Workplace compliance—monitoring safety, health and legal aspects of employment—can be demanding and expensive. Unless you’re an AI robot. Then it’s all seamless, mind-numbing work.

In a notable shift from its roots as a credential checking business, Australian RegTech company Kinatico Limited (ASX: KYP) has been pivoting to become an all-encompassing provider of simplified daily compliance management through its Software-as-a-Service (SaaS) offerings. It replaced many of its employees with artificial intelligence last year, and its new bet is proving profitable.

As a testament to this strategic transformation, the Company anticipates reporting a profit of $0.4 million for the first half of FY24. This marks a significant increase compared to the reported full-year profit of $0.2 million in FY23. The half-year revenue for FY24 reached $14.3 million, indicating a commendable 6% uptick from the prior corresponding period (pcp).

Another highlight is the surge in SaaS revenue, which soared to $4.4 million during the first half of the year, representing a remarkable 159% increase from $1.7 million in the pcp. This substantial growth in SaaS revenue now accounts for 31% of Kinatico’s total revenue, a noteworthy leap from the 12% reported in the pcp.

Kinatico CEO Michael Ivanchenko said, “I am delighted to confirm that the vision of making Kinatico a provider of simplified daily compliance, and the transformation of the business towards that clear goal is delivering results. Notwithstanding the challenging macro-economic environment in which we find ourselves, Kinatico has demonstrated an ability to grow revenue and increase our booked SaaS revenue at an impressive rate independent of seasonal or employment market impacts.”

Looking ahead, Ivanchenko pointed at the upcoming half-year report, scheduled for release before the end of February, where a more detailed review of the year’s performance will be provided.

Kinatico’s core SaaS RegTech solution, Cited, delivers real-time workforce compliance management by integrating certifications and compliance data with business policies and legislative requirements. This enables scalable compliance monitoring, spanning pre-employment to real-time obligations related to geo-location, roles, and tasks applicable across various industries.

During Q2 FY24, Kinatico achieved $2.4 million in SaaS revenue, reflecting a substantial 145% increase from the pcp. SaaS revenue for the quarter constituted 33% of Kinatico’s total Q2 revenue of $7.1 million, marking a 6% increase from the pcp, despite the ongoing challenging macroeconomic conditions.

After normalising for the share buy-back extending into August 2023 and one-off organisational alignment costs, the closing cash balance as of December 31, 2023, remained consistent with the cash position at the start of the financial year. The closing cash balance for the half, including $0.3 million on term deposit to secure a lease, stood at an impressive $9.4 million.

In a survey the Company conducted, Kinatico revealed that 84% of customers found its platform “easy to use” and in the first quarter, there was a 10% increase in SaaS customers compared to Q4 FY23. 

In FY24, it expects this number to grow further as the platform becomes more advanced and better-equipped for industries beyond healthcare, energy and industrials where it is already present.