• Revenue: $17 million, up 20% from the same period last year.
• EBITDA: Increased by $2.6 million from the previous period.
• Gross Margin: Increased slightly to 64%.
• Cash Position: $4.7 million, with $1.7 million received in early January due to delayed December revenue.
• Recurring Revenue: Up 20% to $2.4 million.
• Sales Backlog: Approximately $8 million.
• Sales Opportunity Pipeline: Larger than $100 million.
• Detect Segment Revenue: Significant improvement, driving overall revenue growth.
• Access Segment Revenue: Declined due to the previous year's large dormakaba order.
• Recurring Revenue Realized: $900,000 compared to $500,000 in the previous year.
• Cash Flow: Decline of $400,000 due to timing of shipments.
• Development Investment: $1 million for Aura platform development.

• Warning! GuruFocus has detected 3 Warning Signs with ASX:AVA.

Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ava Risk Group Ltd (ASX:AVA) reported a 20% increase in revenue for H1 FY '25, reaching $17 million, driven by strong performance in the Detect segment.
• EBITDA saw a significant turnaround, increasing by $2.6 million from the previous period, indicating improved operational efficiency.
• The company's gross margin improved slightly to 64%, reflecting strong profitability in its core business segments.
• Recurring revenue grew by 20% to $2.4 million, highlighting the success of the Aura Ai-X platform in generating consistent revenue streams.
• The sales opportunity pipeline remains robust, exceeding $100 million, with a solid sales backlog of approximately $8 million, indicating future growth potential.

Negative Points

• The company revised its FY '25 revenue forecast downward due to delays in closing deals within the adjacencies, impacting expected revenue growth.
• The Access segment experienced a decline compared to the previous period, partly due to the absence of large orders like those from dormakaba in the prior year.
• Cash flow was negatively impacted by the timing of shipments, resulting in a $400,000 decline in cash, although this was partially offset by early January collections.
• The adoption of new technology in the telecommunications adjacency has been slower than anticipated, delaying expected revenue contributions.
• The backlog is lower than it was at the end of June '24, primarily due to the delay of two large infrastructure projects, affecting short-term revenue visibility.

Q & A Highlights

Q: What drove the downward revision in FY '25 revenue forecast, and what supports the ambitious FY '26 revenue guidance of $52 million? A: The downward revision is primarily due to delays in closing adjacencies, which took longer than anticipated. However, the core business remains strong, and the ambitious FY '26 guidance is supported by a robust Detect business pipeline and backlog. The focus is on pushing both the commercial and technical teams to deliver solutions.

Q: Can you provide an update on the Telstra deal and whether we should expect revenue within this financial year or next? A: We are actively negotiating the extension of the Telstra contract, which has an automatic extension clause. We expect to see commercial sales into adjacencies, including Telstra, in the second half of this year, with the majority of revenue materializing in FY '26.

Q: Is there seasonality in the backlog, noting it is lower than at June 30, 2024? A: The backlog reflects the programmatic nature of the business. Two large infrastructure projects moved out of the period, impacting the backlog. However, these projects are expected to close soon, and the current backlog is solid, with efforts to increase it further.

Q: How has the market responded to the launch of LX LoRa Connect, and what challenges have prevented stronger adoption? A: LoRa has been well accepted, providing advantages to installers. The company is transitioning to higher-value sensors and expanding in the American and Asian markets. Efforts are focused on building up the offering in higher-end sensors and increasing market presence.

Q: What needs to be done for results to be reflected in the share price? A: The company is focused on achieving its objectives and communicating results to shareholders. Investor engagement is planned, and the management team is working to grow market cap and revenue size, which should attract more investors and potentially reflect in the share price.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.