Another NZ tech, IkeGPS, misses forecast

IkeGPS joins a procession of tech companies in New Zealand that have missed forecasts, but says momentum has built since year's end.

Investing in startup technology stocks is a risky business, especially where early stage companies are concerned.

That became evident once again in New Zealand on Friday, when mobile measurement and engineering software company IkeGPS reported that it made NZ$4 million in sales for the year ended March 31, 2015, NZ$2.4 million below IPO forecast.

That NZ$4 million was a 114 percent increase on the previous financial year's revenue, but it adds to an emerging pattern of forecast misses on the New Zealand bourse.

IkeGPS has joined Gentrack, Serko, Wynyard Group, SLI Systems and others that have similarly disappointed.

In many, but not all, of these cases, the tech stocks concerned are very early stage and arguably would not have come to market in other geographies. But in New Zealand, where the term "rock-star economy" was until recently being bandied about, the stock market has boomed and the hunger for new listings was high.

IkeGPS made an overall loss of NZ$5.1 million, lower than the NZ$5.3 million loss forecast, because planned scaling of the business was around 90 days behind plan.

"This slight delay in building out resources reduced costs in the period and impacted our forecast increase in revenues."

IkeGPS said sales of its GE MapSight pole inspection solution to the electric utilities market (216 units sold during the year) and of a new smartphone measurement app, Spike (1,191 units sold) drove its growth during the period.

"Contract services relating to Spike were delivered to two major industry partners during FY15, with this contract revenue being achieved earlier than expected. An additional NZ$0.5 million in contract services was invoiced and receipted in FY15, but corresponding revenue recognition was deferred into the 2016 financial year (FY16). "

Forecasts in the offer document were missed, because anticipated sales of the new smartphone solution also fell outside of the year end.

"We are pleased to have received those expected orders in April 2015 from our original equipment manufacturer (OEM) partner, and the board believes that this will result in outperformance in this channel in FY16," the company told investors.

IkeGPS said it was "very pleased" with the momentum in the Spike business now.

"Spike is now experiencing strong online sales growth, as well as the emergence of enterprise sales opportunities that will be pursued through FY16. Spike unit sales are currently forecast to exceed the IPO offer document forecast for FY16 of 2,712 units and revenue of NZ$2.9 million.

"In addition, in November 2014 we announced the signing of a branding and distribution deal with Stanley Black & Decker that is expected to underpin high-volume distribution in FY16. "

Two new offices have been established in the US -- sales and marketing in Broomfield, Colorado, and engineering in Seattle, Washington. Sales presences have been opened in Asia and Europe, while the company's Wellington engineering and manufacturing facility has also been expanded.

Full-time equivalent staff numbers increased around two and a half times to 60 by year's end.

New cloud bases subscription products are expected extend revenue opportunities.

"We expect that these products will be introduced in the first half of FY16 under the IkeGPS brand as well as alongside a major global partner," the company said.