Kyckr Limited

KYK Details

Kyckr Limited (ASX: KYK) is engaged in aggregating, organizing and structuring the world’s primary source company data to help businesses minimize risks by avoiding regulatory and commercial costs connected with using poor quality data. It delivers  real-time access to legally authoritative global company data through a single platform that enables users to connect to more than 180 company registries and over 170 million legal entities in 120 countries.

Q4FY21 Update (Ended 30 June 2021)

• Unaudited revenue for the period stood at $829k, up by 28% on the previous corresponding period (pcp). This can be attributed to record customer orders in the month of June 2021.
• ARR for the period stood at $1.5 million, an increase of 300% YoY supported by all new business written on ARR contracts and existing customers switching from “pay as you go” contracts to ARR contracts, with the attendant benefit of guaranteed revenues.
• The cash Balance at the end of the period stood at $5.3 million.

(Source: Company Reports)

Results Performance (H1FY21 Ended 31 December 2020)

• Interim revenue stood at $1.27 million, an increase of 9% on pcp. The revenue in the period was negatively impacted by temporary Covid-19 circumstances that led to a decline in online transactional business.
• Enterprise revenue has shown a growth of 20%, of which 40% was Annual Recurring Revenue (ARR) that rose by 38% over the pcp. The revenue growth was led by revenue from new client signings as well as higher data usage from existing enterprise customers.
• Net loss after tax for the period stood at $2.75 million, as compared to $2.27 million in H1FY20

Income Statement (Source: Company Reports)

Recent Update:

• On 25 August 2021, the company informed the market that it had  received commitments for $6 million Placement and had  launched a Share Purchase Plan for up to $0.5 million. The proceeds are expected to get utilized to expand its enterprise sales team and expand its network of strategic partners to accelerate growth and help the Company reach cash flow break even.
  

• Outlook

KYK has guided for a positive outlook for Q1FY22 driven by an increase in onboarding volumes. Further, the company has strong partnership leads with 35 opportunities under active management and the launch of the UBO Verify service to become a new source of revenue generation, going forward.

Additionally, the  launch of the new SaaS Enterprise Portal in Q2FY22 along with the benefit of easing COVID restrictions boosts the sales pipeline outlook for FY22.

Key Risks

The company is exposed to competition risk as its intellectual property rights are not protected by any registered patents in any jurisdiction. The group’s financial performance is also susceptible to the movement in exchange rates between the Australian Dollar and various other foreign currencies. The loss of key management personnel could adversely hurt the business, financial conditions, and performance.

Stock Recommendation

The company’s EBITDA Margin and Net Margin for H1FY21 stood at -204.5% and -217.5%, as compared to the industry median of 26.4% and 16.8%, respectively. Its ROE for H1FY21 stood at -17.6%, lower than the industry median of 6.5%.

Considering the aforementioned factors as well as associated risks, we give a “Sell” recommendation on the stock at the current market price of $0.051 per share, up by 10.869% on 30^th August 2021. 

Technical Overview:

Chart:

Source: REFINITIV, Purple Color Line Reflects RSI (14-Period)

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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