15 February 2024

Checkit plc

("Checkit" or the "Group)

FY24 Trading Update

Checkit (AIM: CKT), the intelligent operations platform for the deskless worker, announces its unaudited trading update for the year ended 31 January 2024 ("FY24").

·    Annual recurring revenue ("ARR"¹) growth of 16% to £13.3m, in line with expectations

·    Focus on path to profitability is anticipated to result in better than expected losses ("LBITDA"²) halving year-on-year to £3.4m

·    Recurring revenues provide good visibility for future periods underpinned by a high net revenue retention³ of 111%

Kit Kyte, CEO of Checkit, commented: "The second half of the year has seen further progress on our stated strategy and our drive towards profitability. Our new AI enhanced products are, we believe, best in class and a step change ahead of what's currently available in the market. We will continue to focus on driving top-line growth in the business and look forward to FY25 with confidence."

Results

Revenue has grown by 17% to £12.0m, in line with market expectations despite the challenging global economy. Our 'Land and Expand' strategy of up-selling and cross-selling has generated growth from our existing customer base, whilst at the same time we have actively identified areas of expansion and opportunity both geographically and vertically.  With recurring revenues now representing 93% of the total and our high net revenue retention of 111%, we have a sound base to pursue our drive towards profitability.

Our focus on gross margin expansion continues to deliver and we expect losses (adjusted LBITDA) to be better than expected and nearly halve for the year to £3.4m (2023: LBITDA of £6.4m) as we drive operational efficiencies and carefully manage costs across the business.

Our cash position at the end of year was £9.0m (31 July 2023: £12.8m), reflecting the 46% reduction in LBITDA and the strategic purchase of inventory to mitigate supply chain constraints in the market. We expect this position to unwind over the next 12-18 months, supporting further revenue growth.

Product Update

During the year, utilising the data we collect and new AI and ML tools, we have successfully added new functionality to our products that will allow our customers to deliver sustainability and energy saving initiatives and benefit from predictive maintenance of their assets. This is being actively trialled by one of our largest customers and we are confident that these developments will provide significant value to the Group and our customers.

We have continued to invest in our products and our markets and we are gaining traction geographically, with 26% of ARR now generated in the US, and as we develop our offerings to address new sectors, such as food manufacturing and R&D laboratories.

We will provide further detail on our product strategy and the path to profitability at the time of our FY24 Results announcement in April 2024.

The Group's management team will host a live webinar which will include an opportunity for questions at 14:00 (GMT) today. The webinar can be accessed via the news area of the website at https://www.checkit.net/news/ or by using this link:

https://www.investormeetcompany.com/checkit-plc/register-investor

NOTES

1.    Annual Recurring Revenue ("ARR") is defined as the annualised value of contracted recurring revenue from subscription services as at the period end, including committed annual recurring revenue from new wins.

2.    Adjusted LBITDA is the loss on operating activities before depreciation and amortisation, share based payment charges and non-recurring or special items. Analysts' Adjusted LBITDA expectations for FY24 were £3.6m.

3.    Net revenue retention is defined as the amount of recurring revenue from existing customers retained over the period, excluding new wins in the last year.

For further information, please visit www.checkit.net or contact: