Why the Sensera share price is up 37% today

The Sensera share price is up 37% on the back of a trading update. Demand for its products is delivering positive revenue growth.

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The Sensera Ltd (ASX: SE1) share price is charging 37% higher today on the back of its trading update.

It's a leading end-to-end senor and wireless communications company in the internet of things (IoT) space. The sensors use wireless networks to provide customers with critical information.

Trading update highlights

In an ASX announcement released today, the group saw Q4 revenue of US$2.3 million resulting in FY20 revenue of US$11.7 million. This represented year-on-year (YOY) growth of 15%.

Pleasingly, the cash position of Sensera also improved in Q4 from US$0.3 million to US$1.3 million. 

Its COVID-19 sensor is expected to be deployed in significant volumes in FY21 with early orders of US$2 million. 

Sensera is expecting continued growth in gross margins in the second half of FY20. In a further positive development, gross margin performance for FY20 will attain 48% in comparison to 41% in FY19.

The group says the product mix shift, manufacturing changes and model changes have had the planned impact of improving margins and the last 2 quarters delivered gross margins of the 60% target model. 

Products – IOTS and MD

Internet of things solutions (IOTS)

Despite a slowdown in mining and manufacturing, the group shipped products to an additional 8 customers. 

Revenues have remained resilient and pleasingly, progress has been supported by recent design wins. 

Both the US military application with Triton Systems Inc, announced last month, and the European rail safety project have made progress. The company will likely see a material revenue increase in FY21 as a result of the partnerships.

MicroDevices (MD)

MicroDevices has continued growth with FY20 revenues totalling US$4.7 million. The Woburn, Massachusettes facility is an essential service through the medical markets the group serves and, therefore, continued operating over recent months.

The biggest impact for the MD business was an application made for one of the sensors used to detect COVID-19. Over US$2 million worth of orders has been obtained over the past 2 months. However, these sensors are still in pre-production and full production is expected in FY21. 

Outlook 

Management believes it is building a sustainable business through a cost reduction focus to increase margins. In addition, the group has been able to move multiple customer opportunities to FY21. The Sensera share price currently sits at 3 cents and it will be interesting to see where it goes after the company releases a detailed update at the end of July. 

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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