Envirosuite has delivered strong FY22 results as it eyes adjusted profitability during FY23 with its three core products helping corporations deliver against ESG credentials.  

Environmental technology company Envirosuite (ASX: EVS) has announced solid FY22 results highlighting accelerating growth which should see the company become EBITDA (adjusted) profitable during FY23.

The company reported solid year on year revenue growth across all three product lines and geographies.

In FY22 EVS delivered annual recurring revenue (ARR) of $53m, up 14.1% with every part of the business contributing.

EVS ended FY22 particularly strongly with ARR growth in Q4 FY22 of 34.8% following a dramatic improvement in industry activity in aviation and an outstanding performance by EVS Omnis as it penetrated new industry verticals.

The EVS Water business added 10 new client sites during the period, and its continued growth can be expected to further improve gross margins due its software as a service (SaaS) revenue model.

Global leadership in aviation environmental management

The company saw ARR growth in its EVS Aviation business accelerate and the Americas region, now its largest, delivering one of its best results on record, up 31.3%.

EVS’ global leadership in aviation was highlighted in Q4 by the addition of three new airports and adoption of the carbon emissions technology by the Spanish Airports Authority.

Its powerful, easy to use SaaS platform for noise management, NoiseDesk, was also launched on the ANOMS X platform for over 30 customers.

EVS Omnis and Water continue to grow

The company described the rapid growth performance from EVS Omnis as “spectacular”, growing ARR 23.9% for the period and contributing 56% of the company’s new ARR for FY2022.

Omnis users can manage environmental risk surrounding air quality, dust, water quality, odour, noise, and vibration.

Meanwhile, EVS Water had been deployed across 13 sites at year end with the addition of marquee customers such as PUB Singapore.

EVS water is divided into SaaS products – its Plant Optimiser assists customers to materially reduce their risk and two highest costs in water treatment and delivery – electricity and chemicals.

The SeweX product is an advanced modelling tool that supports water utilities proactively manage and respond to safety, corrosion, and odour risks in their sewer networks.

Gross margin improvement

EVS’ gross margin continued to improve and increased 550bp to 47.9%, driven by improving cash flow from operating activities and high levels of recurring revenue.

Adjusted EBITDA of -$4.0m was an 11.8% improvement on FY21.

Strength of EVS tech shines in FY22

CEO Jason Cooper said FY22 was a year in which the underlying strength of the EVS business emerged.

EVS solutions deployed in 46 countries across 416 client sites at year end, up 11.5% vs pcp as cross selling success begins to positively impact, particularly in EVS Omnis and EVS Water.

“These results show not only the marketplace’s expanding appetite for our products but a pathway to profitability for our shareholders as operating cash flow improved, Gross Margins expanded and EBITDA (adjusted) tracks towards the positive during FY23,” he said.

Cooper said the company’s growth engine, EVS Omnis, recorded outstanding growth as the product line penetrated new verticals while its core EVS Aviation business benefited from a rebound in activity towards pre-Covid levels.

He said EVS Water signed marquee customers and was resourced for future growth and had begun to deliver ultra-high margin revenue.

“Cross-selling opportunities particularly between EVS Omnis and EVS Water began to emerge, and we expect this trend to accelerate in FY23,” Cooper said.

He said in conversations with customers, existing and potential, there is a noticeable uptick in the importance assigned to ESG solutions that can provide a tangible benefit to their business.

“EVS is well placed to meet demand, which is particularly evident in the Americas, now its largest geographical revenue segment, but this is a global phenomenon that seems unstoppable,” he said.

This article was developed in collaboration with Envirosuite, 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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