however the company estimates that the gross operating cash outflows will be offset by operating cash inflows from customers in the September 2019 quarter. At the date of this report over $1.5m had been received from customers in the Sept’19 quarter.

The Company’s revenue model has predominantly been based on billing customers annually in advance. This is reflected in the quarterly cash flow fluctuations. Licence fees invoiced annually in advance are recognised as revenue in the financial accounts each month as the revenue is earned evenly over a 12 month period. Higher customer cash receipts have typically been received in June/July of each year, due to large annual licence renewals, with lower receipts in other months. However, Singtel and Optus as major customers now provide a wider spread of cash inflows to Knosys across other quarterly cashflow periods.

For further information please contact:
John Thompson, Managing Director
Knosys Limited
T: +61 3 9046 9700
E: cosec@knosys.it


ABOUT KNOSYS

Knosys is a fast-growing Australian cloud software company that is simplifying enterprise knowledge to improve the productivity of employees and improve customer experience. Our KIQ Cloud service is the knowledge management platform transforming the digital workplace by ensuring all forms of knowledge are accurate, relevant to the user, compliant and easy to find. The KIQ Cloud knowledge management platform is intuitive and does the hard work. It uses the knowledge of real experts and the analytic power of machine learning to organise and share information for greater productivity. It is an organisation-wide solution for all industries, trusted by businesses and enterprises in the banking, telecommunications and government sectors.

Picture of Stephen Kerr By Stephen Kerr on July 31, 2019