Activeport Group Ltd reported steady revenue of $2.5 million in Q2 FY25, maintaining a stable cost structure post-restructure and positioning itself for growth through new projects and a significant GPU orchestration licensing deal.
- Q2 FY25 revenue stable at $2.5 million with minimal cost growth
- Successful rights issue raised $6.1 million, strengthening balance sheet
- Conditional $4 million GPU orchestration license agreement with Radian Arc pending revenue recognition
- Recurring revenue streams from SaaS and software licensing established as baseline
- CEO highlights upcoming bandwidth-on-demand rollout and international projects
Stable Revenue and Cost Base Post-Restructure
Activeport Group Ltd (ASX: ATV) has delivered consistent financial results in the first half of FY25, with Q2 revenue holding steady at $2.5 million, a slight dip from Q1 but within expected variance. This stability follows a significant restructure completed in FY24, which has right-sized the company and established a reliable baseline of recurring revenue from its core software licensing and Software-as-a-Service (SaaS) segments. Operating costs remained stable, underscoring the effectiveness of the restructure in positioning Activeport for improved operating margins.
Capital Raise and Balance Sheet Strengthening
During the quarter, Activeport successfully completed a rights issue and associated placement, raising $6.1 million against a target of $5.3 million before costs. This capital injection, alongside a $1.52 million R&D tax refund received in Q2, has materially improved the company’s cash position, with cash and equivalents reported at $2.6 million at quarter-end, excluding the conditional $4 million payment from the Radian Arc license agreement and $2 million from the rights issue placement expected in Q3.
GPU Orchestration Licensing Deal and Future Growth
A key highlight is the conditional licensing agreement with Radian Arc for Activeport’s GPU orchestration software, valued at $4 million. While this revenue has not yet been recognised due to conditionality, it represents a significant potential upside. The deal is expected to close in Q3, with receivables accumulating in the current quarter. CEO Peter Christie expressed optimism about this contract and the upcoming rollout of bandwidth-on-demand services via the FibreconX network in Australia, as well as new international projects targeting telecommunications and data centre operators.
Recurring Revenue Focus and Operational Outlook
Activeport’s strategy centers on expanding its recurring revenue streams, aiming for recurring revenue to exceed operating costs in the first half of FY26. The company’s two main revenue streams, SaaS and software licensing, have delivered consistent performance, with SaaS revenue at $2.26 million and software licensing at $259,000 in Q2. The company’s rightsizing and cost control measures have set the stage for scalable growth without significant fixed cost increases.
Governance and Capital Structure Updates
In addition to operational updates, Activeport disclosed payments to related parties totaling $240,000 for director fees and salaries, consistent with prior periods. The company also issued 25 million zero exercise price options (ZEPOs) across three classes, vesting on share price milestones ranging from $0.10 to $0.20, providing potential future equity incentives aligned with shareholder value creation.
Bottom Line?
Activeport’s steady financial footing and strategic licensing deals set the stage for a pivotal growth phase in FY26, but investors should watch for the realisation of conditional revenues and execution on international projects.
Questions in the middle?
- When will the conditional $4 million Radian Arc GPU orchestration deal be recognised as revenue?
- How will the rollout of bandwidth-on-demand via FibreconX impact recurring revenue growth?
- What are the risks and timelines associated with international telco and data centre projects?