Netlinkz achieves considerable growth during half-year with revenue from customers up more than 13-fold

Netlinkz Ltd (ASX:NET) achieved considerable growth in revenue and several milestones throughout the half-year ending December 31, 2020, with revenue from customers increasing to $8,720,841 from $640,529 in the corresponding six months of 2019. Revenues from ordinary activities, including interest and grant income, increased by $7,861,636, or 508 per cent, to $9,407,847. Among the milestones achieved was the joint strategic partnership signed with LNS International. LNS has an extensive sales force, established customer network, system integration skills and local industry knowledge in the fast-growing APAC region. The partnership allows Netlinkz to focus on localisation of the Virtual Secure Network (VSN) as well as providing secure network solutions based on customer requirements assessed by LNS. Expansion into new markets Netlinkz is also rolling out partner technologies underpinned by the VSN, including customer-funded proof of concept deployments in Japan, Hong Kong, India and Australia. Additionally, the company’s partners have begun embedding the VSN in their products, sales strategies, and value proposition. This transformation in growth has allowed Netlinkz to expand into new markets as network security and the cloud revolution continues globally. Revenue in China Revenue in China revenue totalled more than $7.69 million for the half-year, up around 1,100% on 1H FY20 with key sources of revenue being NaaS-based services, including secure networking design, implementation and engineering work. A key milestone for the group was the launch of VSN 2.0 in August 2020, which was quickly embedded into customer networks. Customer feedback is positive, with responses including praise for reduced latency and better handling of data packet loss, with enhanced features in Quality of Service, Deep Packet Inspection and the new management console. The high throughput of data and secured data package transfer is the result of the VSN leveraging DPDK and VPP technologies. All China VSN research and development is now carried out by AOFA and iLinkAll employees which today number more than 80 and span research and development, client origination, product sales, engineering and implementation. Japan development During the period, Netlinkz executed several distribution agreements for the VSN 2.0. The Japan IoT Lab is at the Uhuru office in Shirahama and showcased a Netlinkz embedded VSN securing the Cognian Syncromesh and ImageDeep thermal COVID-19 tracking application at the virtual Combined Exhibition of Advanced Technologies (CEATEC) exhibition. Testing of the VSN continues by Japanese multinational corporates and local Japanese organisations. Demand exists from commercial building owners looking for secure enhancements to create a COVID-safe work environment and to encourage tenants to go back to the office. Australian progress The Australian team has made strong progress and is focused on implementing the internal processes and infrastructure to facilitate the support of a global rollout of the VSN at speed. Australia is the focal point for developing and managing resellers, distributors and partners for Netlinkz globally. In addition, the team signed a number of distributors, reseller and partner agreements, including with ImageDeep and Cognian. The Australian IoT lab is currently the support centre for Netlinkz global customers outside of China. SSI is now integrated as a division of the company with a greater focus on bundled sales solutions. SSI contributed the majority of the $900,000 of Australia and New Zealand segment revenue for the period. India engagement In August 2020, Netlinkz engaged Natsoft Corporation to develop and source selected international markets and customers through a reseller agreement for the Netlinkz products as well as establish an IoT Lab in Natsoft’s offices in India. Development of the IoT lab commenced in August 2020 building on the experience of the existing Netlinkz IoT labs. Natsoft has generated a pipeline of opportunities within India. These opportunities are in the financial services, telecommunications, and retail sectors. Malaysia focus Netlinkz partnership with LNS International is a key strategic initiative aimed at diversifying sourcing of larger-scale clients whilst requiring no capital outlay. The first phase of the partnership is to focus on Malaysia. LNS is a technology consultancy organisation with offices throughout the APAC region with a key focus to provide total network solutions to key customers in Malaysia underpinned by Netlinkz’s products and services. In December 2020, Netlinkz announced it was committing IP and contributing design, implementation, and delivery expertise, in addition to product support. Outlook The second half of FY 2021 has started off well for Netlinkz underpinned by the advanced technology offering that VSN 2.0 is delivering, a robust business development pipeline, growing recurring revenue streams, new customer engagements, increased penetration in key markets and an expanding geographical footprint. Netlinkz now has a stronger balance sheet and expects the top line to continue growing while we maintain a vigilant focus on costs.