Kyckr Limited

KYK Details

Kyckr Limited (ASX: KYK) is engaged in delivering 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.

H1FY21 Results Performance (For the Period Ended 31 December 2020)

Revenue Rose 9%: The group overall revenue during the period rose 9% YoY to $1.27 million and was negatively impacted by temporary Covid-19 circumstances that led to a decline in online transactional business.

Increased Enterprise Revenue. The company has reported a 20% growth in enterprise revenue, of which 40% was Annual Recurring Revenue (ARR) that rose by 38% over the pcp. The company won 11 new enterprise clients during the period. The revenue growth was led by revenue from new client signings as well as higher data usage from existing enterprise customers.

Strong Growth Along with Contract Renewals: Strong growth along with contract renewals from existing customers has resulted in a 138% Net Revenue Retention (NRR) that grew by 68% over the pcp.

Net Loss Increased to $2.75 million: The company has reported an increase in its net loss after tax to $2.75 million from $2.27 million in H1FY20.

Key Data (Source: Company Reports)

June 2021 Quarter Activities Update

• It has achieved record revenue growth in June 2021 quarter with unaudited revenue increasing to $829k during the quarter, up by 28% from $650k in the same prior corresponding quarter. Further, the company has achieved record customer orders in the month of June 2021.
• Quarterly ARR rose by 300% YoY to A$1.5 million 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 30 June 2021 stood at $5.3 million.

Appointment of Non- Executive Chairman

As per the press release dated 18 August 2021, the company declared that Mr Benny Higgins, Chairman, and Ms Jacqueline Kilgour Non-Executive Director would  retire from the Kyckr Board. Further, the directors have appointed Mr Rajarshi Ray, the Non-Executive Director as Non-Executive Chairman.

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.

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

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

Stock Recommendation

The company possesses a better current ratio that stood at 5.53x in H1FY21 compared to the industry median of 1.90x reflecting sound liquidity.

Considering the aforementioned factors along with its targeted investment in technology capabilities to gain scale, traction in new order wins as well as the current trading levels, we give a “Speculative Buy ” recommendation on the stock at the current market price of $0.044 per share on 23^rd August 2021. 

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.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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