Harvest Technology Group Boosts EBITDA 19%, Raises $1.6M to Fuel Growth

Financial Performance and Capital Raise

Harvest Technology Group Limited (ASX: HTG) has reported a solid financial performance for the March quarter of FY25, with a notable 19% improvement in normalized EBITDA compared to the previous quarter. The company recorded cash receipts of $501,000 and total revenue of $938,000 during the period. Importantly, HTG successfully raised $1.6 million (before costs) through convertible notes issued to sophisticated investors, bolstering its cash position to $596,000 at quarter-end.

Operational Progress and Market Expansion

Operationally, the quarter marked the final phase impacted by restructuring costs, with cost-saving benefits now being realised. The sales pipeline has expanded significantly, doubling from the prior quarter, driven by new reseller partners and entry into new markets. HTG’s management has been actively engaging with key partners and prospective customers in the Middle East and Europe, underscoring the company’s international growth ambitions.

Hardware deployment is set to accelerate in Q4 FY25, with an order received for Nodestream fleet hardware expected to be installed on an additional five vessels. This deployment will be complemented by new software subscriptions, enhancing recurring revenue streams. The company also launched three new internally manufactured hardware devices designed to improve performance and operational efficiency.

Strategic Software Developments

On the software front, HTG released a major upgrade named “Dragontail,” enabling customers to toggle between NodestreamX and NodestreamLive within a unified platform. This upgrade represents a significant step towards integrating the company’s solutions into a comprehensive, feature-rich offering. Additionally, HTG has begun developing a solutions roadmap aimed at providing turnkey offerings through its reseller network, which is expected to shorten sales cycles and drive revenue growth.

3-Year Strategic Plan on Track

HTG remains firmly on track with its 3-year strategic plan targeting profitability by FY27 and revenue exceeding $10 million, with $7.5 million anticipated from the existing Nodestream product range. The company has completed nine months of this 36-month plan, achieving a $467,000 EBITDA improvement from Q2 to Q3, driven by an 11% increase in recurring revenue compared to the prior corresponding period.

Cost optimisation efforts have been successful, reducing the breakeven revenue target from $14 million to $10 million, with further reductions to $6.5 million projected due to targeted cost cuts. Gross margins have improved from 72% to 74%, reflecting the shift towards recurring licensing revenue. While progress on major global contracts is slower than desired, HTG’s executive team is actively pursuing contract closures and expanding existing agreements in Europe.

Cash Flow and Funding Outlook

The company reported a net cash outflow of $74,000 for the quarter, with operating cash outflows of $1.389 million partially offset by the $1.6 million capital raise. Cash costs related to prior periods, including termination and rightsizing expenses in Europe, are expected to decline going forward. HTG’s management remains confident in its ability to continue operations and meet business objectives, supported by a strong sales pipeline and ongoing cost discipline.