Strategic Review Looms as Codeifai Cuts Cash Burn Amid Digital Pivot

Strong Cash Flow Improvement Signals Operational Discipline

Codeifai Limited (ASX: CDE) closed out 2024 with its lowest quarterly cash burn since early 2023, reporting a 59% reduction in cash used in operating activities compared to the same quarter last year. The company’s net operating cash outflow for Q4 2024 was $240,000, a marked improvement reflecting effective cost controls and a disciplined approach to expenditure.

Cash receipts for the quarter rose 48% year-on-year to $113,000, driven largely by repeat customer orders and the growing traction of its digital offerings. This steady inflow, combined with restrained spending, underscores a positive momentum heading into 2025.

ConnectQR SaaS Platform Emerges as Growth Engine

Central to Codeifai’s recent progress is the launch of ConnectQR, a self-service SaaS platform focused on large-scale QR code management. Since its debut in 2024, ConnectQR has achieved several milestones including integration with Canva, surpassing 1,000 subscribers, and adding new features like a URL shortener. This platform exemplifies Codeifai’s “Digital First Engagement First” strategy, aiming to rapidly scale revenue and profitability through high-margin digital solutions.

The company’s high gross margin, consistently above 95%, remains a cornerstone of its path to profitability. The digital-first approach is expected to further leverage these margins as ConnectQR expands its customer base and platform capabilities.

Strategic Review of Material Science Division and IP

In parallel with its digital pivot, Codeifai has initiated a strategic review of its Material Science division, which historically focused on anti-counterfeit technologies including proprietary tracers and the patented MotifMicro smartphone-readable technology. The company has terminated its exclusive license with MIT for the serialized MotifMicro technology, signaling a potential shift or divestment in this segment.

The review contemplates the possible sale of the division and its valuable patents, which act as barriers to competitor smartphone-readable technologies. These patents include US and China grants covering mobile device interaction with physical security materials, underscoring the division’s intellectual property strength despite the strategic realignment.

Geographic Expansion and Financial Position

Geographically, Codeifai reported a turnaround in its China business unit, achieving positive cash flow and profitability for two consecutive quarters, a notable milestone. Additionally, integration work continues on a major beverage container recycling initiative in Kenya, which holds promise as a significant future revenue contributor.

Financially, the company ended the quarter with $386,000 in cash and cash equivalents, supported by a $750,000 loan facility from Executive Chairman John Houston, who personally advanced $380,000 during the quarter. The company also maintains an unused financing facility of $510,000, providing a runway of approximately 3.7 quarters based on current cash burn rates.

Leadership Confidence Amid Market Challenges

Executive Chairman and CEO John Houston emphasized the company’s rigorous cost management and strategic focus on digital growth. His personal financial support highlights confidence in Codeifai’s prospects, describing the current strategies as the best in the company’s history with unparalleled potential to scale high-margin revenues.

As Codeifai navigates its strategic review and capitalises on its SaaS platform’s momentum, investors will be watching closely for further clarity on the Material Science division’s future and the commercial impact of new contracts and international initiatives.