TrackX Holdings Inc. (TSX.V:TKX | OTC:
TKXHF | FRANKFURT:3TH) (“TrackX” or the “Company), a
Software-as-a-Service (SaaS)-based enterprise asset management
solution provider, announces the financial and operational
highlights from its third quarter of fiscal 2020 ended June 30,
2020. All results are reported in Canadian dollars unless otherwise
specified. A complete set of the June 30, 2020 Consolidated
Financial Statements and Management’s Discussion & Analysis has
been filed on SEDAR (www.sedar.com).
Financial Highlights for the 3-Months
Ended June 30, 2020
- Gross margin of 69%, versus 39% for the same quarter last
year;
- Recurring revenue decreased by 47% over the previous year
period to $402,492 due the reduction in yard management revenue
resulting from the sale of that line of business to FourKites in
Q2, 2020;
- Adjusted EBITDA income of $241,050 in Q3 FY20 compared to a
loss of $774,964 in Q3 FY19;
- Net loss of $0.529 million ($0.01/share) in Q3 FY20 versus a
net loss of $1.276 million ($0.02/share) in Q3 FY19 which includes
amortization and depreciation of $0.592 million in the current
quarter.
Third Quarter FY20 Revenue
Mix
|
Revenue |
Q3 FY20 |
Q3 FY19 |
|
Recurring |
39% |
54% |
|
Hardware |
(2%) |
18% |
|
Setup, implementation, and otherfees |
63% |
26% |
|
Services |
0% |
2% |
|
TOTAL |
100% |
100% |
Operational Highlights for the 3-Months
Ended June 30, 2020
- Following the sale of its yard management line of business in
Q2 2020, the Company has continued to expand its partnership with
FourKites, the Chicago-based creator of the predictive supply chain
visibility category. Joint sales and marketing are driving
additional pipeline activity, expected to result in additional
revenue in subsequent quarters.
- TrackX announced an initial three-year agreement to provide its
supply chain and inventory management solutions to Shifflet Bros.
Enterprises (“Shifflet”), a freight hauling provider servicing the
electric utility industry.
- For a global leader in powersports, TrackX completed the Phase
1 implementation of its Global Asset Management for Enterprises
(GAME) solution for the tracking of recreational vehicles and has
entered into discussions regarding a Phase 2 expansion.
Management Commentary
“For the nine-months ended June 30, 2020 (YTD
2020), revenues were $3,137,537 compared to $5,235,516 for the
nine-months ended June 30, 2019 (YTD 2019), a decrease of
$2,097,979 (40%), largely due to the sales of the yard management
line of business to FourKites,” said CEO Tim Harvie. “Recurring
revenue also decreased by $107,083 to $1,893,744 YTD 2020 compared
to $2,000,827 YTD 2019, a 5% decrease. Hardware, implementation and
other services revenues for YTD 2020 decreased to $1,243,793 from
$2,812,611 YTD 2019, largely a result of the sale of the yard
management business. Additional decreases resulted from
COVID-19 and the difficulty it created in gaining onsite access to
customer locations and operating personnel to complete additional
implementations. While the pandemic created some delays in
progressing pipeline opportunities, it is expected that these
delays will result in revenue in future quarters, depending on the
extent and duration of the COVID-19 pandemic.”
Harvie further states, “Net income during YTD
2020 was $891,311 compared to a net loss of ($3,407,381) in YTD
2019. The main factor in achieving a net income for YTD 2020
from a net loss for YTD 2019 was the one-time gain on the sale of
the Yard Management line of business to FourKites of
$2,934,145. Additionally, the gross margin increased from 40%
YTD 2019 to 53% YTD 2020 as a result of a reduction in operating
expenses and the reduction in hardware, implementation and other
services revenue resulting from the sale of the yard business.”
Selected Financial Information
|
C$(000s) (except per share) |
Three-month Period Ended June 30 |
|
|
2020 |
2019 |
|
Revenue |
$1,030 |
$1,391 |
|
Gross Margin % |
69% |
39% |
|
Income (loss) for the period |
($529) |
($1,276) |
|
Income (loss) per share |
($0.01) |
($0.02) |
|
Adjusted EBITDA Income (Loss)* |
$241 |
($775) |
|
* Adjusted EBITDA is a non-IFRS (international financial reporting
standards) measure and excludes stock-based compensation |
Business Outlook
The sale of the yard management line of business
to FourKites has enabled TrackX to refine its focus on the delivery
of repeatable, higher margin SaaS-based solutions targeting supply
chain execution and returnable transport item management. With this
refined focus, The Company will:
- Gain better leverage from GAME’s enterprise workflow processing
and analytics capability
- Provide a lower cost of solution entry to customers
- Reduce the necessity and the upfront expense of hardware
infrastructure
- Realize an increase in gross margin as fewer software
customizations will be required
- Reduce the complexity of solution pricing, resulting in shorter
and more predictable sales cycles
- Increase solution expansion opportunities within existing
customers
- Create additional leverage within its partner ecosystem with
more repeatable solutions
Recent wins with companies like Shifflet Bros.
Enterprises validate TrackX’s ability to leverage its IoT-enabled
enterprise platform throughout the supply chain. In today’s world,
companies are facing increased pressure to gain improved visibility
and demonstrate corporate responsibility with respect to the source
of materials, working conditions and carbon emissions. The rise of
the digital supply chain will continue to create demand for
solutions that can enable supply chain sustainability. With a
proven, enterprise scalable, IOT hardware agnostic, supply chain
platform, TrackX expects an increase in pipeline activity and
opportunities to close more quickly as companies respond to COVID
and return to more normal operations.
The Company has continued to focus on its land
and expand strategy. While COVID has delayed several
implementations, TrackX has continued to see expansion of its
industry solutions beyond the initial implementation to additional
locations, new assets and additional business processes. As these
expansion opportunities are implemented, the Company anticipates
continued growth in recurring revenue, a core metric.
TrackX’s has evolved its partner program and is
placing much more focus on leveraging its existing partner
ecosystem. Joint sales and marketing collaboration with these
partners, and further expansion of the partner ecosystem with the
addition of new partners, are expected to fuel additional growth in
pipeline activity and higher margin recurring SaaS revenue.
With a greater supply chain focus, GAME will
continue to benefit from new feature enhancements, the majority of
which will come from the automation of new business processes and
analytics largely in response to customer feedback and demand.
Other GAME enhancements will be driven by the integration with new
technologies made available by a growing partner ecosystem.
The Company’s recent integration with blockchain creates further
differentiation as the Company responds to customers seeking to
achieve a greater degree of sustainability and accountability
throughout their supply chains.
About TrackX
TrackX Holdings, Inc., based in Denver,
Colorado, is an enterprise asset management company deploying
SaaS-based solutions leveraging multiple auto-ID and sensor
technologies for the comprehensive tracking and management of
physical assets. TrackX's Global Asset Management for Enterprises
(GAME) platform enables the Industrial Internet of Things (IIoT) by
providing unique item level tracking, workflow processing, event
management, alerting and powerful analytics to deliver solutions
across a growing number of industries. TrackX delivers significant
value to a growing list of Fortune 500 companies and for customers
in industries such as transportation, beverage, brewery, hi-tech,
hospitality, mining, agriculture, horticulture, manufacturing and
government.
For more information, please contact: Gene
McConnell, TrackX Holdings Inc. investor@trackx.com
303-325-7300
Neither TSX Venture Exchange nor its Regulations
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION: This news release includes certain “forward-looking
statements” under applicable Canadian securities legislation.
Forward looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable, are
subject to known and unknown risks, uncertainties, and other
factors which may cause the actual results and future events to
differ materially from those expressed or implied by such
forward-looking statements. All statements that address future
plans, activities, events or developments that the Company
believes, expects or anticipates will or may occur including the
Company’s anticipated pipeline and value of current and customer
deployments and future opportunities are the managements best
estimates and cannot be guaranteed or relied upon and is
forward-looking information. There can be no assurance that
such statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. The Company disclaims any
intention or obligation to update or revise any forward-looking
statements in this news release, whether as a result of new
information, future events or otherwise, except as required by
law.
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