accesso Technology ((GB:ACSO)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call of accesso Technology presented a balanced sentiment, highlighting significant new business wins and strategic diversification that offset declines in specific revenue segments and increased operational costs. While the introduction of new technologies and strategic acquisitions signals potential for future growth, challenges such as weather impacts and rising administrative expenses remain areas of concern.
Increased Revenue from New Business
Revenue from new business wins nearly doubled, increasing by almost 90% compared to the prior year. This growth was driven by a robust sales pipeline, which expanded from $12 million to $24 million year-over-year, showcasing the company’s ability to secure and capitalize on new opportunities.
Geographic and Revenue Diversification
The maintenance support business experienced a 15% revenue increase, primarily due to new business ventures in Saudi Arabia and Australia/New Zealand. This diversification helped offset weaknesses in summer transactional revenue, highlighting the company’s strategic expansion into new markets.
Strong Pipeline with Emerging Technologies
Accesso’s Freedom product expanded from 11 to 39 venues, with 48 more in the pipeline. Additionally, the company introduced an AI-driven voice-enabled chatbot for ticket and food orders, with a market-ready prototype, underscoring their commitment to innovation and technology-driven growth.
Strategic Capital Use
The acquisition of 1RISK was completed, enhancing accesso’s integration capabilities. The company also continued its buyback program, spending $5 million on shares to enhance shareholder value, demonstrating a strategic use of capital to strengthen its market position.
Improvement in Gross Margin
Gross margin improved from 76.2% to 78.3%, attributed to a decrease in low-margin hardware sales. This improvement reflects the company’s focus on optimizing its product mix to enhance profitability.
Revenue Decline in Key Segments
Overall revenue saw a decline of 1.9%, primarily due to the exit from the B2C business, the sale of a Brazilian subsidiary, and a significant drop in hardware sales. These factors contributed to a challenging revenue environment in certain segments.
Guest Experience Revenue Decrease
Guest experience revenue dropped by 21% as extreme heat conditions reduced visitor volumes, impacting sales of chilled queuing. This highlights the vulnerability of certain revenue streams to external environmental factors.
Softness in Transactional Revenue
Transactional revenue decreased by 4%, influenced by adverse weather conditions affecting theme park attendance. This softness underscores the impact of uncontrollable external factors on the company’s performance.
Increased Administrative Expenses
Underlying administrative expenses increased by 4% due to foreign exchange losses and broader wage inflation, indicating rising operational costs that could impact future profitability.
Forward-Looking Guidance
Accesso’s CEO, Steve Brown, provided guidance on the company’s outlook, reporting revenue just under $68 million and a cash EBITDA of $5.1 million. The company ended the period with over $25 million in net cash. The ticketing and distribution business saw a 2.5% increase, while guest experience revenue declined by 21% due to extreme heat. Professional services were up 5%. The company plans to accelerate wins, increase customer basket size, and invest in technology, with new wins doubling in revenue compared to the previous year. The CEO emphasized progress in deploying their composable commerce project and integrating AI for efficiency improvements. Accesso aims to leverage its capital through strategic acquisitions and ongoing share buybacks, focusing on maintaining growth through geographic diversification and expanding service offerings.
In summary, the earnings call of accesso Technology reflected a balanced sentiment with significant new business wins and strategic diversification offsetting some revenue declines and increased operational costs. The company’s focus on emerging technologies, strategic capital use, and geographic diversification positions it well for future growth, despite current challenges such as weather impacts and rising administrative expenses.