-
Notifications
You must be signed in to change notification settings - Fork 0
/
Copy pathk2f.html
39 lines (31 loc) · 4.36 KB
/
k2f.html
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
<link rel="icon" type="image/png" href="fav.png">
<!DOCTYPE html>
<html lang="en" dir="ltr">
<head>
<meta charset="utf-8">
<meta name="viewport" content="width=device-width, initial-scale:1.0">
<link rel="icon" type="image/png" href="fav.png">
<link rel="stylesheet" href="styles.css">
<script src="scripts.js"></script>
<script src="https://ajax.googleapis.com/ajax/libs/jquery/3.4.1/jquery.min.js"></script>
<title>k2f</title>
</head>
<body>
<div id="navigation">
<script>
$('#navigation').load("menu.html");
</script>
</div>
<div id="myContent" class="main_content">
<h3 class="head">K2FLY Ltd (K2F.AX)</h3>
<p><em>Mar 7, 2022</em></p>
<p>K2fly provides enterprise software solutions for mining industry. These solutions address problems that have appeared due to the rise of environment, social and governance (ESG) movement. K2fly is a tiny nanocap that is growing fast but is losing money.</p>
<p>K2fly listed on ASX in 2016 and started as a software solutions and consulting service provider to asset intensive companies. Market cap at the time was $10 million with 50 million shares on register. Today, after six years of operating, market cap is $25 million with 140 million shares on register. During these six years company has made four major acquisitions to expand their product offering. Every acquisition was done through issuing shares and company raised money a few times, which is why the share count almost tripled since listing. K2fly acquired Infoscope (inventory management solution) in 2017, RCubed (resource governance solution) in 2019, Sateva (block model management solution) in 2020 and Decipher (dams and tailings tracking solution) in 2021. The largest iron ore (3/4) and gold ore (5/10) companies of the world are K2fly’s customers which certainly validates the product.</p>
<p>There are two major ways to grow the revenues for the company – to find new customers and to get more money from the existing ones. CEO mentioned that there are about 3500 mining customers globally but K2fly only targets the top dogs – 50 to 100 largest players. None of the existing large customers are using the full suite of solutions offered by K2fly. For example, one company is only using inventory management block, another company is only using tailings tracker solution, and so on. Company’s management is sure they will eventually be able to convince existing customers to use more of K2fly’s products – the famous “land and expand” strategy.</p>
<p>Although company is tightly held – top 20 shareholders hold just above 60% of the shares – the insider ownership is not very impressive. Brian Miller, who was at the helm until 2021, holds less than 3% of the company. He bought around $50k worth of shares in an open market in 2021 at prices higher than current. Mark Forster, Sateva’s leader, owns approximately 4% because Sateva acquisition was done through shares. New CEO, who has been with the company for three years in a role of Chief Commercial Officer, Nic Pollock, does not hold a substantial position.</p>
<p>K2fly had $3.6 million in cash at the end of 2021 but they burned $2 million in the latest reported quarter. ARR is $4.8 million. K2fly is winning contracts but the operating costs blew up because of all the hiring needed to fulfill those contracts. If we look at the employees on LinkedIn, we see a lot of software engineers (which is normal) and business analysts (more than an average number I’d say). It is weird that staffing costs went up so much after the company had already won contracts. Either they are really planning ahead and invest in the features and enhancements of the products or the products they showcase to win the contracts are only presentation-ready and not full-deployment-ready.</p>
<p>I think at this point another capital raise is inevitable which is very unfortunate given the current share price. On a bright side – K2fly has a top-notch validated product, the average contract value is increasing, ESG requirements for large mining companies are likely here to stay and even more likely to stricten.</p>
<p>I believe in K2fly’s long-term success but the management needs to sort out their operational expenditures and bring the company to cash flow breakeven as soon as possible.</p>
</div>
</body>
</html>