CyanConnode Holdings (LON:CYAN), a technology leader in smart metering solutions, has released its interim results, affirming a strong performance outlook for 2024. Despite a slight revenue dip in the first half compared to a stellar 2023, the company’s robust backlog and recent contract wins set it up for a promising second half. Panmure Liberum analyst Harvey Robinson praised CyanConnode’s market positioning, saying, “CyanConnode is well placed to capture meaningful share of the Indian smart meter market with a win rate of 25% by volume.” This statement highlights CyanConnode’s growing dominance, especially in India, where it already commands around 14% of the smart metering market base.
A significant highlight from the interim results is the company’s increasing backlog, which has more than doubled to 13.1 million units. CyanConnode expects to deploy approximately 9.7 million units in the latter half of the financial year, with a substantial revenue impact anticipated in the fourth quarter due to seasonal business trends. Analyst Harvey Robinson also highlighted the company’s expanding contribution from software and services, now accounting for 20% of revenues, which has boosted the gross margin to 41%. He notes that “gross profit improved to £2.3 million from £1.8 million in H1 FY24, with the gross margin increasing by 10% from 31% to 41%.”
India continues to be a central pillar of CyanConnode’s growth, especially with the recent Letter of Award (LOA) from a global partner, covering 6.5 million Omnimesh Modules and related infrastructure. The agreement, Robinson explains, is crucial as it “doubled the cumulative orders to 13.1m and significantly increases the backlog from 3.5m (at FY24A) to 9.7m.” Additionally, CyanConnode has secured a $1 million follow-on order in the MENA region, indicating steady progress beyond India, further diversifying its geographical footprint and revenue sources.
In a recent funding development, CyanConnode Holdings raised £5.4 million through an oversubscribed placing and subscription, which has strengthened its balance sheet and supported its financial targets. This has led Panmure Liberum to maintain a Buy rating on the stock, with a target price of 18.5p. CyanConnode’s commitment to innovation, such as a new gateway version optimised for longevity, positions it for sustainable profitability. Robinson concludes that, “Importantly we expect the business to become profitable in FY25E, driven by the revenue increase and improved gross margin.”
Final Thoughts
CyanConnode’s interim results underscore its readiness for a successful second half of 2024 and highlight its potential for sustainable growth in FY25. With strong gains in gross margin, increased contributions from software and services, and strategic market footholds in India and the MENA region, CyanConnode stands well-positioned for further expansion. As the company advances towards profitability, its trajectory remains one to watch.
