Contract Dispute Clouds Urbanise’s Revenue Outlook Despite Positive Cash Flow

Steady H1 Revenue Growth Masks Q2 Challenges

Urbanise.com Limited (ASX: UBN), a cloud-based SaaS provider for strata and facilities management, delivered a mixed performance in the first half of FY2025. The company reported a 2% increase in license revenue to $5.8 million, contributing to a total revenue of $6.3 million, marginally up by $35,000 compared to the prior corresponding period. This growth was primarily driven by recurring revenues, offsetting a decline in professional services fees.

However, the second quarter revealed headwinds with license revenue declining 2.6% to $2.9 million, impacted by customer churn and a significant contract dispute. Total Q2 revenue fell 4.4% year-on-year to $3.0 million, though recurring revenue remained robust at 95% of total revenue.

Contract Dispute with Colliers Australia Weighs on Performance

Urbanise is embroiled in an ongoing dispute with Colliers Australia concerning unpaid development costs exceeding $3 million. The company has asserted a strong claim but acknowledges uncertainty around the dispute’s resolution. This conflict has directly affected license fee revenue, with a $120,000 reduction in Q2 attributed to the Colliers contract. The outcome of this dispute remains a critical variable for Urbanise’s near-term financial outlook.

Positive Cash Flow and Cost Discipline Drive Financial Stability

Despite revenue pressures, Urbanise achieved positive cash flow in Q2 FY2025, generating an average of $108,000 monthly, supported by improved collections and cost rationalisation measures implemented in the previous fiscal year. The company’s cash balance rose to $2.7 million at quarter-end, up from $1.9 million six months prior, with no material debt on the balance sheet. Management remains confident in reaching cash flow breakeven by the end of FY2025.

Strategic Focus on Banking Partnerships and Market Diversification

Urbanise is actively pursuing partnerships with financial institutions to enhance its APAC strata management platform. These discussions aim to integrate banking services such as debt collection and strata loan finance, tapping into a market opportunity estimated between $30 million and $54 million annually. The company targets finalising these partnerships by Q3 FY2025, which could significantly expand its service offerings and revenue streams.

In the Middle East, Urbanise is adjusting its sales strategy following market consolidation, focusing on medium-sized customers across the Gulf Cooperation Council and UAE landlord markets. The reallocation of revenue between strata and facilities management segments reflects a refined approach to contract valuation and service delivery in this region.

Outlook and Market Positioning

CEO Simon Lee emphasised the importance of pipeline progression and customer retention amid a challenging sales environment, noting delays in deal closures over the holiday period. The company’s dual-platform strategy across APAC and MENA markets, combined with its cloud-based SaaS capabilities, positions Urbanise well for future growth, provided it can resolve the Colliers dispute and secure key banking partnerships.