Melbourne-based Damstra Technology (ASX: DTC) has been appointed as a tech partner on one of Victoria’s most extensive road projects, led by Spark Consortium.
Damstra is a global technology company that operates various software products that assists with security and communications for mining, construction, government and education industries.
Spark Consortium comprises eight different partnerships contracted to construct the North East Link for the Victorian Government for $15.8 billion. The project will close the missing link in Melbourne’s freeway network and provide three-lane twin tunnels that stretch up to 6.5km long.
After commencing in October 2021, the group started organising and drawing up plans for the massive project. In order to mobilise the approximately 15,000 workers on the job, Spark reached out to Damstra and appointed the Company as a Technology Partner for Workforce Management services. They will integrate their Enterprise Protection Platform (EPP) and digital software to allow the whole project to communicate and organise itself as construction commences.
Damstra has started working with the consortium to establish worker mobilisation requirements as the group prepares to begin early works in Q3 FY22. Over the next six years, revenue of $4.9m is expected to be delivered for the Company.
Damstra CEO, Christian Damstra, said, “We are very pleased to announce this significant long-term arrangement with the Spark Consortium, which will be a major new client for Damstra. We believe it reflects confidence in Damstra’s ability to provide critical services for workers and contractors for large-scale infrastructure projects.”
Along with the partnership, the Company also released its half-yearly results today. Earnings were $0.4 million, which improved upon the -$0.6 million posted in Q1, including operating cash outflow reduced $9.4 million in Q1 to $7.6 million. Revenue has seen growth of 16%, equating to $13.4 million – with guidance for FY22 expected to be in the range of $30-$34 million. The Company flouted that they remained EBITDA and operating cash flow positive.
The Company has products used in more than 20 countries, with Australia and New Zealand as its primary focus. This year, part of their focus is shifting towards North America, where they hope to grow into the mining and construction sector where they believe they have a strong use case for their EPP products.
Acquisitions have played a key role in developing their EPP. Recently, the Company completed an acquisition of TIKS, a Sydney-based Software as a Service (SaaS) business that operates in workforce management. Like Damstra, TIKS has involvement in mining, construction, aviation, and facilities management. TIKS was a natural fit for Damstra, with the acquisition bolstering its strategy to pursue new markets, establish new clients, and provide cross-selling opportunities.
The news today saw its share price climb by 12%. But that hardly compensates for the decline investors have felt over the last eighteen months. During that time, the stock has fallen 90% from a high of $2.39 to $0.22 at the time of writing. It is essential to see whether they can turn this around in the long term.