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A Broker's PreView - ikeGPS Spikes After Positive Update

Overview: This week ikeGPS updated the market on their expansion in the US market. ikeGPS has two core products in their stable, GE MapSight & Spike. Both products enable the user to take a photograph, overlay measurements onto those photographs, model the data and share it with other stakeholders.

Pros: The technology comprises measurement software and a hardware integrating laser, camera, compass and GPS components and is designed to increase efficiency and safety in the electric utility, telecom, government, engineering, construction, real estate and signage sectors. The US signage industry has been one of the early success stories for ike, helping push Spike sales to 63 percent of total revenue.

Revenue figures released by ike showed first half revenue grew by 250 percent over the first six months of last year. The $4.5 million revenue achieved obviously needs to grow further, and the company is predicting continued growth with full year revenue forecast to be $14.3 million.

The revenue growth has been led by ikeGPS’s smartphone products. Further growth in this area will be helped by the Company’s relationship with Stanley Black & Decker. The Stanley Smart Measure Pro is currently being rolled out through Home Improvement store Lowe’s 1850 North American stores with a US$149.99 price tag. Positive sales growth leading up to Christmas could be the impetus ikeGPS needs. 

Cons: Impetus is something ike’s share price needs. Since listing at $1.10 over a year ago, the performance has been disappointing. This has not been helped by missed targets and lacklustre performance from the GE MapSight product.

GE MapSight, a product aimed at the electric utility market, was expected to be the main driver of revenue this year, but was surpassed by Spike in the first half. Contracts with large utilities result in lumpier revenue, but ike see potential for “single account opportunities of $1million or greater.” The Company expects GE MapSight to produce more revenue in the second half, but the business unit is still likely to underperform the prospectus forecasts.

Price performance: After raising funds at $1.10 in July last year, the share price has slumped to 65 cents this week.

Investment outlook:  The product appears to be gaining traction, with ike teaming up with some heavy hitters in the US (General Electric, Stanley and In-Q-Tel). Profit is obviously some way off, but sales are heading in the right direction.

Grant Davies
Investment Advisor
Phone: 03 353 0795
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*A Broker's View is written by Grant Davies, Investment Advisor at Hamilton Hindin Greene Limited. This article represents general information provided by Hamilton Hindin Greene, who may hold an interest in the security. It does not constitute investment advice. Disclosure documents are available by request and free of charge through www.hhg.co.nz.

 

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