Sales reach helps push CyanConnode

Narrowband radio mesh network company CyanConnode described its first half as “busy” on Thursday, saying in a trading update that a number of key existing relationships were “strengthened” during the period, and its global reach was “enhanced”.

The AIM-traded firm said that was demonstrated by a combination of both new orders and follow-on contract wins in Bangladesh, India and Sweden, worth a total of £7.6m, which were won and would now be delivered through CyanConnode’s partner ecosystem.

It said revenue for the six months to 30 June was in line with management's expectations at £0.6m. as the revenue mix transitioned from low-margin third party electricity meters, delivered to a specific customer in India in the corresponding period, towards the more regular revenue mix of CyanConnode hardware, software and professional services.

The company was it was “pleased” with progress on its software recurring revenue model, with approximately 50% of the £7.1m order for Bangladesh for the period from recurring software licenses.

It said the order book, representing the value of purchase orders received but not yet delivered, grew significantly over the six month trading period from £13m to £20.1m, which iwa in addition to the expected £25m of software licence and support fees from the UK smart metering contract.

During the first six months of 2017, the company collected customer payments of £1.1m, the board reported.

As of 30 June, net cash was £3.1m compared with £3.9m at the end of the financial year to December 2016 and £2.4m at the end of June 2016.

“The progress made during the period ensures we are well placed to build on the momentum achieved by expanding our capabilities and strengthening our brand globally,” said executive chairman John Cronin.

“We have now built a world class development and delivery organisation and the value of this has directly resulted in the follow on orders from Tata Power and in Bangladesh in the period.”

Looking ahead, CyanConnode said it was continuing to develop its software recurring revenue model, underpinning revenue visibility with further margin expansion expected from both existing and new opportunities.

The order book - which the company said it would start delivering on during the second half - new opportunity pipeline and growing global presence underpinned management's confidence in a strong performance during the remainder of the current financial year and beyond, the board explained.

Immediately following the period end, CyanConnode announced a £0.9m order from India, which further increased the order book to £21m.

As the company serviced and delivered against the order book, management remained “confident” that trading during the second half would be “significantly” ahead of the period under review.

“We are extremely excited by the continued opportunity, security and visibility provided by the growing number of deployments as we now start to deliver on our significant order book,” Cronin added.

“The quality of our products and customer base signify the strength of our operations and reflect our continued efforts to deliver results for shareholders on a growing number of fronts.

“CyanConnode is now becoming a well-established business, with highly competitive solutions which industry leading customers like Tata Power are buying and then re-ordering on a repeat basis.”