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Mach7 Technologies share price jumps 15% on quarterly update

The Mach7 Technologies Ltd (ASX: M7T) share price is up 15.44% to $0.78 in morning Thursday trade, following the release of its quarterly cash flow report and a business update. 

What did Mach7 Technologies announce in its quarterly update? 

For the first quarter of FY20, Mach7 announced that it has recorded its strongest quarterly cash flow result in its history. The company received $4.7 million in cash from customers and recorded $1.7 million in positive operating cash flows. At the end of the quarter its cash balance stood at $4.3 million.  

The $4.7 million in cash receipts from customers consisted of $1.6 million of support fees (recurring cash) and $3.1 million of software and services receipts. The quarterly cash receipts figure included a large payment from Advocate Aurora Health after it purchased the Mach7 Platform in July. Management also noted that cash receipts for the quarter did not include any receipts from Hospital Authority Hong Kong

Cash payments for the quarter were $3.1 million, which was in-line with the prior quarter of $3.0 million. The company also recorded free cash flow for the quarter of $1.6 million, and remains on track to meet its 12-month free cash flow break even target ending in February 2020. 

The business update also noted that Mach7 is completing active software installation and/or data migration projects across 20 of its customers. As a result of these projects the company will generate $2.2 million in services revenue that will be recognised over the remaining installation period on a % complete basis. The majority of this revenue is projected to be recognised in FY20. 

A small-cap stock for investors to watch

Mach7 has started FY20 strongly after securing $7.5 million of sales orders with a total contract value over five years. This includes its largest ever US deal to date with Advocate Aurora Health, valued at $5.7 million. The company has managed to grow its contracted annual recurring revenue to $8.5 million. 

At the time of writing, shares in Mach7 have risen 271% in 2019. Other small cap technology companies that have rewarded shareholders in 2019 include Alcidion Group Ltd (ASX: ALC), Audinate Group Ltd (ASX: AD8) and Bigtincan Holdings Ltd (ASX: BTH).

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Tim Katavic has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Alcidion Group Ltd, AUDINATEGL FPO, BIGTINCAN FPO, and MACH7 FPO. The Motley Fool Australia has recommended Alcidion Group Ltd, AUDINATEGL FPO, and BIGTINCAN FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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