Spacetalk Accelerates with 53% Subscriber Surge and $11M ARR in Q2 FY25

Strong Subscriber Growth Drives Revenue Momentum

Spacetalk Ltd (ASX: SPA) has delivered a compelling update for the quarter ended 31 December 2024, showcasing a 53% year-on-year increase in paid mobile subscribers to 39,800. This surge underscores the growing appeal of Spacetalk Mobile’s user-focused solutions and validates the scalability of its business model. The subscriber growth is a key driver behind the company’s 16% rise in annual recurring revenue (ARR), which reached $11.0 million, reflecting a solid foundation of sustainable, high-quality revenue streams.

The company’s gross profit also climbed 18% to $3.2 million, signaling effective margin management and a shift towards higher-margin revenue sources. Spacetalk Mobile revenue alone increased by 56% to $1.6 million, with gross profit up 41%, highlighting the segment’s role as a core growth engine.

Cash Flow Stability Amid Strategic Investments

Despite a steady cash outflow from operating activities of $1.1 million, Spacetalk demonstrated strong underlying cash generation before inventory investments, producing $1.2 million in net cash. The company prudently increased inventory payments by $600,000 compared to the prior corresponding period to secure stock for the high-demand Black Friday and Christmas seasons and to mitigate supply chain risks ahead of planned international expansion.

Operating payments, excluding inventory, were reduced by 25% year-on-year to $3.7 million, reflecting successful cost optimisation efforts. This disciplined approach has helped maintain stable cash flow performance even as the company invests in growth initiatives.

International Expansion and Product Innovation

Spacetalk is actively expanding its footprint beyond Australia, with business development and sales now underway in the USA, United Kingdom, Canada, Finland, and New Zealand. This international push is expected to fuel new subscription growth and diversify revenue sources.

On the product front, the company released version 1.5 of its Spacetalk App during the quarter and is developing a new version aimed at enhancing customer experience and driving further ARR growth. This aligns with the strategic transition from the legacy app platform to the more profitable Spacetalk Mobile service, which has seen a $2.0 million year-on-year increase in ARR.

Emerging Segments and Financial Position

Spacetalk also highlighted growth in its Seniors segment, with revenue up 85% to $48,000, supported by reseller partnerships. Corporate revenue surged dramatically due to R&D grant completion, although the cash from this grant will be received in the next quarter.

Financially, the company strengthened its capital structure by completing the final tranche of an equity raise, netting $1.7 million in cash to support strategic initiatives. The loan facility was refinanced and extended to March 2027, providing additional financial flexibility with a clear amortisation schedule and covenants to maintain minimum cash balances and EBITDA targets.

With cash and cash equivalents of $2.4 million at quarter-end and no unused financing facilities, Spacetalk estimates it has approximately 3.3 quarters of funding available based on current operating cash flows.

Looking Ahead

CEO Simon Crowther expressed confidence in the company’s trajectory, emphasizing the strong foundation laid for sustainable growth. The focus remains on scaling the subscriber base, enhancing customer lifetime value, and executing international expansion while continuing to optimise costs and invest in product innovation.