Checkit losses widen despite recurring revenue growth

Deskless working operations specialist Checkit reported a 28% rise in annual recurring revenue (ARR) in its preliminary results on Monday, to £11.5m.

The AIM-traded company said ARR had doubled over the last two years, which it put down to its strategy to focus solely on subscription-based sales, with recurring revenue accounting for 93% of total revenues in the 12 months ended 31 January.

It said its expansion in the United States was also successful, with 91% year-on-year growth in US ARR to £2.8m.

Additionally, the firm reported continued success in retaining and growing its existing customer base, with net revenue retention of 116%.

Checkit's building energy management systems division was closed as planned, and the path to profitability accelerated, with increased focus on cost efficiency, resulting in improving gross margins of 63% compared to 54% in the 2022 financial year.

Recurring revenue increased 41% to £9.6m compared to £6.8m, while total group revenue from continuing operations was £10.3m, up 22% year-on-year.

The company’s adjusted EBITDA loss from continuing operations came in at £6.4m, widening from £5.6m a year earlier.

Net cash at year-end totalled £15.6m, down from £24.2m year-on-year, with a 17% reduction in net cash outflows during the second half compared to the first amid an emphasis on operational efficiency.

The board said it remained confident that the group was well-positioned to deliver strong, sustainable organic growth in the years ahead, adding that it expected it to meet market expectations for the 2024 period.

“Our purpose is to simplify and digitise operational activity for the deskless workforce - and never has that been more important,” said chief executive officer Kit Kyte.

“We know that simplifying how organisations manage operational performance has a transformative impact on organisational success, the wellbeing of employees and the outcomes for customers.

“When we look back at what was a tumultuous year for us all, we are excited at the progress we have made as a business and proud of the support we have given our customers, providing them with the insight, tools, and methodology to thrive in these challenging times.”

Kyte said the company was “still at the start” of its journey, but described its opportunities as immense.

“Global supply chain challenges, the rising cost of labour and increased compliance requirements mean that the premium on simplifying deskless operations has never been more relevant.

“The board expects to meet 2024 financial year market expectations, and remains confident that the group is well positioned to deliver strong, sustainable organic growth.”

At 1248 BST, shares in Checkit were down 1.96% at 27.45p.

Reporting by Josh White for Sharecast.com.