Knosys saw a 19% lift in license and support fee revenues for the year, and now has an annual run rate of $3m in recurring revenues.

The buisness was cash flow positive for the 4th quarter, up $0.4m. It now has $3.7m in cash.

The company said it was well placed to capitalise on the increasing trend of working from home, and is on the hunt for potential bolt-on acquisitions (which would almost certainly require a capital raise).

You can read the full quarterly results here

Knosys has signed a deal with ANZ New Zealand to migrate its data to a standalone Knowledge IQ system -- a decision driven by a regulatory requirement not to have technology systems dependant on any foreign parent entity.

The deal is expected to generate $840k in service fees over 9 months. For context, KNO generated $396k in customer cash receipts in the March quarter -- so this is a significant deal.

I quite like the business, but am wary of the customer concentration. I do not hold at present.

ASX announcement is here

Annual recurring revenue of just under $3m at 31 December, 2019. Up 21% from this time last year, and roughly 16% in the past 6 months. 

However, the number of user licenses was essentially unchanghed from the end of FY19, and up only 5% for the last year. As such, ARR was driven entirely by an increase in the average revenue per user.

Net operating cash reduced from $500k in prior quarter to -$886k in the second quarter -- a huge turnaround, which Knoysis says was due to the timing of cash flows, and the typical seasonality due to annual license renewals usually occuring in the 4th and 1st quarters.

Cash balance at $2.8m, essentially flat from the end of FY19. It expects gross cash outflows of $1.25m next quarter, which will be offset by $0.4m in contracted inflows, plus any new wins. A further $1m in inflows is expected in the June quarter, which includes an R&D tax refund.

With annual operating costs of ~$5m, and an ACV of ~$3m, it seems likely that Knoysis will need to raise more capital in the not too distant future. 

With a market cap of 4.4x ARR, the lack of customer growth is concerning, as is the low level of remaining cash. A lot of effort and expense has been put into achieving growth, but this latest quarter fails to adequately demonstrate that.  

Total sales opportunities supposedly increased "significantly" in the last quarter, with the company hopeful of converting many of these prospects in the current half. We will see.. There's likely further downside if they fail to bring in significantly more users in the months ahead.

4C report can be seen here