Release Date: February 28, 2025

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

Positive Points

• Urbanise.com Ltd (ASX:UBN) reported a high customer retention rate of over 99% for its Strata and FM platforms.
• The company achieved a 6.3% increase in Annual Recurring Revenue (ARR) compared to the previous period, reaching 11.99 million.
• Urbanise.com Ltd (ASX:UBN) successfully identified 2.4 million in cash flow improvements, with 95% of this target achieved by December 31, 2023.
• The company has a strong global presence, operating in 17 countries, with core markets in APAC and the Middle East.
• Urbanise.com Ltd (ASX:UBN) reported an 8% reduction in operating expenses due to headcount savings and reduction in non-wage overheads.

Negative Points

• Total revenue was marginally lower compared to the previous period, primarily due to a 3.44% decrease in professional fees.
• There was a temporary reduction in license fees from an APAC customer, impacting revenue growth.
• The company is still working towards achieving cash flow break-even, expected in FY 2025.
• Urbanise.com Ltd (ASX:UBN) experienced some small customer losses and license fee reductions from FM customers.
• The contract discussions with a large APAC customer have been complex and time-consuming, affecting license fee recognition.

Q & A Highlights

• Warning! GuruFocus has detected 8 Warning Signs with ASX:UBN.

Q: Can you discuss the ongoing contract discussions with a large APAC customer and what is involved in that process? A: The fee reductions in our license fees over the last few quarters are related to this large APAC customer. We are negotiating a cost escalation mechanism to invoice at a higher rate and addressing out-of-scope functionality critical to the customer. We expect to conclude these discussions by the end of this quarter and will update the market accordingly. The complexity of the contract and technical reviews have contributed to the delay. Simon Lee, CEO

Q: Do you still expect to reach cash flow break-even in FY 2025? A: Yes, we do. The board reviews our cash flow forecasts regularly. We have a clear view of our cost base, customer churn, professional fees, and working capital management. We are confident in our strategy to achieve cash flow break-even by FY 2025, with ongoing reviews every four weeks. Simon Lee, CEO

Q: Could you talk about the Middle East debtor book? Revenue is up, but debtors are down. A: Revenue growth is driven by FM and Strata customers, both existing and new. While we have some large outstanding debts in the Middle East, the rest of the portfolio has improved. We are working closely with customers to clear these debts, and improvements in working capital are ongoing. Simon Lee, CEO

Q: Are you satisfied with the pace of contract wins in Strata and FM? A: We have made significant improvements in our sales strategy, including better market engagement and sales pipeline conversion. While progress is being made, we are working on reducing conversion times and improving sales focus in key markets. We are optimistic about the improvements in sales conversion lead times. Simon Lee, CEO

Q: What are the key components of your strategy to achieve cash flow break-even? A: Our strategy includes managing our cost base, focusing on customer retention, optimizing professional fees, and improving working capital management. We are also exploring opportunities for cash in advance and better debtor management. These efforts are reviewed regularly to ensure we stay on track for cash flow break-even in FY 2025. Simon Lee, CEO

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