Connected IO signs revenue-boosting deal with cyber security company

Connected IO ASX CIO cyber security routers

Wireless technology company Connected IO (ASX: CIO) has announced it will collaborate with a US-based cyber-security company to help it develop a production line of co-branded Category 1 routers over the next 3 years.

The signed Letter of Intent (LOI) specifies an initial trial period commencing immediately with custom-built prototypes being supplied to the cybersecurity company for an initial period of 7 days for evaluation purposes.

Subject to how Connected IO’s prototype performs in live customer testing, the parties have left the door open to signing a definitive contract.

If the trial period is successful, Connected IO believes it can strike a binding contract with the as yet unnamed cybersecurity company, purchasing around $625,000 of its products each year. Longer term, Connected IO expects to generate around $7 million from the deal over 3 years.

Connected IO has demonstrated its capability of slashing diagnostics and maintenance costs for large networks of machines as part of previous work for the likes of Coca-Cola, JohnRyan and Savioke Relay, helping the firms to streamline various services and improving cost-effectiveness within their respective businesses.

The specific details of LOI include an agreement for Connected IO to deliver 25 prototypes immediately, 350 units within the next 30 days and for a minimal annual revenue of $625,000 per year. Connected IO also retains a first right of refusal for customers’ future hardware solutions during the trial period.

Delving into prototypes

Connected IO’s router prototypes have been developed in conjunction with customer requirements based on market feedback over the past 12 months.

Gradual improvement based on ongoing feedback and live testing has meant Connected IO has a well-tested and reliable solution that provides significantly advanced features required in various security and data communication functions.

Ultimately, Connected IO will provide the cyber security company with a sophisticated co-branded programmable router with advanced features, offering unique abilities such as remote monitoring, management, security and real-time connectivity to machines and devices.

Supplementary to the LOI, Connected IO is also working on developing its ability to provide managed services software (SaaS) and integrate this technology into its overarching product suite being offered to all customers.

With respect to its SaaS ambitions, Connected IO says that “if a contract is completed this will represent a further revenue stream recurring in nature with greater profit margins.”

“The Letter of Intent is a great step forward for CIO particularly as it is with a long-standing customer and one we have dealt with since 2016. The LOI signifies great confidence in CIO’s ability to provide reliable superior quality communication devices, especially as the company has requested we work with them to build an industry-specific solution,” said Yakov Temov, CEO at Connected IO.

“The ongoing relationship provides a solid foundation for CIO business for years to come,” he added.

Filip has written in both Australia and abroad during his career, covering everything from the global economy, politics and geopolitical issues to commodities and small cap stocks on the ASX.