Iqgeo Regulatory News (IQG)

15 January 2024

IQGeo Group plc

(the "Company" or the "Group")

Trading update

IQGeo Group plc (AIM: IQG), a leading developer of geospatial productivity and collaboration software for telecoms and utility network operators, is pleased to announce an update on the Group's trading for the year ended 31 December 2023, ahead of the release of its audited final results in March 2024.

The Group is pleased to report that it expects results to be ahead of expectations, demonstrating sustained and strong growth and momentum across all key metrics, underpinning confidence in further improvement and growth in the current financial year and beyond.

Highlights:

· Revenue to exceed £44.2 million (2022: £26.6 million) representing growth of 66% (organic growth of 56%)

· Exit ARR* of c.£21.1 million representing an increase of c.40% (2022: £15.1 million) (50% on a constant currency basis)

· Net retention** for the period of c.132% (2022: 108%) on a constant currency basis

· Record order intake of c.£56.9 million representing over 40% growth (2022: £41.0 million)

· Gross profit margin of c.60% (2022: 59%)

· Adjusted EBITDA*** to exceed £6.4 million (2022: £1.9 million), representing 237% growth

· Free cash flow positive (2022: negative) with net cash of £11.0 million at 31 December (2022: £8.1 million)

2023 Financial Performance:

The Group expects to report growth for the year ending 31 December 2023 across all key metrics comfortably ahead of current market expectations. 

Revenue for the year is expected to exceed £44.2 million (2022: £26.6m) representing 66% growth and 56% organic growth. The Group has achieved continued success in increasing its recurring revenue base with Exit ARR* as at 31 December 2023 of approximately £21.1 million representing growth of 50% on a constant currency basis (2022: £15.1 million being £14.1 million on a constant currency basis). ARR intake during 2023 includes a North American tier 1 telecom operator and a tier 1 utility, as well as a significant new tier 1 national utility and broadband operator in Southern Europe, as well as growth within existing customer relationships, as demonstrated by Net Retention** of c.132%, underscoring the success of the Group's land and expand strategy.

Gross margins will be approximately 60% (2022: 59%) and the considerable operational gearing within the Group means the revenue growth delivered translates to a substantial level of adjusted EBITDA*** growth which will exceed £6.4 million (2022: £1.9 million, 2021: loss of £0.8 million). This has been achieved whilst continuing significant investment in the Group's global operational, sales and marketing capabilities.

The Group expects to report net cash as at 31 December 2023 of £11.0 million (£8.1 million as at 31 December 2022), after having settled the first earn-out related to the Comsof acquisition (?1.5 million) in April 2023. The second and final earn-out of ?1.5 million will be paid in 2024.

Outlook

The growth in exit ARR* of 50% in 2023, combined with a strong pipeline and underpinned by the record order intake of £56.9 million, further acceleration in the growth of recurring revenue growth in 2024 and combined with stable growth in services revenues, will lead to increasing operational gearing and margins.

Gross margins are expected to improve in coming periods as more high margin recurring revenue is recognised. The Group continues to focus on growing recurring revenue with its "Editions" strategy, which provides a flexible solution dependent on the demands and budgets of various sized customers and is proving successful in broadening the Group's customer base with solutions with lower associated implementation and service costs.

IQGeo's growth is underpinned by strong momentum in our two key verticals: Telecoms and Utilities. Record growth in the rollout of fibre networks is being driven by commercial broadband operators competing for market share and by national and local governments seeking to provide universal broadband services. In parallel, electric utilities are making major investments to redesign and modernise their grids for renewable and distributed energy generation and to meet government targets for net-zero carbon emissions. With these global megatrends set to continue for the coming decade, they provide a strong long-term market opportunity for IQGeo's network management solutions.

Richard Petti, CEO, commented that: "I am delighted with our performance in 2023. We have delivered a very strong set of results and at the same time we have strengthened both our product competitiveness and our organisation.

On 1 January 2024 we celebrated our 5-year anniversary as IQGeo over which time we've delivered two successful acquisitions and dramatically reshaped our software technology portfolio and global presence. Our Integrated Network solution is now well established as a market leader in the telecom industry, and we are building similar momentum in the electric utility industry for our Adaptive Grid solution. 

Our record order intake, strong growth in exit ARR* and more than three-fold growth in adjusted EBITDA*** demonstrate the strength of our proposition, our position in our chosen markets and the innovation of our technology. Our future is underpinned by global megatrends that will deliver long-term sustainable growth in our end markets for the next decade and beyond. 

I would like to acknowledge the hard work and commitment of the IQGeo team that performed so well in 2023 and we look forward to an exciting 2024." 

* Exit ARR is defined as the current go forward run rate of annually renewable subscription and M&S agreements.

** Net Retention is Recurring Revenue Net Retention defined as the growth in recurring revenue from customers at the start of the financial period to the end of the financial period, net of any recurring revenue churn

***Adjusted EBITDA excludes amortisation, depreciation, share option expense, foreign exchange gains/losses on intercompany trading balances and non-recurring items and is reported as it reflects the performance of the Group

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 which is part of UK law by virtue of the European Union (withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For further information contact:

IQGeo Group plc +44 1223 606655

Richard Petti

Haywood Chapman

Cavendish Capital Markets Limited +44 20 7220 0500

Henrik Persson, Seamus Fricker (Corporate Finance)

Tim Redfern (ECM)

Notes to Editors

About IQGeo

Telecommunication, fiber, and utility operators are "Building better networks" with IQGeo's award-winning network management software. The ability to powerfully model any network requirement, integrate every system and data source, and support field and office teams with continual innovation is helping operators create the networks of the future. Our solutions ensure greater cross-team collaboration and process efficiency throughout the network lifecycle, from planning and design to construction, operations, and sales.

Whether it's highly competitive fiber and 5G broadband rollouts or complex utility grid modernization projects, customers trust IQGeo's Integrated Network and Adaptive Grid solutions. We partner with large multinationals and smaller regional operators to deliver the digital innovation they need to accelerate time-to-revenue, increase network resilience, improve operational safety, and deliver ROI.

For more information visit: www.iqgeo.com/

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