Why the ikeGPS (ASX:IKE) share price is lifting today

The Ikegps Group Ltd (ASX: IKE) share price is up slightly today following the release of mixed half-year results for 2021. At the time of writing, the ikeGPS share price is trading at $1.13, up 0.89%.

Ike designs, markets and sells integrated GPS data capture devices, related software and consulting solutions. The group’s sales activities is divided into two segments: utility & communications, and new business. Key products include ikeGPS and Spike.

What’s driving the ikeGPS share price lower

For the period ending September 30, Ike reported revenue of $4.4 million, down 15% over the prior corresponding period (pcp). The company said despite the drop in revenue, this was a solid result during a Q1 period disrupted by COVID-19.

Ike noted that no customers or material pipeline contracts were lost, but rather network projects had been deferred.

Gross margin came to $2.9 million, around 67%, which was lower than the 72% attained over the first half of FY20. Fixed costs from Ike’s analysis segment were maintained, with the left-over capital used to improve operating efficiency going forward.

Operating expenses increased to $6.3 million compared to the $4.9 million spend on the comparable period. The additional splurge related to the company’s investment strategy focusing on growing the capability for its sales, solutions engineering, delivery and marketing teams. In-turn, this is expected to support its sales pipeline, customer onboarding and the overall customer experience for large infrastructure clients.

The group made an operating loss of $2.5 million for the first-half of the 2021 financial year. This compares to a $1.1 million loss in the pcp.

Ike recorded $21.9 million in cash and receivable at the end of September, with no debt.

Outlook for FY21

With focus now on the second-half of the year, Ike remains committed to delivering contracts on time. Furthermore, the company will also seek to push revenue opportunities through upselling its products to existing customers.

Ike revealed that significant tailwinds in the industry have the potential to flow through the company. It has predicted that more than $350 billion will be invested into fibre and 5G infrastructure during the next five years. This translates to more than 3,000 electric utilities needed for network build and maintenance.

About the IkeGPS share price

The IkeGPS share price has increased by almost 40% since the start of August. While the company has been positioning itself for future growth, its field data collection product and laser measurement tools are proving successful. Ike reached a 52-week high of $1.24 on Tuesday.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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