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GeoOp widens annual loss, foregoes dividends, as it chases growth

GeoOp [NZX: GEO], whose software allows mobile businesses such as builders to manage their workforce, widened its annual loss as it pressed on with investing for growth.

The Auckland-based company posted a $4.6 million loss in the year ended March 31, including $600,000 of costs relating to its 2013 capital raising and listing. That compares with an annual loss of $312,000 in the 2013 year. The company's loss per share narrowed to 23.9 cents a share from 294 cents a share the year earlier as it increased the number of shares on issue.

GeoOp, which listed on the New Zealand stock exchange NZAX market for smaller companies in October, said revenue surged almost fourfold to $488,000 in the past year as it increased paying users to 8,006 from 2,300, added new product features for the services and trades sectors and appointed key executives in sales and technology. The number of paying users increased further to 9,047 at May 31, it said.

"In the seven months since GeoOp listed, the company has shown pleasing progress in the key areas of customer acquisition, product development and has significantly added its capability in its senior leadership team," chairman Mark Weldon said. "The board confidently expects momentum in customer acquisition to accelerate over the next 12 months."

GeoOp has $7.7 million of cash and investments to fund its growth, up from $80,000 a year earlier. It didn't pay a dividend.

The company has customers in 25 countries, with 58 percent in Australia, 19 percent in New Zealand and 11 percent in North America. It expects to benefit from the increasing use of smart mobile devices which will enable companies to better manage their mobile workforces. Market research firm IDC expects there will be 1.3 billion mobile workers worldwide by 2015, one third of the global workforce, the company said.

GeoOp today named Jamie West to head its product, technology and delivery teams after appointing Rhonda Robati as head of sales in April.

The company plans to simplify its pricing structure from July so businesses pay a single monthly licence fee, rather than paying based on the number of users in the field. It also plans to change its balance date to June 30 in the current financial year, meaning its next interim results will be for a nine-month period to Dec. 31, 2014.

Shares in GeoOp last traded at $1.45, having shed 22 percent so far this year. The shares were sold in its private offering last year at $1 apiece.


Comments and questions

What were the revenues?

Average revenue per customer is only ~$6 compared to the $20 listed on the website. They maybe growing their customer base but they are having to offer big discounts to achieve it.

Harvey, I think you are right. Their investor presentation states Annualised March subscription revenue of $610,000. That's indeed only $6.35 per user per month. Discounting and partner commissions must be to blame.

They are burning cash like crazy. Total expenses were $5.1M for $488K in revenue.

All very unexciting to be frank

Another unrealistic tech company with fundamental issues - like profit? or any likelihood of profit in the forseeable future with their growth strategy.

I will now get bombarded with techo's who truly believe that this business model is sustainable when in reality 7 out of 10 of these companies will never reach maturity - they will end up like Energy Mad or die.


I think you are about right. international VC models will show that something like 1 or 2 out of ten investments will be stars and 3 or 4 will generate a reasonable return. The balance will die and or be the living dead (e.g. Energy Mad).

The NZ experience (NZ Venture Investment Fund) would indicate the numbers in NZ are below that of international funds, so saying that 7 out of 10 will never generate a positive return is probably about right.

Investors need to understand the risk and what returns they should be looking for. These companies if they perform should generate 25 - 40%+ returns per annum. That is say 5 times your money in 5 years.

For Geo-op this means becoming a company worth $200m. Can they do that - maybe if everything goes well.

So who is going to say the Emperor has no clothes?

I think you will find the ARPU is now below the $6 they declared at the investor briefings. Take off the commission and related costs, and the margin on this says much about the value users (forget about investors...) actually place on the service.

Doing an "enterprise" pricing deal is a desperate move and will in effect actually lower the ARPU further.

Interesting choice having Mark Weldon as Chairman and so closely involved in the company's profile.

If GeoP is thinking Diligent, wrong move as Mark was quick to dis-associate himself with Diligent when it went south, but quick to get back in when it headed north. Fair weather friend?

If GeoP is thinking NZX, that was a monopoly milked by Mark until there was rebellion by the listed companies. The goose was plucked to feather his exit NZX nest.

GeoP is in a competitive space requiring stamina and a keen commercial sense to succeed. Diligent and NZX show Mark have none of those attributes.