Netlinkz lays the platform for its next phase of growth with a strong quarter as cash receipts rip higher
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NET’s strong revenue momentum will be further enhanced by the release of its VSN 2.2 platform in December, as it scales up its enterprise client service offering.
Advanced network security software company Netlinkz (ASX:NET) is building momentum into the end of the year following a strong September quarter.
The company, which, achieved a number of positive operating metrics despite the ongoing impacts of the pandemic in its core global markets, including China.
With its market-leading Virtual Secure Network solution, Netlinkz is building out a global client base for its VSN platform which provides enhanced data-sharing capability across ‘edge’ devices such as mobile phones and tablets
NET’s trading highlights for the quarter included a big jump in cash receipts, which rose to $4.8m – representing a huge turnaround of $3.1m from the previous quarter.
In line with that momentum, the company also booked a material jump in accounts receivable to $2m, after the timing of an additional $500,000 of cash receipts was pushed forward to the December quarter.
While cash inflows jumped, Netlinkz also focused on cost-cutting initiatives which saw operating expenses fall to around $2.5m – well below the FY21 quarterly average of ~$4m.
The Netlinkz executive team also flagged additional efficiency measures which will see a further $150-$250,000 of costs removed from operational expenditure in the quarters ahead.
The result is a more streamlined business model, where Netlinkz can reap the gains from its superior technology advantage.
In addition, the company flagged a clear positive trend in its client base due to the proven benefits of the VSN 2.0 platform and its Network-as-a-Service (NaaS) product offering.
With an increasing suite of enterprise clients, the company is moving away from lower-margin hardware sales and generating high-margin recurring revenue streams.
Of its enterprise client base in the September quarter, more than 80% of sales were generated through recurring revenue services, compared to just 34% at the same time last year.
“The greater effort in shifting to the NaaS business model for existing and new customers saw a continuing and accelerating increase in operating margin,” Netlinkz said, which is expected to flow through to an increase in EBITDA.
And looking ahead, the company will look to consolidate that market advantage with the release of VSN Version 2.2, scheduled for completion in December.
The latest version will have improved connectivity to global cloud-based platforms such as Microsoft Azure, AWS and Google Cloud – in response to client demand.
“The release of VSN 2.2 will enable easy global connectivity to Cloud providers and will facilitate accelerating growth in Enterprise client numbers,” Netlinkz said.
This article was developed in collaboration with Netlinkz, 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.