SaaS-based vendor marketplace Felix Group (ASX: FLX) reported a strong sales quarter, with five new contractors added and three contract expansions in Q3 FY24. As supply-chain reporting and compliance practices become mandatory, services like Felix’s – where all interactions are imprinted online – become crucial. 

The new contract wins and expansions added $407k of new ARR (annual recurring revenue), bringing Contractor ARR to $5.3m in Q3 FY24, an increase of 45% on PCP. Subsequent to the quarter end, it received receipts totalling $0.4m due in March, impacting net operating cash flow this quarter. This timing delay does not impact the Company’s target of achieving positive operating cash flow.

Felix’s Co-Founder and CEO, Mike Davis, commented, “Q3 FY24 has been another strong quarter for Felix, with the strong sales further strengthening our pathway towards positive operating cash flow in Q1 FY25 and beyond. 

“We are particularly pleased with the breadth of contract wins, demonstrating both the broad applicability of our platform and building momentum across our target sectors. 2024 is shaping up to be a milestone year for Felix as we continue to deliver on our value creation strategy for shareholders.”

Felix operates a cloud-based enterprise Software as a Service (SaaS) procurement management platform and vendor marketplace. It connects contractors and third-party vendors by digitising, automating, and streamlining a range of critical procurement-related business processes, reducing supply chain risk and improving transparency and governance. 

A key contract win in Q3 FY24 was the industrial division of Frasers Property, a diversified property developer specialising in residential, retail and commercial property. The initial use case includes Felix’s full suite of modules for the Industrial division. There are significant future revenue expansion opportunities with Frasers Property across other divisions in Australia and some international operations. 

Besides the Fraser contract, other wins include Regis Resources (ASX: RRL), a gold producer; Capricornia Energy Hub, a renewable energy project developer owned by Copenhagen Infrastructure Partners; Mid West Ports, a Western Australia-based port operator, and MLG OZ (ASX: MLG), an integrated mining services provider.

The three expansion deals won this quarter were across both long-term and more recent customers. The largest expansion was with an existing Tier 1 Contractor, generating a $43k ARR uplift to the existing contract. 

This highlights Felix’s ability to drive ARR from existing customers beyond initial contracts to generate high-margin, low-cost customer acquisition revenue. Contracted price increases and additional user licences drove the two other expansions during the quarter. 

Felix grew the number of vendors in the Vendor Marketplace to 94,792 in Q3 FY24, increasing 16% on pcp. This growth supports Felix’s strategic goal of monetising the marketplace in the medium term, following the development of key modules and features. 

Felix’s Vendor Management module is now integrated with Eftsure, an Australian software company specialising in payment fraud prevention. This integration will save platform users’ time when validating bank details as part of vendor compliance and fraud prevention practices.