CyanConnode Holdings plc (LON:CYAN), a world leader in narrowband radio frequency (RF) mesh networks, has announced its unaudited interim results for the six months ended 30 September 2024 (H1 FY 2025).
John Cronin, Executive Chairman, commented:
“The Indian smart metering market continues to gain momentum, with sanctioned tenders exceeding 200 million smart meters. Of this total, contracts for approximately 132 million smart meters have already been awarded to prime bidders, underscoring the Government of India’s commitment to install 250 million smart prepayment meters under the Revamped Distribution Sector Scheme (RDSS).
CyanConnode’s order book has demonstrated strong growth, more than doubling during this period from 6.3 million units at the start of the year to 13.1 million units. Our current backlog stands at 9.7 million units yet to be deployed, having increased substantially from 3.5 million units at the end of March 2024, with a significant portion of this expected for delivery in the second half of FY 2025. Historically, our revenue recognition is heavily weighted toward the final quarter of our financial year, as order completions and deployments often peak near year-end. We expect this seasonal trend to continue, with a substantial proportion of this year’s revenue materialising in Q4.
Given this pattern, we remain confident in meeting market expectations for FY 2025.
Our business outside of India is also progressing well. Since the end of September 2024, we have secured a follow-on order for the Middle East and North Africa (MENA) region, valued at over $1 million. This order is expected to be fulfilled within the current financial year, further supporting our revenue forecasts and expanding our international footprint.“
Financial Highlights
Full year revenue expectation unchanged, with the following highlights for H1 FY 2025
· Revenue of £5.6m (H1 FY 2024: £5.8m)
· Increase of 9% in software and services revenue as a percentage of total revenue from 11% in H1 FY 2024 to 20% in H1 FY2025
· Gross profit of £2.3m (H1 FY 2024: £1.8m), driven by an improvement in Gross Margin percentage of 10% from 31% in H1 FY 2024 to 41% in H1 FY 2025. This is partly as a result of a new version of gateway being sold, which does not use end-of-life components, and partly as a result of the increased software and services revenue as a proportion of total revenue
· Operating loss of £2.1m (H1 FY 2024 loss: £2.2m)
· Cash received from customers of £7.3m (H1 FY 2024: £7.4m)
· Cash and cash equivalents at end of period £3.7m (FY 2024: £0.9m)
· Completion of oversubscribed placing and subscription to raise £5.4 million (before expenses) at a premium to prevailing share price
Operational Highlights
· Major new contract won in India for 6.5 million Omnimesh RF Modules and associated products, doubling order book to 13.1 million units
· 265,000 Omnimesh RF Modules and associated products ordered from a subsidiary of IntelliSmart Infrastructure Private Limited
· CyanConnode India’s subsidiary, DigiSmart Networks Private Ltd successfully empanelled as an Advanced Metering Infrastructure Service Provider (“AMISP”) for both RF and cellular, making it eligible to bid for smart metering contracts under the Revamped Distribution Sector Scheme (RDSS)
· Setup of subsidiary in United Arab Emirates to promote business in the Middle East and North Africa (MENA) region
· Changes to the organisation to strengthen leadership in India and streamline global operations by having all engineering and operations reporting into the MD CEO of India
· Key milestones such as Site Acceptance Tests (SATs) and project go-lives achieved across several key projects
· Successful deployment of over two million nodes, making CyanConnode the first and only smart metering communications player in India to reach this milestone
· Prestigious SKOCH Gold Award won by Tamil Nadu Generation and Distribution Corporation Limited (Tangedco) for its smart metering project powered by CyanConnode’s communication network
· CyanConnode named a 2024 WIRED Trailblazer
Post-Period Highlights
· Follow-on order with a value in excess of $1 million won, for cellular gateways in the Middle East and North Africa (MENA) region
· Cash received from customers since the period end of £1.4m taking cash received for the financial year to date to £8.7m
· Current market share of all installed smart metering base in India of approximately 14% and 42% of all RF deployments
· Win ratio of 25% in terms of volumes for RDSS tenders in India
· Indian smart metering market continues to gather momentum – current tenders for more than 220 million Smart Meters have been sanctioned to the end of October 2024, with 132 million being awarded to prime bidders, typically Advanced Metering Infrastructure Service Providers (AMISPs)
· Revenue for the financial year ending 31 March 2025 is forecast to meet market expectations
Chairman’s Statement
Financial review
Key figures
| H1 FY 2025£’000 | H1 FY 2024£’000 | % Change | |
| Revenue | 5,629 | 5,775 | – 3% |
| Gross profit | 2,336 | 1,810 | + 29% |
| Operating costs* | (4,424) | (3,987) | + 11% |
| Operating loss | (2,088) | (2,177) | – 4% |
| EBITDA | (1,901) | (2,008) | – 5% |
| Adjusted EBITDA | (1,597) | (1,916) | – 17% |
| Cash | 3,714 | 945 | + 293% |
| Basic and diluted loss per share | 0.70p | 0.72p | – 3% |
* Research and Development (R&D) tax credit of £224k is included in other operating costs following the latest amendments made to the R&D scheme by HMRC for accounting periods beginning on or after 1 April 2024, which require R&D tax credits to be reported within operating costs rather than within taxation.
Revenue and Operating Costs
Revenue for the first six months of FY 2025 was flat compared to the revenue for the same period of FY 2024, largely as a result of some slowdown in deployments during the India elections. The Company, having won its largest order to date during the period, thereby doubling the order book, expects a significant increase in revenue during the second half of FY 2025 over the first half year. Gross margins have improved considerably compared to H1 FY 2024 as H1 FY 2024 included sales of gateways using end of life components purchased at a significant premium. A new, lower cost, gateway was developed during FY 2024 and is now being shipped. In addition, the higher margin software and services proportion of total revenue for the period increased from 11% to 20% in H1 FY 2025. The increase in operating costs compared to H1 FY 2024 was in line with expectations since the cost base had increased to support expected growth, with the majority of that increase being in H2 FY 2024.
Cash
During the period cash was utilised to both purchase stocks of components to support delivery during the remainder of the financial year, (stock of 567,000 MCUs were held at period end to allow H2 FY 2025 deliveries to be met) and investing in development of new products to enhance the current product suite.
On 10 September 2024 CyanConnode Holdings plc raised £5.4 million (before expenses) through an oversubscribed placing of 20,204,063 New Ordinary Shares and a subscription for 39,611,109 New Ordinary Shares at a premium to the prevailing mid-market share price. The cash is to be used to provide ongoing working capital for growth, to further strengthen the Company’s balance sheet and to fund the setup of a hardware product design lab in India, which will enable a ramp up of operations.
Accounts receivable
A total of £7.3m cash was collected from customers during the period (compared to £7.4m for the same period in FY 2024), and a further £1.4m since the period end. In the period, our non-current trade receivables such as contract assets, reported in the non-current assets part of the balance sheet, increased to £3.3m (FY 2024: £2.4m), where revenue has been recognised in accordance with IFRS 15, and will be paid for over the period of the contract. The remainder of trade receivables included in non-current assets related to accrued income from contracts. Approximately 58% of cash collection during H1 FY 2025 related to trade receivables from FY 2024 and a further 8% of FY 2024 trade receivables has been collected since period end.
Operational Review
India
Market
According to recent research studies, the smart meter market in India is poised for significant growth over the next decade. In 2023, the market size then, was estimated at c. $212m by Zion Market Research and $219m by Astute Analytica. Both studies projected substantial increases by 2032, with Zion Market Research forecasting a market size of $2.8bn and Astute Analytica predicting $3. 2bn. This growth should be driven by several key factors, including government incentives to reduce aggregate technical and commercial (AT&C) losses and the integration of advanced metering infrastructure (AMI) with IoT platforms. The Indian government’s target of deploying 250 million smart prepaid meters is a significant part of this growth, as these meters would improve billing efficiency, reduce power theft, and enhance the overall reliability of the power supply. This initiative is part of a broader strategy to reform the energy sector and improve efficiency through advanced technologies.
The Government of India plans to rollout 250 million smart meters through tenders for large volumes, of which tenders for more than 220 million smart meters had been sanctioned to the end of October 2024. According to the most recent statistics reported on the National Smart Grid Mission (NSGM) website, tenders for 132 million meters had been awarded to the end of October 2024 to prime bidders. While these contracts have been awarded to prime bidders, who are typically AMISPs, there can be a delay of a few months between the award of the contract to the AMISP and the subsequent award to subcontractors such as CyanConnode.
Orders
In April 2024, the Company received an order for 235,331 Omnimesh RF Modules, for the Madhyanchal Vidyut Vitaran Nigam Ltd (MVVNL) smart metering project in Lucknow
In August 2024, a Letter of Award (“LOA”) was received for 6.5 million Omnimesh RF Modules, being the largest contract awarded to the Company to date. This contract award took the Company’s order book for Omnimesh modules in India from 6.6 million to 13.1 million, solidifying the Company’s position in India. This LOA was received from a global partner and relates to various smart metering projects in India.
Achievements
During the period, CyanConnode India’s subsidiary, DigiSmart Networks Private Limited (“DigiSmart”) qualified and was certified to participate in the upcoming smart metering tenders as an AMISP for both RF and cellular. As an AMISP, CyanConnode would be responsible for the end-to-end execution of smart metering projects, from meter supply to Meter Data Management (“MDM”).
Key milestones such as Site Acceptance Tests (SATs) and project go-lives were achieved across several key projects during the period.
· CyanConnode has passed multiple Site Acceptance Tests (SATs) across several key projects and has achieved “Go Live” status in one project
· CyanConnode is consistently meeting the desired SLAs as per the agreements across projects
· This marks a crucial milestone that enables the commencement of billing for deployed meters
· The “Go Live” milestone is a critical achievement for any project as it signifies the transition to the billing phase, allowing for revenue generation
· The SAT qualification process involves rigorous quality and performance testing of the meters and the communication network, ensuring the highest standards of operation
· TANGEDCO and TN72 projects have come under FMS in FY 2024
Organisation
In May 2024 a strategic decision was taken to make changes to the organisation to strengthen leadership in India and streamline global operations by having all engineering and operations reporting into the MD CEO of India. The key reasons for this change were
· Strengthened Leadership: The new structure brings together seasoned leaders with extensive experience in smart metering, IoT solutions, and technology innovation. This ensures a robust leadership team capable of driving the company’s strategic vision forward.
· Enhanced Operational Efficiency: By reorganising the engineering and technology teams, CyanConnode aims to streamline processes, improve execution speed, and enhance troubleshooting capabilities. This will enable the company to better meet the dynamic demands of customers and the market.
· Focus on Innovation: The restructured teams are focused on continuous innovation in product development and technology solutions.
· Market Expansion: The reorganisation underscores CyanConnode’s commitment to leveraging the immense potential of the Indian market while continuing to deliver exceptional service and innovation to global stakeholders.
· Alignment with Strategic Goals: The new structure aligns with CyanConnode’s strategic goals of maintaining market leadership, expanding technological capabilities, and driving sustainable growth in the smart metering sector.
Innovation
During the period significant work has been undertaken on innovation to further enhance the Company’s product suite. The following products have either been developed or enhanced, in each case to ensure the highest performing and lowest cost version to maintain the Company’s competitive position in the market, and reputation as a company achieving constantly high Service Level Agreements (“SLAs”).
· In-Meter Gateway
o To compete with cellular
o Be Competitive
o Faster and Ease of Deployment
· Production of Long-Range Radios
· Gateways with 3 Phase Power Supply
o For compliance to local specifications
o Thailand and markets abroad
· Unified Head End System (“uHES”)
o A Head End System that will allow both cellular and RF, including that of third-party providers, to connect
· Low Cost CNIC
o A low cost version of the Company’s Cellular Network Interface Card (“CNIC”) at a competitive price point to suit the market in India
· Solution on FG28 platform
o Design in of a newer, high performing chip
APAC and Middle East
The smart metering market in the APAC and Middle East continues to mature and presents a significant opportunity for CyanConnode.
During the period CyanConnode continued to deploy its contracts for the MENA region and additionally completed incorporation of its subsidiary in Dubai. In October 2024, the Company was pleased to announce a follow-on order for this region, and shipments for this order are expected to complete during this financial year. Further orders for the region are expected to be won in the near term.
Additionally, the Metropolitan Electricity Authority (MEA) Smart Grid Project, won in December 2019 continues to roll out in Thailand and reached go-live during the period.
The Company is currently working on opportunities in Malaysia, Indonesia and Azerbaijan.
Cash
On 10 September 2024 CyanConnode Holdings plc raised £5.4 million (before expenses) through an oversubscribed placing of 20,204,063 New Ordinary Shares and a subscription for 39,611,109 New Ordinary Shares at a premium to the prevailing mid-market share price. The cash is to be used to provide ongoing working capital for growth, to further strengthen the Company’s balance sheet and to fund the setup of a hardware product design lab in India, which will enable a ramp up of operations.
Awards and recognition
In September 2024, CyanConnode was pleased to announce that it has been named a WIRED Trailblazer 2024. This prestigious recognition, awarded by WIRED Magazine in partnership with HSBC UK, highlights innovative companies driving positive economic, social, and environmental change through technology. The WIRED Trailblazers programme celebrates organisations that are making a tangible impact on the future of industries by tackling key global challenges such as sustainability and resource management. CyanConnode’s commitment to innovation, demonstrated through its award-winning RF communication solutions and large-scale project deployments, positions the Company as a leader in smart energy transformation.
Also in September 2024, the distribution company, Tangedco, won the prestigious SKOCH Award for Gold Category in the Power & Energy category. The award recognises the digital transformation of Tangedco’s commercial operations under the smart metering project powered by CyanConnode’s communication network. The project has delivered exceptional billing and smart metering communication rates of over 99%, accelerating invoicing, reducing errors, and enhancing customer satisfaction through timely billing. It has also optimised operations, reduced carbon emissions, increased revenue, and optimised manpower, among many other benefits.
Post period end developments and outlook
Orders
In October 2024, CyanConnode announced a follow-on order with a value in excess of $1 million for cellular gateways in the Middle East and North Africa (MENA) region. This contract builds upon the initial MENA order for this project, which was announced by the Company on 4 August 2022. The full order is scheduled for delivery, with revenue also recognised, within this financial year, which ends on 31 March 2025.
