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K2Fly share price on watch after update

The K2FLY Ltd (ASX: K2F) share price is on watch after the company announced a positive update on FY20 performance. K2Fly is a specialist company providing environmental, social and governance (ESG) products and services to the global mining sectors. The company also provides asset management consultancy, system integration, and represents a suite of niche products alongside its own software products. 

Among the company’s own ESG products is a range of software-as-a-service (SaaS) products. This includes the ‘RCubed’ product which is used for mineral resource and reserve governance, compliance, and reporting. In addition, the company provides ‘Infoscope’, a product to help companies maintain their ‘social license’ to operate on land. Uniquely, Infoscope delivers stakeholder, tenement, cultural heritage, native title and environmental management, as well as full life-cycle ground disturbance process.

Why is the K2Fly share price on watch?

The company announced an increase in Q4 FY20 invoices of 28% versus the previous corresponding period. For the full FY20 year, this translated into an increase of 60% against FY19. In addition, the company announced it was cashflow positive for Q4 FY20. The FY20 activities have been largely focused on building annual recurring revenues via the SaaS business model.

FY20 annual recurring revenue stands at $2.36 million, this is running at a compound annual growth rate (CAGR) of 177%. Q4 new clients to the Rcubed product include the Tier 1 miners Kinross Gold, South32 Ltd (ASX: S32), Sibelco and Orano SA. They join a list of announced Rcubed clients including Newmont Corporation and Rio Tinto Limited (ASX: RIO). Many Tier 1 miners have also extended their licensing agreements including AngloGold Ashanti (ASX: AGG), Westgold Resources Ltd (ASX: WGX) and Teck Resources.

In the 13 months since acquisition, the Rcubed product has exceeded its 3 year acquisition performance milestone. The company has been helped by Rcubed’s capability to work across a range of international stock markets. 

Company performance

Along with the Rcubed contracts, the company is also progressing new products. One of these involves an MoU with Decipher Pty Ltd,  a company with an award-winning cloud-based mine rehabilitation platform. K2F and Decipher have partnered to create an integrated monitoring and governance platform for Tailings Storage Facilities (TSF).

This further extends the K2Fly product range in both the environmental and governance areas of ESG requirements. The company is already collaborating with SAP on the development of a Tailings solution. The Decipher partnership adds a further level of detail into the monitoring of facilities.

In December 2019 a new entity, ‘The Place of Keeping’ took over the rollout of Infoscope to Australian Aboriginal groups. ‘The Keeping Place’ is  a secure platform that enables Traditional Owners to unlock social and economic opportunities for current and future generations.

The K2Fly share price has risen by 107.6% since its low point on March 20, valuing it at $24.95 million.

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Motley Fool contributor Daryl Mather 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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