SMALL CAP MOVERS: IQGeo Group declares first year of positive cashflow

IQGeo Group plc had something to celebrate this week: Its first cash flow-positive year, as announced in a Monday trading update.

The software supplier to the telecoms and networking sectors put in a good showing all around, with successful acquisitions and a loyal client base contributing to a 66 per cent increase in total revenues to £44million, with gross profit margins hitting 60 per cent.

IQGeo said it expects to report exit annual recurring revenues (ARR) of £21.1million, a near 50 per cent increase on a constant currency basis, while maintaining a net retention rate of around 132 per cent for its expanding customer base, which now includes top-tier telecoms and utility operators.

Cavendish analysts attributed IQGeo’s strong performance to the group’s ‘excellent execution of the land and expand strategy’ under chief executive Richard Petti and chief financial officer Haywood Chapman, Little wonder then, that shares ran up 20 per cent throughout the week.

Technology provider: Software company Checkit is planning a major equity raise to help expand in North America and boost trade with firms in the deskless worker sector

Technology: IQGeo Group is a software supplier to the telecoms and networking sectors 

If only the wider market was as cheery.

The AIM All-Share Index fell 1.4 per cent to 739.4p over the five-day trading period, no doubt influenced by a surprise upside to Wednesday’s inflation read.

Year-on-year inflation unexpectedly rose to 4 per cent in December 2023 from a nearly two-year low of 3.9 per cent in November, surpassing forecasts of 3.8 per cent.

It was the first increase in the inflation rate in ten months, with the biggest upward contribution coming from alcohol and tobacco.

Blue chips fared worse than the junior market though, with the FTSE 100 Index flailing 1.8 per cent to 7,488 by Friday.

Strategic Minerals plc was the week’s biggest AIM riser.

Shares jumped nearly 80 per cent after the biggest customer of its Cobre tailings operation in New Mexico returned with a new order for 30,000 tonnes of iron ore.

The (unnamed) customer halted supplies in 2023, knocking a big hole in SML’s deliveries for the year just ended, but this contract is 50 per cent bigger than anything it ordered previously and will give a boost to cash flows this year.

Furthermore, SML added it is in discussion with a new client about another similar-sized deal with details to follow later if an agreement is reached.

A rally on uranium prices (currently at 16-year highs) came as music to Thor Energy plc’s ears, as did its recent exploration programme in Colorado, where drilling at the Wedding Bell and Radium Mountain projects has yielded high-grade uranium results.

Thor Energy’s shares flew 53 per cent higher this week as a result.

EQTEC plc, an emerging player in the on-topic sustainable aviation fuel industry, was also among the top risers this week.

Investors were impressed by its new joint venture with CompactGTL, a specialist in the production and use of synthetic fuels from gases.

EQTEC’s venture with CompactGTL will focus on an integrated, waste-to-liquid fuel solution based on EQTEC syngas technology and CompactGTL’s gas-to-liquid conversion technology.

Speaking up cutting-edge technologies, e-Therapeutics plc said it has made ‘remarkable progress’ in developing RNAi drug targets using artificial intelligence (AI) – and doing so against a tough financial backdrop for the sector and the wider economy.

Looking ahead, e-Therapeutics is actively seeking potential partnerships and preparing for further clinical trials of its promising drug candidates. Shares were up 24 per cent in response to the promising developments.

Top risers in the heavy industries saw Harvest Minerals Ltd up 27 per cent, Mosman Oil & Gas Ltd up 24 per cent and Great Western Mining Corp plc up 21 per cent.

Among the biggest fallers was Big Technologies plc, which tumbled 37 per cent as it warned revenues from a prisoner tagging contact with a major customer in Colombia are coming to an end.

Versarien was sent 51 per cent lower, though this was a technical markdown following a £400,000 share placement.

Bango plc was also among the biggest fallers, although perhaps undeservedly so: After all, the subscription-based technology group posted a 62 per cent increase in revenues to $46.1million (£36.3million) as a host of new contracts started to contribute.

Bango signed nine new long-term contracts for its Digital Vending Machine (DVM), catapulting its telco annual recurring revenue (ARR) to $8.8million by December 2023, a 76 per cent leap from the previous year.

Yet underlying earnings came slightly below City consensus, and shares were punished 40 per cent as a result.

Nonetheless, Bango’s management expects sustained revenue growth in the year ahead, with chief executive Paul Larbey citing ‘significant opportunity for the Bango DVM (Digital Vending Machine) to become adopted as the universal standard by merchants to distribute their subscription products through indirect channels, such as telcos’.

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