ikeGPS Group Limited (IKE) Earnings Call Transcript & Summary

And good afternoon. My name is Alex Knowles, and I'm the Board Chair of ikeGPS. On behalf of the Board, management and staff of IKE, thank you for attending our 2026 Annual Meeting. We welcome all our ASX and NZX shareholders on the virtual meeting platform provided by our share register, MUFG. Please note, you can vote and ask questions online. We encourage you to do so. I'll provide you with further instructions as we progress through the meeting. If you encounter any issues, please refer to the virtual annual meeting online portal guide or you can phone the help line at 0800-200-220. I would encourage you to send through your questions as soon as you can. This will allow us to answer these questions at the appropriate time. We are glad to host you, and I welcome you to the meeting on behalf of the IKE Board. We have an apology from Rod Snodgrass, who is currently traveling to Asia and unable to attend this meeting. Also present today are our representatives of our auditors, Grant Thornton. With the introduction out of the way, let us move to the formal part of the meeting notes. I'll make some opening remarks, and then our Managing Director and CEO, Glenn Milnes, will present an online performance highlights of the year. After that, the resolutions that are before you today will be put forward. Just for good order's sake, the company constitution prescribes a quorum requirement of 3 shareholders. I can confirm that this requirement has been met. Proxies have been appointed for the purposes of this meeting in respect of 91.5 million shares, representing over 47% of the total number of shares. I'd like to thank shareholders for their level of participation in today's meeting. My fellow directors and I intend to vote all discretionary proxies we have received in favor of resolutions 1 through 3 as set out in the notice of meeting, subject to the voting restrictions that apply to Resolution 3. Voting on all resolutions in today's meeting will be conducted by way of poll. Those participating online through the virtual meeting website will have the opportunity to ask questions. [Operator Instructions] I encourage shareholders who are attending online to send their questions through as soon as possible. The financial statements for the 12-month period through 31 March 2026, together with the auditor's report, are set out in the company's annual report. The annual report was made available on the ikeGPS website on the 26th of June 2026. I would just like to now make a few points before handing over to Glenn. Fundamentally, I'm delighted to report that the last financial year was the strongest year in IKE's history, setting the stage for more growth and strong predictability for the next couple of years. IKE has moved from proving a model to scaling one. It is an exciting time. To give that some context, our recurring subscription revenue is up. Positive underlying EBITDA on a run rate basis has been delivered in Q4. We have a strong balance sheet with no debt. We did what we said we were going to do. The team has delivered quality growth, a highly sticky customer base with financial strength that is funded to execute. Our strategy is clear. IKE value compounds because it is embedded in our electric utilities workflow. It is written into the engineering standards. Our strategy of building a new system of record for distribution infrastructure using our decade-built customer council and standards level that are locked in, has placed us in a very good position. It is very hard for others to replicate the position we are in. We are positioning AI at the performance strategic level. The Board sees AI as IKE's accelerant, underpinned by a proprietary data set of 20 million-plus human-engineered electrical assets, our own moat, so to speak, carefully overseen at every level as it needs to be. The capital you entrusted to us in 2025 is doing exactly what we said it would do, funding 3 new products coming to market soon, a disciplined allocation across the lanes, new product development, customer acquisition and possibly selective M&A in time only where it clears our internal thresholds of likely return, our self-funding road map is strong with a net cash position preserved. Our Board continues to perform well. Firstly, I'd like to thank Fred Lax, who is a Nonexecutive Director for over 12 years, providing outstanding guidance, Chair of Audit and Risk throughout, instrumental in shaping strategy and building the financial governance and risk foundations that supported the company's growth. His stewardship of audit and risk has been constant. We wish him all the very best in the future. I also note he remains a committed shareholder and is very interested in the continued growth of the company. I would also like to welcome Rod Snodgrass, who is the former Chief Strategy Officer and Chief Product Officer of Spark New Zealand and CEO of Spark Ventures. He is now Chair of the Audit and Risk Committee. He is a fellow chartered accountant. He brings strategy, product and technology scaling expertise, and we're excited by his imports into IKE's next phase. We will continue to seek out expertise and capability to ensure good governance, strong discipline that is refreshed as we scale. We would be remiss not to remember the most important part of our business. It is driven by our people, our culture. We have never been stronger. We had an NPS of 91, which is not a marking number, it's an output of what a great culture delivers. Our amazing team has delivered a 97% customer retention rate. I cannot thank the people, the team at IKE enough for their dedication and commitment that is growing this company daily. We are seeing with our education mission continuing that over 3,000 webinar attendees to our NESC sessions, over 1,000-plus engineers certified, all part of our long-term market development and commitment to the growth of this business. The outlook is amazing. We have entered '27 with our momentum strengthening. The macro market tailwinds behind us are getting stronger and stronger. So with all that said, let me hand over to Glenn to take you through this in a lot more detail and substance.

Thank you, Alex. I hope I'm coming through. Again, I appreciate everyone taking the time to catch up. What I would like to do is cover some new territory and new outlook data because we've had, obviously, FY '26 numbers in the market for a couple of quarters. So I'm going to reiterate a lot of what Alex has headlined, is that we're seeking to become part of the standard for how the distribution electricity networks in the United States are built. And there's more than 3,000 electric utilities that we're addressing here in the U.S. So we call ourselves the [ POS ] company, but we're about to go underground as well. So that's exciting. I think from an FY '26 scorecard perspective, we did everything we said we would in terms of growth and in terms of cash and balance sheet management and EBITDA, which has been very important. In October, we're going to get into a lot more detail around the revenue bridge from an ARR perspective, how we add -- we added 86 new customers last year. We've already added close to 40 new customers this year. That matters because those customers start small and they get bigger over time. We're increasing pricing, we're not reducing pricing. And we're cross-selling, and we're bringing new products to market. And we think that sets us up really well in terms of future growth. We've got lots of evidence of demand in the industry. And I know in this whole SaaSpocalypse world, people are worried about the stickiness of customers and whether they'll build their own products and et cetera, et cetera, use agents to use your software. I feel that we're well protected on that front. And then the two things I would like to focus on in terms of this discussion, just so that we're not repeating the same data that we've talked to previously, one is around new product innovation. These are new additional ARR products that are going to drive recurring revenue and open us up to new markets; and also the AI conversation because AI for us is an accelerant. We're sticking it inside of products. We're increasing pricing, and we're using it operationally to do things faster and better. And I think that's an important conversation. So I'm going to pulse through these slides fast and then leave hopefully as much time as we need for questions. Important notice here, read this document in conjunction with our audited financial statements, and we've had a quarterly update in FY '27 already. So that's important. So from a performance perspective, we delivered to our FY '26 guidance in terms of growth. We're reiterating here FY '27 subscription revenue growth targets at around 35%. It might be higher, it might be slightly less, just depending on revenue recognition. But we've got off to a really good start in terms of this financial year. And in fact, August was an incredibly good performance year. I won't go through the FY '26 numbers because they're in the market and you've already seen them. But we have continued to keep growing. And I think there's a bunch of things in terms of customer quality, in terms of retention that matter a lot, like we don't lose virtually anyone once we get them on the platform. We do lose small engineering companies that come and go. And we lost one customer last year, Charter Communications. We didn't lose them, but -- they're still a very active reference customer for us, but we help them deliver a project in California for the regulator there. Other than that, we keep everyone. And we released some AI-based products. PolePilot is the first one of them. We increased pricing 10%, and we lost no one on the way through because it delivers value. We're now operating in all 50 states across the United States, and we've only got 6% market share. So there's lots of growth opportunities in front of us. The thing I did want to focus on for this discussion today is last year, we were very grateful to have support to go and build some new products. It was a funny round that was oversubscribed by multiple, multiple times. And we're building new subscription products to bring to market, and we're on track in terms of all of these items. And I wanted to provide just a fast overview here. So what are we building? And why does it matter for IKE PoleForeman? We've grown that business 25x since we acquired it. It's close to $13 million of ARR today. And the next thing that's coming for IKE PoleForeman is we call it 2.0, which is not a very sexy title, but it means that we are now able to address the communications market. So these are all the fiber businesses. There's like 260 of them trying to deploy fiber across North America. And this product lets them solve for their planning process and their design process and submit to electric utilities in a way faster and more visual way than what they can do today. So we're excited to be bringing that to market. We've got another product that's coming. This is the one as a shareholder that we should all be getting the most excited about. Based on our customer council, this is 18 of the biggest electric utilities in North America. The leaders in these groups have asked us to build something that helps them manage power quality. So this is -- if you look at that image on the right-hand side, you can see up there, those green boxes. They're not green in real life, but they're transformers. So they take power from a very high voltage and deliver power into a home or a business. And this is a huge cost item and quality item in terms of the power network. It also deals with they call a DER, which is Distributed Energy Resourcing. So that's when solar and batteries and those sorts of things are coming back into the network. So we're moving into the electrical management side of the grid, which we're very excited about and backed by the biggest utilities in the world. And this is going into beta testing very soon through this next quarter. And then -- I just lost James, I just lost the ability to move the slides forward. Can you help me? James, can you go to Slide 9? Okay. So -- and also for IKE Office Pro, this is coming to market within the next 30 days, again, in terms of our investment into new products, moving to like an automated make-ready engineering software module. Why this matters is our customers use engineers in the back office to design the network. And this is a module that automates a lot of the standard space engineering in terms of network development. And keep in mind, the distribution grid in the U.S. is going to double capacity over the next 20 years. So this is a very large problem that we're seeking to solve. James, next slide, please. PolePilot, we've talked about before. Next slide, James. We've developed this detection capability to be able to recognize power infrastructure, next slide, and detect who's attached and where and what the infrastructure is. Again, this gives us an ability to work with some of the bulk data capture providers such as Google Street View and Tesla and other folks that are scanning things all the time, but are not focused on power infrastructure. Next slide. This is repetition from here, but we do see AI as an accelerant for our business, not as a disruptor or a threat. And I think this does really matter in terms of how shareholders should view our business. I think we have very proprietary data, and that is what these large language models train on. We've got 20 million human-engineered power assets as a data set to train on. And that's what we've been leveraging. And we've also got AI inside of our workflows and operations. But that's the part that the whole world has got access to that side of things. I think the key capability is having like workflow integration inside of deep industries and places where customers really need your direct delivery and support and customer experience, et cetera. So I feel that we're in a strong spot. We respect some of the threats, but we feel we're in a good spot from that perspective. Next slide. Yes, the rest of the slide information has been with you from last month. And so I won't spend too much time talking about this. We're only 5%, 6% penetrated in terms of our position in the market. Next slide. And we're -- I think importantly, we're positioning ourselves inside of industry workflows. We're not an app that is easily replaced. It's -- we're tied into these really big industry problems around grid hardening, is the biggest one in terms of dealing with the grid in terms of storms and fires and floods and hurricanes, et cetera, and the digital twin requirement, joints, et cetera. So we're focusing on these really specific applications. Next slide. And the market just keeps getting larger and larger from our perspective. We're about to move into underground design as well as overground -- and overground distribution. So yes, we're -- we feel that the market is going to get larger and larger. And at the moment, we're focused on North America versus other international markets. And James, I'll probably pause there because the balance of the slides are items that this group has had a chance to review previously and open things up to questions.

Floor is now open for any questions of Glenn's presentation. James, are there any questions received?

There are no questions received about the CEO presentation at this time.

All right. Thank you for that. We now go on to the formal part of the meeting, matters requiring resolution, which are outlined in the notice of meeting. You may ask questions on each matter being put to the shareholders through the virtual meeting website. Please note, you will only be able to ask a question after you've registered as a shareholder. Now moving to the resolutions. I propose to call a poll on each of these resolutions. As mentioned, shareholders will be able to cast their vote using the electronic voting card received when online registration is validated. To vote, you will need to click Get Voting Card within the online meeting platform. You'll be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking for, against or abstain on the voting card. Once you've made your selection, please click Submit Vote on the bottom of the card to lodge your vote. Please revert to the virtual meeting online portal guide or use the help line specified if you require assistance. Voting will remain open until 5 minutes after the conclusion of the meeting. The results of the vote on each resolution will be announced on NZX and ASX after the meeting. Each resolution set out in the Notice of Meeting is to be considered as an ordinary resolution and as such, must be approved by a simple majority of the votes cast by shareholders entitled to vote and voting on the resolution. Resolution 1 is auditor's remuneration. Firstly, we turn to the matters relating to the company's auditors. The motion concerns the fixing of the auditor's remuneration and the Board seeks shareholder approval that the directors may be authorized to fix the remuneration. James, are there any questions for the Board concerning this motion?

There are no questions on this matter from shareholders.

Thank you. Please now select either for, against or abstain for Resolution 1 on the voting card. I will pause for a few moments before proceeding further. Resolution 2 concerns my own reelection as a director of the company. It would not be appropriate for me to preside over this item, according to my position on the Board. I therefore propose that Glenn takes over the meeting at this point to move Resolution 2 to vote.

Thanks, Alex. This resolution is to approve Alex to be reappointed or -- reappointed as a Director of the Board. Yes, he's had such considerable input into the business. The Board unanimously approves his reelection.

There's a point there about the proxy position.

Yes. Yes, that's correct. In terms of the proxy position that have been received, there are 72 million votes for and 5,000 votes withheld. And there are 80 million discretionary votes held by the Chair, which have been voted for the Board for this resolution. So I just ask attendees now to either vote for, against or abstain for this resolution.

Resolution 3 is the election of Rod Snodgrass. In accordance with the NZX Listing Rule 2.7.1, a director appointed by the Board must hold office without reelection past the Annual General Meeting following directors' appointment. Accordingly, Rod is required to retire, having been appointed by the Board on November 2025. Being eligible, Rod has offered himself for reelection. The Board considers that Rod will be an independent director for the purposes of the NZX listing rules if elected to the Board. The Board unanimously support the election of Rod. James, are there any questions on this resolution?

We have one question from Mr. [ Stephen Mayne ]. So it's unfortunate that Rod could not attend the meeting today. Could you please comment on the recruitment process that led to his original appointment to the Board?

Glenn, would you like to run with that?

Yes. Look, we've really vigorously been dealing with succession planning. Rod is an executive leader at Telecom New Zealand, also at Spark, and he was the leader at Spark Ventures and has subsequently been involved in other directorships at electric utilities. We're very lucky to have a very growth mindset of person like Rod involved. He's picking up the Chair of the Audit and Risk Committee for IKE. I'd echo Alex's comments. We were very lucky to have Fred Lax on the Board of IKE. But since he stepped down, Rod fills a really valuable gap, not just with governance, but also with a growth company mindset. So we've been very deliberate. His appointment, Ros Buick came on 1.5 years ago. Rod's ran all of Oracle Utilities product business. So we're lucky to have a very talented Board and obviously, very pleased to have Rod join the team.

Any other further questions, James?

There are no further questions.