Skyfii Potential Escalates

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IT business, Skyfii, has won and renewed some major contracts in recent weeks, which TMT Analytics believes reinforce the potential of the company.

-Substantial opportunities to on-sell further I/O services
-New contract with UK shopping centre chain
-First deal in a grocery retail vertical, in Italy
 

By Eva Brocklehurst

Skyfii ((SKF)), an Australian-based technology business, has scored a significant contract from a major global shopping centre group. This contract is estimated to be worth more than $750,000 and the Skyfii I/O SaaS platform will be rolled out across 22 centres, initially in Europe and the US.

The company has not disclosed financial details, other than the initial contract value being more than three times the purchase price of Wicom Wireless, which was around $247,000 and paid in scrip.

The new customer was a client of Wicom Wireless, recently acquired by Skyfii, and the Skyfii I/O platform has been on-sold to this customer. This includes I/O Connect, the data portal where data is collected in the venue with Wi-Fi capability, and I/O Insight, where venue performance is measured through data analytics based on visitors. Additionally, data consultancy services (DCS) will be provided, including project-based analytics around venue and visitor data.

The value of the initial service is worth a minimum of $250,000 year and TMT Analytics expects the annual deal can be substantially higher. DCS are one-of projects which can be worth anywhere between $10,000 and $250,000 per project.

The analysts also expect further opportunities to emerge through the rolling out of I/O Engage, the company's digital marketing services for retail venues that are powered by the actual visitor and Wi-Fi data generated at these venues.

Assuming DCS accounts for 10% of revenue in this deal, TMT Analytics estimates monthly recurring revenue per venue of around $815, or around $18,000 per month across the 22 malls.

The company, in the September quarter, indicated recurring revenues grew by 55% while non-recurring revenue grew by 11%. TMT analytics is encouraged by the growth trend which illustrates the scalability of the company's business model.

In the current quarter, the early indications are for 35% growth in recurring revenue. On this basis the analysts calculate recurring revenues would amount to $860,000. They do point out that non-recurring revenue in the first quarter was down -44% versus the prior quarter, which emphasises the bulky nature of consultancy services.

TMT Analytics reiterates a Buy rating and 14c price target.

But wait, there's more. In September the company achieved a contract with Lexicon Shopping Centre in the UK for the provision of the three I/O services: I/O Connect, I/O Insight and I/O Engage. This marks the first deal in the UK shopping centre vertical, and TMT analysts notes the company is already active in the UK education vertical through a deal with Durham University as well as in quick serve retail through a deal with a UK food chain.

Skyfii has also secured its first deal in the grocery retail vertical with one of Italy's largest supermarket chains and will provide I/O Connect and I/O Insight across 285 supermarkets in a five-year contract. The company's platform will replace an incumbent analytics solution.

Other contracts recently renewed include GPT ((GPT)), for three more years. GPT was one of the company's first customers in 2015 and now sources all three I/O services from Skyfii. A contract has been secured with Aventus Property ((AVN)), a specialised property fund manager with 22 large format retail centres in Australia. Four sites will initially be connected and there is potential to expand to some of the others.
 

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