ikeGPS Narrows Losses but Faces Market Penetration and Acquisition Questions
ikeGPS Group Limited (IKE) reported a robust FY25 with 19% revenue growth driven by subscription gains and improved margins, setting the stage for EBITDA break-even in FY26 H2 amid strong North American market demand.
- FY25 revenue up 19% to NZ$25.2 million
- Subscription revenue grows 34%, annual run rate up 48%
- Gross margin improves to 69% from 60%
- Adjusted EBITDA loss narrows to NZ$6.1 million
- FY26 outlook targets EBITDA break-even and 35%+ subscription growth
Strong Subscription Momentum Drives Revenue Growth
ikeGPS Group Limited (ASX: IKE) delivered a solid financial performance for FY25, with total revenue climbing 19% year-on-year to NZ$25.2 million. The standout contributor was subscription revenue, which surged 34% to NZ$14.4 million, reflecting a 48% increase in the annual platform subscription run rate. This growth was underpinned by a doubling of subscription seat licenses, now exceeding 8,500, as customers increasingly adopt IKE’s PoleForman platform.
Margin Expansion and Cost Discipline Improve Profitability Metrics
Gross margin expanded significantly to 69%, up from 60% the previous year, driven by improvements across subscription, transaction, and hardware segments. Despite a net loss of NZ$16.3 million, the company’s adjusted EBITDA loss narrowed markedly to NZ$6.1 million from NZ$9.8 million in FY24, reflecting tighter control over cash operating expenses, which declined 2% year-on-year. Notably, IKE ended the year with NZ$15.4 million in cash and net receivables and maintained a debt-free balance sheet.
Focused North American Expansion and Product Innovation
Looking ahead, IKE is targeting continued strong subscription revenue growth of 35% or more in FY26, with a goal of reaching EBITDA break-even on a run-rate basis in the second half of the year. The company’s strategic focus remains on becoming the industry standard in the North American market, where it already counts eight of the ten largest U.S. electric utilities among its customers. This positioning is bolstered by the massive expected investment exceeding US$400 billion in U.S. grid infrastructure over the next five years, including fiber, 5G, and rural broadband projects.
Market Opportunity and Acquisition Interest
IKE’s technology and automation solutions are central to the digitization and resilience efforts of major utilities, with a current market penetration estimated at just 20% of addressable customers. The company also disclosed receiving an unsolicited, non-binding acquisition approach valuing IKE at approximately NZ$165-170 million enterprise value, highlighting growing investor interest in its growth trajectory and market position.
Outlook and Challenges
While the outlook is optimistic, uncertainties remain around customer adoption timing and competitive dynamics in the North American market. The company plans to introduce new automation applications and modules to its product suite, aiming to deepen customer engagement and drive further revenue expansion. Maintaining cost discipline while scaling will be critical as IKE pursues profitability.
Bottom Line?
With subscription growth accelerating and EBITDA losses narrowing, IKE is poised for a pivotal FY26 as it seeks to cement its role in North America’s grid modernization.
Questions in the middle?
- How will IKE navigate competitive pressures in the rapidly evolving North American utility software market?
- What impact might the unsolicited acquisition approach have on IKE’s strategic direction and valuation?
- Can IKE sustain its margin improvements while investing in new product development and market expansion?
