Netlinkz achieves high-speed growth in China for its VSN services

Special Report: Customer revenue for virtual secure networks (VSN) company Netlinkz has soared 846 per cent year on year to $5.25m in the 2020 financial year, powered by rapid growth in China.

The strong revenue performance for Netlinkz (ASX:NET) stems from the fast-paced expansion of its business in China through its 80 per cent-owned subsidiary iLinkAll.

Netlinkz has reaffirmed its revenue guidance for the 2020 calendar year at $15.3m.

“We remain on track to meet our previously stated guidance of $15m of customer receipts by year-end, with the board being of the firm view that we are only just in the very early stages of growth,” executive chairman and CEO James Tsiolis said.

The company’s market-leading VSN technology, expanding global footprint, quality partners, and growing base of blue chip customers all mean Netlinkz is well positioned to capitalise on its strong market advantages, he added.

iLinkAll has secured a number of business agreements in China for Netlinkz’s VSN which has been deployed in AWS Cloud, Microsoft Azure Cloud Services and Huawei Cloud Services.

Key contract wins for Netlinkz in China market

The company’s China-branded Virtual Storage Portal (VSP) and Vendor Information Network (VIN) technology is available for iOS and Android mobile phone systems in China.

Netlinkz has won a string of contracts for key projects in China, including the Chengdu Water sanitation program sponsored by the World Bank, and is working with M-Soft Information Technology and Pinnacle Access Solutions as key partners for its sales in China.

The tech company’s iLinkAll and iSoftStone software solutions are becoming established in the Chinese market as Netlinkz’s go-to-market VSN offerings in China.

Virtual Secure Networks is Netlinkz own developed peer-to-peer technology that allows customers to manage their cloud computing capabilities in a secure way without connecting to a central server.

VSNs operated by Netlinkz are quick to connect, and enable companies’ staff to work with greater security, flexibility and speed.

The company has added Internet of Things (IOT) development laboratories in India and Singapore to develop the VSN market for ASEAN in partnership with US IT company Natsoft.

Indian market is next on the list for Netlinkz

Netlinkz has entered the Indian market after signing an agreement with technology software company Natsoft which has an existing customer base in the Asian country.

“India presents a significant opportunity for the VSN. Like China three years ago, there are several converging factors requiring secured software-based network solutions,” the company said in its results update.

These factors include India’s huge demand for cloud-based services, very high use of mobile phone devices as wireless networks are underdeveloped, and IT infrastructure not keeping up with the rapid adoption of digital technologies, Netlinkz said.

This is alongside its existing IOT lab in Beijing which has established a VSN for the large and sophisticated Chinese market.

An IOT lab is planned for Europe to develop Netlinkz VSNs for this important market. IOT labs have created global opportunities for the company to sell its products globally.

Netlinkz has also added to its customer base through its acquisition of a local reseller and system integrator SSI Pacific for $10.2m, adding to its SSI distribution channel for Australia and New Zealand.

SSI Pacific is a Melbourne-based reseller specialising in lawful intervention and data retention system design and development, implementation and maintenance support.

Company growth supported by capital raising, debt repayment

The fast-growing software company made a net loss of $22.76m for FY2020 that included one-off costs amounting to $12m, including for debt settlement and restructuring.

Netlinkz has refinanced its debt facilities with the proposed issue of convertible notes to raise $18m, subject to shareholder approval, and will deploy these funds to repay debt.

The company has a cash balance of $4.1m, with $2.6m of this held in low-risk financial products and is looking to raise further funds in September from an $18m capital raising.

Netlinkz also generated additional income of $1m in the 2020 financial year, including receiving a $900,000 refund from the Australian government’s research and development tax incentive scheme.