A brief glance at software company 8common’s (ASX: 8CO) fourth quarter results will confirm that the Company has done a good deal of good, injecting some much-needed momentum into FY24.
In Q4 FY23, the Company achieved a record total revenue of $2.9 million, marking an 87% increase on Q4 FY22. This growth can be attributed to the ongoing implementation efforts related to the Federal GovERP program. Overall, its FY23 revenue amounted to $7.5 million, a boost of 68% on FY22.
GovERP (Enterprise Resource Planning) is a platform facilitated by the Aussie government to manage various important tasks—“back-office functions”—like finances, hiring people, and buying services. It uses modern technology, like SAP S4/HANA (data storage tools), as its foundation. Some additional helpful features are also available from different technology providers, like 8common (specialising in financial transaction processing and expense management), chosen through an open process. 8common joined GovERP’s team in July 2021, and since then, it has accumulated over $6 million in contracts.
Sweetening the deal, its total contract value in FY23 of $12.4 million is more than the combination of contracts it secured across FY20, FY21 and FY22.
8common CEO, Andrew Bond said “FY2023 and in particular the recent quarter has been momentous for 8common as we posted record operating results across the board. More importantly, we recorded positive operating and group net cash-flow as the business works towards profitability. Whilst it remains premature to be able to give forecasts, the $12.4 million in contracts closed during FY23 and robust pipeline places the Company in a very encouraging position.”
The Company also experienced positive cash receipts from operations, amounting to $3 million, indicating a 51.9% increase on Q4 FY22. The significant revenues earned from big projects this quarter are expected to help increase Software-as-a-Service (SaaS) revenues, improve profit margins, and boost cash flow when users start using the services.
Moreover, 8common achieved quarterly transaction and recurring SaaS revenue of $935k, indicating a 12% growth. Its average revenue per user (ARPU) increased by 21%, reaching $24.29. Notably, the Federal Government ARPU for the period was $56.41—a sign of more good things to come, considering the growing number of federal government users to be onboarded under the GovERP program.
In Q4 alone, 8common signed implementation agreements with the Department of Veterans’ Affairs, The Department of Finance, IP Australia and Museums of History NSW for a combined Total Contract Value (TCV) of $2.3 million.
Thanks to the positive operating cash flow, 8common’s cash balance rose by $156k, reaching $1.8 million by the end of June 2023, compared to $1.7 million at the end of March 2023.
Its sunny financials have set the stage for a profitable FY24. In FY24, at the outset, 8common will keep expanding its presence amongst the government, not for profit and large enterprises. Secondly, as more companies progress through the on-boarding phase of Expense8 (the Company’s travel expense management program) and into Live Users under the GovERP program, it anticipates user numbers to continue to grow in coming quarters. Finally, its partner program is expected to boost growth, with new prospects entering the pipeline through its partners, both Australian and International, government-related and not.
With a strong cash balance and a pipeline of new prospects, 8common finds itself in a promising position with no need to raise further capital—at least for now.
Alinda is a Business Reporter for The Sentiment
Latest posts by Alinda Gupta (see all)
- Ovanti’s iSentric signs contracts worth $14.4m with Malaysian commercial bank - June 27, 2024
- Baby Bunting fights back from retail downturn with 5-year strategy, includes Gen-Z focus and self-funded growth - June 27, 2024
- CLEO meets with US FDA to develop strategy for ovarian cancer test launch - June 26, 2024
Leave a Comment
You must be logged in to post a comment.