I was a real fan of IKE and joined the forum to go to bat for them, I liked the niche market strategy and to their credit their product has become a market leader in the niche. That doesn’t mean the business model is sustainable, I’m now struggling to see how they will achieve a sustainable long-term revenue stream. In my last post back on July’15 I stated:
“Assuming they can get their annual revenue to a sustainable $15 to $20m over the next four to five years and keep their costs under control they are probably worth a punt, particularly if the share price falls further”.
At the time they were forecasting revenue of $14.3m for FY’16 which was a real stretch, the actual was $9.2m followed by a dismal $5.8m in FY17. With a paltry $3.5m revenue in the 1st half of FY18 they’re going to struggle to get anywhere near $10m revenue for the full year. I suspect what’s wrong with their business model is too little recurring income, their early model was to sell the product outright rather than licensing it on a SaaS basis. Upfront sales help with early cashflow but risks decimating future revenue, particularly if the niche market isn’t that deep and sales run out of steam.
I still hope they succeed, it’s going to be tough!