Child safety tech company Spacetalk Ltd (ASX: SPA) saw shares more than double in early trading on Thursday, and at the time of writing, has continued to surge higher. The rally followed news that the Company had appointed the former NearMap (ASX: NEA) CEO, Simon Crowther, who will take the helm as Managing Director and CEO to replace Mark Fortunatow after his termination last November.
Shares skyrocketed and closed the trading day 96% higher from 2.7 cents to 5.4 cents on what could be a sign of a brighter future ahead for the budding tech Company. As investors reacted with awe, the stock maintained momentum and gained a further 43.4% the following day, closing Friday’s trading at $0.076 – still far from the all-time highs of $4.84 in 2018, and its 12-month high of $0.159.
Mr Crowther has a remarkable track record of success. Over the course of his 5-year tenure as CEO at Nearmap, he achieved multiple quarters of double digit growth and built up intellectual property to protect their competitive advantages – while lifting Nearmap’s market capitalisation to new heights.
In October 2022, an unexpected move saw the company sever ties with Mark Fortunatow. Only a month later at their Annual General Meeting, displeased shareholders expressed strong dissatisfaction towards any board resolutions – with 38.76% even going so far as to reject a remuneration report and 43.4% were diametrically opposed against the re-election of ex-director Mike Rann.
This week, ASX filings revealed that Mr Fortunatow had unloaded a hefty portion of his stake as part of his departure – selling more than 2 million shares, his holdings are now equal to just over 15 million.
In January’s quarterly update, Spacetalk has achieved a remarkable turnaround, with their first positive quarterly cash flow banking $0.4m – a notable increase from Q1 FY2023’s outflow of -$2.9m. Noting the tech business’s cost cutting initiatives, they have managed to hold a total of $4.2m cash in bank – leading them on the path for more potential to hopefully become a dominant player in the wearables market.
To kick off on a new path with Mr Crowther in the driver’s seat, the business has begun embracing new strategies to ensure efficient working capital, such as shortening vendor terms and also phasing out the budget watch product line with a more profitable alternative due for Q4 2023 launch.
The recent introduction of Jumpy Sim in September 2022 adds further profitability, as it creates deferred revenue from users that pay their entire annual bill in advance when purchasing the product.
The wearables product has been off to an impressive start since its introduction having achieved $7.4m in annual recurring revenue (ARR) – over 43% growth from last quarter. These advancements will line the Company up for success long term, but only time will tell where the new leadership team steers and how much market share they can capture.
Trading Desk Assistant at Emerald Financial
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