Connected IO closes out tax year with highest quarterly cash receipts in its history

Connected IO ASX CIO tax year highest quarterly cash receipts 2019
Connected IO generated cash receipts for the June quarter of $1,020,000.

Connected IO (ASX: CIO) has furnished its shareholders with positive news to close out the tax year after reporting the highest quarterly cash receipts in its relatively short history.

Founded in 2014 as an engineering contractor to Verizon Wireless, Connected IO designs and manufactures rugged, industrial routers and modems for machine-to-machine (M2M) and Internet of Things (IoT) connectivity.

Its modems use LTE Advanced technologies to allow devices to connect using popular carrier networks. Meanwhile, its routers provide the same WAN connectivity but add Ethernet, WiFi and serial LAN interfaces to provide cost-efficient connectivity solutions for the 80% of the market that use these protocols.

The company announced customer-generated cash receipts of $1.02 million in the second quarter of 2019 – demonstrating significant growth compared to previous quarters.

More specifically, Connected IO said it had generated a 63% increase in cash receipts which it attributed to its ability to “scale up manufacturing and delivery of its products to meet customer demand”.

The improvement in company performance over the past quarter, but also the longer-dated improvement over the past year, has enabled Connected IO to “recover sustainably from the restructuring that took place in July and August last year”.

In an update to the market, Connected IO reported that it had achieved annualised cash receipts totalling $2.67 million which represents around 49% of its current market capitalisation – currently hovering around the $5.5 million mark.

Looking forward, the device manufacturer said it remains focused on maintaining its “greater than 40% gross profit margin” as its activity continues to grow in the US, currently the largest single territory within the multi-trillion-dollar IoT market.

Harnessing the IoT market bloom

According to market leader Cisco Systems, there will be more than 50 billion connected devices by 2020 which is putting greater emphasis on their ability to communicate in real-time in order to deliver the vast array of services being touted by the IoT revolution.

Connected IO’s operations are conducted from Dallas, Texas where it is focusing on what it calls M2M connectivity, providing hardware and software solutions to some of the world’s largest companies. The company produces routers, modems and communication solutions for security, surveillance, and energy management fields.

As a prime example, Connected IO claims its CR48NA operator agnostic multi-SIM router represents a “giant leap” in its strategy to transition from hardware manufacturing to providing turn-key subscription-based services comprising both hardware and software.

Furthermore, the Australian device manufacturer offers communication solutions which provide real-time streaming capability for surveillance cameras and digital video recorders in commercial vehicles such as buses and trucks.

The functionality made possible by its range of devices means that customers can report data via an always-on SIM card data connection over WiFi-capable batteries. Also, IoT devices can provide vehicle collision detection, cargo and temperature sensors, as well as artificial intelligence devices.

The company’s product portfolio and open platform lend themselves to retrofitting existing vehicles with state-of-the-art capabilities and capturing a significant slice of the hybrid and fully electric vehicles sectors – markets that are experiencing significant growth globally.

The global in-vehicle surveillance sector is expected to reach $42.89 billion by 2023, with a 26% compound annual growth rate.

As a taster of what Connected IO’s devices could help deliver, the company says its in-vehicle surveillance technology can be an effective solution in reducing crime rates and ensuring the security of digital business transactions in crowded areas such as buses, trains and other public spaces.

Meanwhile, its software solutions also include a customised cloud management interface and a variety of support services.

Following this morning’s market announcement into improved company performance, Connected IO’s shares rose over 66% to trade at $0.005 by mid-morning.

George is an award-winning market analyst who has authored articles and editorial opinion pieces for multiple publications around the world. He has written about a wide variety of topics including financial markets, stocks, trading, politics and economics.