TZ Limited on-track to grow monthly recurring revenue 50% in FY2023
FY2022 was a transitional year for TZ Limited as focuses on a recurring revenue business model rather than one-off hardware sales.
Smart locker software technology developer, TZ Limited (ASX: TZL) has reiterated it remains on track to grow its monthly recurring revenue (MRR) by 50% this financial year ending June 2023 (FY2023).
Chairman Peter Graham said FY2022 had been a “transitional year” for the company as it shifts from hardware-based to a recurring revenue model focused on software as a service (SaaS) products.
He said despite global headwinds, revenue grew 24% to $20.38 million in FY2022, while earnings before interest tax depreciation and amortisation rose 64% to $225,000.
MRR has now hit $308,000, which nearly 50% higher than the same time last year.
Mr Graham said TZ was now about 50% through its transformation program as it moves away from one-off hardware sales.
Key changes
Shoring up TZ’s transition in FY2022 was a reshuffle in management, business restructuring, a revised product suit, launching a new software based open platform, and rewriting the software stack.
Additionally, existing customers have provided positive feedback on their migration to the TZ Cloud SaaS products.
To further underpin its MRR growth, TZ is phasing out all existing perpetual software licence customers, with all of these to approached end of life in September next year.
The customers on these licences will be migrated to TZ’s Cloud.
New offerings in the pipeline
Sales and earnings are expected to be “significantly” boosted in FY2023 following the launch of TZ’s OPeL product.
OPeL is an open software platform that can use other manufacturer’s hardware for metal lockers.
Sales of the platform have already begun with new and existing clients adopting the product.
Mr Graham said the company would continue to upgrade its software stack throughout FY2023, including building out the functionality of the TZ Exchange Point operating model.
OPeL 2 is scheduled to be launched in April, which will be the company’s “industry-standard” commodity hardware system for all of its laminate locker systems.
Software modernisation is ongoing, and TZ plans to debut the first of its next-generation software ‘TZx’ in March.
A number of existing customers will begin beta testing TZx in January next year.
TZx’s core functionality will be a “fully headless system with kiosk capability” in the cloud.
“Also included will be the virtualisation of the exchange point, where each individual locker door can be configured on the fly for all use cases, including package delivery and pickup, personal storage, and ecommerce click and collect all within the one system,” Mr Graham said.
Continued growth
Mr Graham said he expects revenue and earnings to continue growing in FY2023.
Facilitating this is a partnership with Ricoh, which has provided “encouraging validation of TZ Cloud as a world-class logistics software”.
“Growth in this partnership is expected to continue as TZ and Ricoh go to market globally with joint bids, with already a number of wins under the new partnership,” Mr Graham said.
“The more flexibility and increased product/services offering is designed to keep TZ ahead of its competition,” he added.