Smart locker and IoT devices company TZ Limited (ASX:TZL) has seen its US pipeline being converted to significant purchase orders over the past month.

Over US$2.2 million in purchase orders were received from TZ’s exisiting US customers since April 2021, including one from Microsoft worth US$547k.

The giant tech company made the purchase order to complete a major hardware upgrade on its existing Locker Bank network.

Other blue chip clients have also committed to TZ Smart Lock and Smart software platforms, having placed orders to upgrade or replace their access control and locker bank solutions with new TZ systems during the month.

Strong growth in US pipeline

Apart from the blue chips, the university sector has also continued to perform strongly over the past month.

A leading university has purchased TZ’s mailroom and locker bank solution valued at US$572k, after cancelling an order from a competing locker provider.

This has solidified TZ’s leading position in the US university mailroom and package locker market, where its technology is increasingly recognised as the best-in-class software platform and electronic hardware solutions.

The strong conversion seen this month also highlighted TZ’s successful strategy execution over the last few years, which has resulted in the growth of its subscription-based recurring revenues.

“The new purchase orders into the business clearly shows that as our existing base of blue-chip US customers emerge from the COVID-19 pandemic, there is a heightened demand for TZ’s access control, smart lock and self-serve locker bank solutions,” said TZ CEO, Scott Beeton.

“Encouragingly, the business is expanding its installed client base across all market sectors we operate in,” he added.

TZ has substantially grown its US pipeline over the past three years – from US$9m in FY19, to over US$26m in FY21.

During this period, the company has increased its business with exisiting US customers, while displacing competitors.

It has also seen a shift in its revenue model towards recurring SaaS revenue, from fixed capital sales.

This growth is a direct result of a management restructure the company underwent in 2019, when it brought in fresh leadership in the shape of current chairman Peter Graham and CEO Beeton.

In their first year, the new leadership team reduced operating expenses by $2.5m, which led to the company’s first profit in 25 years.

Balance sheet restructuring

In April, TZL announced a rights issue that followed a heavily oversubscribed placement.

The company is seeking to raise $7.06 million in the rights issue, as it looks to partially pay down debts to major shareholder First Samuel.

The balance sheet restructuring comes as management strives to reposition the company, amid a period of heightened interest in the business which saw its pipeline doubling in 2020.

The rights issue will be supported by First Samuel, who will take up their full entitlement. Post the rights issue, the remaining debt to First Samuel (approximately $2 million) will be converted to equity.

Huge potential market

Founded in 1996, TZ has turned 25 this year, and is in the best shape of its life.

In the past two years, the company has become a globally significant player in the access control market, manufacturing digitally-enabled locks and locker banks for postal, corporate, and industrial purposes.

Its suite of leading edge security technologies allow clients around the world 24/7 access to parcel lockers, offices, data centres and more without the need for keys.

Its data management platform provides real-time information around who is using integrated locks, and when.

Apple, Google, Amazon, Microsoft, and Disney are just some of the big names that TZ calls as its clients.

The pandemic in 2020 has done wonders for TZL’s business, as contactless sales methods created huge demands for its Smart Locker solutions for personal storage.

Research has shown that shopping delivery methods are about to undergo a seismic change post the pandemic, with the drop-off and pick-up method seen as the most likely to gain significant traction.

TZL is in pole position to address this issue through its own range of digitally-enabled smart locks, allowing customers to collect their items at any time of the day or night without needing to queue up, or deal with staff in a face-to-face environment.

And the potential is huge.

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 12c in the past 12 months.