ASX virtual reality play Vection flags new client wins, shares tick higher
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ASX virtual reality stock Vection Technologies (ASX:VR1) says momentum for its diversified client strategy in FY22 is building as sales increase.
In a trading update this morning, the company said it’s added new deals since July 1 which will contribute another $2.2m total contract value (TCV) this financial year.
TCV in FY22 for sales to VR1’s enterprise customers has now been upgraded to $4m, from $1.8m in July.
Investors gave a nod of approval, sending VR1 shares ~8% higher in morning trade to 9.7c.
The stock has been recalibrating since it mooned to around 20c last October with a furious 10x rally. This morning’s price action brings its FY22 gains to around 50% from recent lows near 6c.
With operations in a number of sites globally and an investment from the Italian government, Vection is looking to build commercial solutions that leverage the use of VR and AR (augmented reality).
The ASX virtual reality stock is still somewhat unique among small caps, with few other listed competitors currently building out dedicated VR/AR strategies.
In early July, the company flagged the recent integration of its Mindesk platform with Microsoft’s Autodesk product suite.
As an example of how it works, Microsoft clients can use Mindesk to deploy the computing giant’s Hololens 2 platform via Mindesk to generate a 3D graphic of the project under construction.
That deal formed part of VR1’s strategy to target clients in the Architecture, Engineering and Construction (AEC) sector.
In light of this morning’s update, the company said it’s targeting more growth across its product suite in XR (extended reality) — an umbrella term used to cover developments in VR, AR and other immersive technologies.
The company said its $2.2m TCV uplift was driven by the rollout of commercial solutions for law enforcement (to support “investigative activities for civil and military dual use”), as well as integrated hardware/software platforms related to COVID-19 safety measures.
While no one customer generated a material new TCV revenue amount, the company said that taken in aggregate, its new contract additions have already resulted in a significant FY22 uplift.
VR1 said that by quarter, cash flows may vary depending on the timing and nature of the contract work carried out.
In its 4C filing for the June quarter, VR flagged a 215% increase in cash receipts to $1.021m. The company booked net operating cash outflows of $1.317m, largely driven by “product manufacturing and operating costs” of over $1m. VR1 finished the June quarter with $6.3m in the bank.