IKE keeps 30% subscription growth target despite FY27 timing reset

FY27 Revenue Forecast Falls Short of Earlier Indication

IKE GPS Group Limited (NZX:IKE; ASX:IKE) has pulled back from its earlier indication of roughly 35% FY27 subscription revenue growth, but has not abandoned its longer-term growth marker. The company said the full-year forecast will be confirmed at the end of November and is expected to be lower than previously indicated because several major customer contracts are closing and being recognised later than planned.

Management said the change reflects timing rather than customer losses, churn or weaker demand. Subscription revenue is recognised over the 12 months after contract execution, meaning the timing of those agreements affects FY27 reported revenue even where contracts are already in place. The company did not disclose the contract values or customer names.

Subscription Metrics Continue to Outrun Total Revenue

For the six months to 30 September, platform subscription revenue was approximately NZ$11 million, up 22% on the prior comparable period. Annualised subscription exit run rate reached approximately NZ$22 million, a 13% increase, and IKE retained its target for that figure to grow by more than 30% by 31 March 2027. The latest update follows IKE's earlier three-product expansion plans, which included an AI platform and products aimed at utility and fibre customers.

Total revenue was approximately NZ$12.7 million, broadly flat year on year, as professional services revenue softened. Professional services revenue fell 61% for the September year to date, although IKE said September revenue was strong and that a growing backlog should support the third quarter. The revenue mix nevertheless continued to shift toward recurring income: subscriptions represented about 85% of total revenue, compared with 69% a year earlier.

Margin and Balance Sheet Provide Room for Product Investment

Gross margin increased to approximately NZ$10.2 million, up 7%, with the margin percentage rising to 81% from 75%. IKE said subscription gross margins were about 95%. Cash and deposits stood at approximately NZ$27.4 million at 30 September, alongside net receivables of about NZ$3.9 million and no debt. The company said cash was ahead of its internal plan, while noting that collection timing for a large receivable and seasonally higher second-quarter spending affected the closing balance.

Three New Products Target Utilities and Fibre Networks

IKE said three products funded during FY26 remain on track to reach the market in the second half of FY27. They are a secondary-voltage analysis module for IKE PoleForeman, a version of PoleForeman designed for communications companies deploying fibre, and an AI-based make-ready engineering platform.

The products broaden IKE's reach beyond structural analysis of distribution infrastructure. The secondary-voltage product is intended to help utilities size transformers and assess voltage as networks absorb electrification and distributed energy. The communications release targets the US fibre infrastructure market, while the make-ready platform is designed to automate the engineering work required to add new services and attachments to distribution networks. IKE expects the launches to contribute material recurring subscription revenue from FY28, but has not quantified that contribution.

The next hard marker is November, when IKE plans to provide its revised FY27 subscription revenue forecast and demonstrate the new products to investors. Until then, the tension is clear: the subscription engine is growing and becoming more recurring, but the size of the near-term revenue reset depends on when those major contracts are executed and recognised.