TZL’s revenue upgrade is the result of its focus to drive its recurring revenue business model.

Smart locker and IoT devices company TZ Limited (ASX:TZL) has upgraded its outlook guidance for FY22 after a series of contract wins recently, on the back of a more positive economic outlook.

As a result of the new contract wins, TZ’s recurring revenue base for FY22 is now expected to come in at approximately $3 million, a 16 per cent increase from the previous guidance of $2.5 million.

This  follows recent wins in South Africa, as well as continuing growth in its US pipeline.

In addition, TZ is also on track to exceed US$9million in purchase orders, after surpassing US$8.6 million so far.  A significant share of this will be recognised and completed in FY22.

Back in Australia, the company also expects a bumper FY22, with two projects currently in the final stage of negotiations.

These projects will see TZ providing its SMArt Locks, electronics and software systems for over 6,000 day lockers – with expected revenue to exceed $2 million, along with $150k per annum for ongoing services over the next three years.

“The growth in our US and Australian sales pipelines provides a very positive outlook for the TZ business in FY2022,” says TZ CEO Scott Beeton.

 

Recurring revenue business

TZ has been bolstering its recurring revenue base over the past month, after securing significant contracts in both South Africa and the US.

The South African deal was done with DSV, one of the largest transport and logistics companies in  the world.

The three-year agreement will provide TZ with $1m in recurring revenue, and involves providing system monitoring, network management, software subscription and maintenance services for DSV’s network of 450 locker banks.

Its US pipeline has also grown strongly, where $2.2m of purchase orders were received from TZ’s list of blue chip customers that include Apple, Google, Microsoft, and Disney.

Microsoft, for example, signed a US$547k contract with TZ to upgrade its Locker Bank hardware in the past month.

Apart from blue chips, the company has also solidified its position with the university sector, and is the main provider for the US university mailroom and package locker market.

Coming out of Covid, TZ has become a globally significant player where its products are seen as the  best-in-class options to support the dynamic and flexibility demands of the changed workplace.

The company has also demonstrated the increasing preference that customers have for cloud-based fully managed solutions that offer a bundle of services across hosting, monitoring, maintenance and software subscription.

According to the latest data, the global market for smart locks is tipped to reach US$3.3 billion by 2025, while the market for parcel lockers alone is expected to grow from US$645m in 2020 to US$1.44 billion by 2027.

The TZL share price has risen from 4c to 14c in the past 12 months.

This article was developed in collaboration with TZ Limited, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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