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QUARTERLY REPORT & APPENDIX 4C: 31 MARCH 2019

CURRENT HIGHLIGHTS

  • Cash balance of $3.3 million at 31 March 2019
  • Operating cash flow positive in Q3 FY2019
  • Launch of new Software-as-a-Service product, KIQ Cloud
  • Geographic expansion with new offices in Sydney and Singapore
  • Annualised recurring revenue of $2.8 million as at 31 March 2019
  • Total licenses on issue of 38,780, up 95% in the past 12 months

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

Knosys was operating cash flow positive in Q3 FY2019, which increased the cash balance to $3.3 million as at 31 March 2019, up $0.3m from $3.0 million at the end of Q2 FY2019.  This net cash inflow reflects year to date sales growth and the collection of outstanding December 2018 receivables of over $1 million.  Knosys continues to grow its recurring revenues and now has an annualised recurring run rate of $2.8 million, as at 31 March 2019. 

Annual recurring rev

KIQ Cloud

During the quarter Knosys launched its new Software-as-a-Service product, KIQ Cloud, to bring knowledge management to a broader range of businesses.  KIQ Cloud is targeted at mid-market companies with 200+ employees and is also suitable for Enterprise and Government agencies.  Knosys is expanding is sales capability with new offices in Sydney and a planned opening in Singapore within the next few months.  These new locations will also enhance the opportunities for co-selling KIQ Cloud as part of the Microsoft Gold Partner program. 

Licensed users

The total license count at March 2019 was 38,780, representing a 95% increase compared to March 2018.  The number of licensed users increased only marginally in Q3 FY2019 compared to December 2018 as the Singtel Singapore operations were onboarded and the internal focus was on the new product launch.

Knosys Managing Director John Thompson said “In the past quarter, our internal focus was on the successful launch of KIQ Cloud, which we believe has the potential to be transformational for Knosys.  This product will increase our addressable market, by enabling us access to the mid-market companies with 200+ employees, as well as expanding into the Asia Pacific region.”

Microsoft Gold Partner and Co-sell arrangement

In February 2019, Knosys announced that it had attained Microsoft Gold Partner status.  The partnership will offer significant benefits to Knosys by enabling the company to develop its core technology using Microsoft tools to help scale its solutions and leverage an established ecosystem and partner network to drive co-

CURRENT HIGHLIGHTS

  • Cash balance of $3.3 million at 31 March 2019
  • Operating cash flow positive in Q3 FY2019
  • Launch of new Software-as-a-Service product, KIQ Cloud
  • Geographic expansion with new offices in Sydney and Singapore
  • Annualised recurring revenue of $2.8 million as at 31 March 2019
  • Total licenses on issue of 38,780, up 95% in the past 12 months

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

Knosys was operating cash flow positive in Q3 FY2019, which increased the cash balance to $3.3 million as at 31 March 2019, up $0.3m from $3.0 million at the end of Q2 FY2019.  This net cash inflow reflects year to date sales growth and the collection of outstanding December 2018 receivables of over $1 million.  Knosys continues to grow its recurring revenues and now has an annualised recurring run rate of $2.8 million, as at 31 March 2019. 

KIQ Cloud

During the quarter Knosys launched its new Software-as-a-Service product, KIQ Cloud, to bring knowledge management to a broader range of businesses.  KIQ Cloud is targeted at mid-market companies with 200+ employees and is also suitable for Enterprise and Government agencies.  Knosys is expanding is sales capability with new offices in Sydney and a planned opening in Singapore within the next few months.  These new locations will also enhance the opportunities for co-selling KIQ Cloud as part of the Microsoft Gold Partner program. 

The total license count at March 2019 was 38,780, representing a 95% increase compared to March 2018.  The number of licensed users increased only marginally in Q3 FY2019 compared to December 2018 as the Singtel Singapore operations were onboarded and the internal focus was on the new product launch.

Knosys Managing Director John Thompson said “In the past quarter, our internal focus was on the successful launch of KIQ Cloud, which we believe has the potential to be transformational for Knosys.  This product will increase our addressable market, by enabling us access to the mid-market companies with 200+ employees, as well as expanding into the Asia Pacific region.”

Microsoft Gold Partner and Co-sell arrangement

In February 2019, Knosys announced that it had attained Microsoft Gold Partner status.  The partnership will offer significant benefits to Knosys by enabling the company to develop its core technology using Microsoft tools to help scale its solutions and leverage an established ecosystem and partner network to drive co-sell opportunities with Microsoft sales teams in Asia Pacific and worldwide.  

Appendix 4C Quarterly statement of cash flows

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

The cash balance at 31 March 2019 was $3.3 million with net cash inflows of $0.3m for the quarter, including inflows of $1.3m from sales receipts.

Gross cash outflows included an increased spend on development, annual insurance payments and  capex for new premises.

As required in Section 9 of the Appendix 4C, gross operating outflows for the June 2019 Quarter are estimated at $1.1m of gross cash outflows. 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 in the June 2019 quarter from customers and R&D rebate. The Company expects a positive cash flow quarter in June 2019, provided all customers pay on agreed terms.

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, the addition of Singtel and Optus as major customers now provides a spread of cash inflows to Knosys across other quarterly cashflow periods, albeit these cashflows are subject to a mix of annual payments and monthly payments.

sell opportunities with Microsoft sales teams in Asia Pacific and worldwide.  

Appendix 4C Quarterly statement of cash flows

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

The cash balance at 31 March 2019 was $3.3 million with net cash inflows of $0.3m for the quarter, including inflows of $1.3m from sales receipts.

Gross cash outflows included an increased spend on development, annual insurance payments and  capex for new premises.

As required in Section 9 of the Appendix 4C, gross operating outflows for the June 2019 Quarter are estimated at $1.1m of gross cash outflows. 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 in the June 2019 quarter from customers and R&D rebate. The Company expects a positive cash flow quarter in June 2019, provided all customers pay on agreed terms.

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, the addition of Singtel and Optus as major customers now provides a spread of cash inflows to Knosys across other quarterly cashflow periods, albeit these cashflows are subject to a mix of annual payments and monthly payments.

 

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Picture of Stephen Kerr By Stephen Kerr on April 30, 2019