Once considered a hindrance to children’s development, technology is now embraced by parents for child safety and supervision. Smartwatches and GPS trackers serve as middle-ground options for those cautious about giving their children smartphones. The child safety smart device sector, particularly those with integrated mobile networks, is a burgeoning segment which contributes to the projected 80% revenue growth for Spacetalk (ASX: SPA) in the upcoming September quarter.
The family safety tech company has projected a minimum of $3.3 million in revenue from ongoing operations in the September quarter, representing an 80% increase compared to the same period in the previous year. The main driver of this growth will be Spacetalk Mobile, a mobile plan utilising the Telstra Wholesale Mobile Network, offering voice, text, and data services.
Q1 FY24 Spacetalk Mobile revenue is forecasted to grow by 17% compared to Q4 FY23, underpinned by growth in subscribers that is expected to surpass 16,300 by the end of the quarter.
The move toward higher average revenue per user for Spacetalk Mobile caused a 22% drop in App revenue. However, the combined revenue from Spacetalk Mobile and App subscriptions has still grown by 50% compared to the previous year. Currently, annualised revenue from Spacetalk Mobile is expected to reach $2.8m.
Improved collaboration between retailers and a better product mix, achieved by selling the Adventurer 2 smartwatch range at higher prices, have led to a 397% Year-on-Year (YoY) growth in device revenue.
CEO & Managing Director Simon Crowther commented, “Q1 forecasted performance reflects the ongoing delivery of our turnaround strategy, which continues to deliver strong results from Q4 FY23. A primary driver of these strong results is the shift in revenue towards recurring Spacetalk Mobile.
“Whilst we finalise clearance of legacy Adventurer inventory, Adventurer 2 device sales performed well, constituting approximately 50% of device sales during the quarter. A disciplined approach to pricing will result in Q1 device margins performing favourably compared to prior corresponding period.”
Crowther also mentioned that the Adventurer clearance is expected to conclude in Q2 FY24 and the Company will continue to work with existing and new retail partners to manage inventory levels.
In addition to the Spacetalk Mobile and App divisions, the Device division is expecting a 397% revenue increase to $1.4m in Q1 FY24 compared to $0.3m pcp. The Schools division however, is expecting a 30% revenue decline from $0.6m pcp to $0.4m due to an uncharacteristically low SMS usage in July 2023 compared to last year.
Spacetalk is making progress in revamping its product lineup for the Schools division. The Company is about to release the Spacetalk Schools app, which will connect teachers and parents. If the strategic plan and a successful product launch result in higher revenue, Spacetalk will be well-positioned for accelerated revenue and cash growth in Q2 FY24.
A software services and smartwatch hardware product developer, Spacetalk focuses on creating wearable devices with all important smartphone features to enhance family safety and remote employees. Its Spacetalk App, offered as Software-as-a-Service (SaaS), is fully user-customisable to enable or disable specific features such as parental control and location tracking of family members who need monitoring, like children and seniors.
In the full year ending 30 June 2023, Spacetalk reported $15m in revenue, which is a 23% decrease from the $20m earned in the previous year. The Company’s Net Loss After Tax (NLAT) increased to $11.1m, a 75% increase compared to the $6.3m NLAT recorded in the previous year. The Company ended the year with $3m cash at bank as opposed to $2.6m cash recorded YoY.
Clara is a Business Reporter for The Sentiment.
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