Envirosuite (ASX:EVS) share price jumps 5% on strategic splash with GHD

Two strategic agreements with one of Australia’s largest consulting firms has put Envirosuite in the green today…

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The Envirosuite Ltd (ASX: EVS) share price is among the green league on Wednesday.

In afternoon trade, the environmental management software providers’ shares are up 4.65% to 22.5 cents. The company’s share price is now just shy of its 52-week high of 24.5 cents.

Why is the Envirosuite share price climbing higher today?

Market participants are bidding up the Envirosuite share price today following the release of a strategic agreement announcement.

According to its announcement, Envirosuite has entered into two strategic agreements with the consulting group GHD. These agreements with the Australian consulting firm involve the use of Envirosuite’s EVS Water software. Specifically, the agreements with GHD for the water software is to:

  • Implement and scale the solution for water facilities
  • Leverage GHD’s global network to refer EVS Water to prospective clients

The development marks a new phase in the company’s rollout of its water-focused environmental software solution.

This software allows clients to create a digital twin of water treatment plants, powered by machine learning and deterministic modelling.

Through partnering with a large company such as GHD, with 200 offices across five continents, Envirosuite aims to grab a large hold of the water market. The referral program will focus on drinking water, desalination, and industrial water treatment industries. This potential increased market reach appears to be aiding the Envirosuite share price today.

Currently, the consulting firm uses EVS Water for water treatment and desalination plants across the Asia-Pacific region. Following the agreements, GHD will provide technical support for EVS Water products and offer product improvements. Additionally, the consultant will assist in configuring digital twins for EVS Water projects.

What does it means for revenue?

Envirosuite expects that the revenue from these two agreements will not be material to the group FY22 revenue. However, it is anticipated to be material to the revenue of the EVS Water segment. This is possibly due to the relatively small base from which the water product is starting.

In Q1, the company recorded $0.1 million in annual recurring revenue (ARR) from the water product. For context, this made up only 7% of ARR for the group.

Finally, the Envirosuite share price is up 24% since the beginning of the year.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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