Trakopolis IoT Corp. (TRAK:TSX-V) – The Howard Group

Trakopolis Is Accelerating Its Growth – How Does It Stack Up?

With yesterday’s (May 3rd)  news that Honeywell and Trakopolis have closed their first major enterprise sale of the ConneXt Lone Worker, future growth indicators are starting to line up, which is beneficial to any investor thinking about what company to buy in a particular sector. The new four year-year deal is worth a minimum of $4.79 million (USD) and carries a tidy recurring revenue stream for TRAK.  While those numbers are important, its not be to missed that this was the first material deal with its partner, Honeywell, which is THE global leader in this area.    

To summarize:
Based on recently reported financial results from various companies in the IoT (Internet of Things) space, we constructed a comparable chart to see how Trakopolis stacks up against its peers on the TSX Venture exchange.

 

TrackX BeWhere Blackline Trakopolis
Stock Price $0.44 $0.26 $3.55 $1.14
Shares Outstanding 55.6 million 50.2 million 28.8 million 23 million
Market Cap $24.5 million $13 million $102.2 million $26.6 million
Revenue
(Trailing based on last reported quarter)
$6.5 million $351,000 $10 million $5.8 million
Multiple of revenue 3.8 X Revenue 37 X Revenue 10.2 X Revenue 4.5 X Revenue
Profitability No No No No
Cash On Hand $1.4 million $1.8 million $1.4 million $3.2 million
Major Distributing Partner Unnamed partners Small resellers Small resellers Honeywell just starting


As you can see, revenue  multiples vary widely, which suggests investors have different expectations about future growth potential.  However, apples to apples, Trakopolis has a tighter share structure, one of the lowest revenue multiples and has the most cash on hand amongst the peer group. These facts in combination with Trakopolis’ news on the first Honeywell deal as well as the company’s fundamental results suggest that  Trakopolis is well positioned and should   stand out amongst its peers.

TRAK has only been trading since last November. 

Trakopolis Announces Multi-Million Dollar Sale Of Honeywell’s ConneXt Lone Worker

Trakopolis announced this afternoon that that it has received a significant purchase order from a major U.S. based energy company for 1,500 units of its co-created product the Honeywell ConneXt Lone Worker gas detector.

Trakopolis’ industry leading software will deliver this solution as “software as a service” and thus each unit will carry a monthly recurring data fee for the contracted four-year period. The minimum total contract value is expected to be USD$4.79 Million, with an estimated USD$2.82 Million (inclusive of hardware revenue) expected in fiscal 2017.

With this announcement investors can now start to model what capturing even a small percentage of the gas detector market would mean to TRAK. Fifteen hundred units represents only 1% of the North American market and just last week, TRAK and Honeywell announced that they are expanding their sales efforts worldwide. See news release here.

When asked, management acknowledged that this sale came with some first customer discounts and made clear that there is a significant pipeline building for the company. This is understandable considering Honeywell is the largest manufacturer and supplier of industrial gas detectors in the world.

The revenue impact of this deal provides clear visibility into the achievement of TRAK management’s stated revenue milestones, which according to the company’s corporate presentation is a $10 million run rate by Q4 2017.

Of note, the “large US-based oil and gas company” that made this initial order reserved an option to order an additional 1,000 units, on the same terms, during the first 18 months of the term.

To view the full news release, please click here.

Trakopolis And Honeywell Expand Partnership To Tackle The World

This morning Trakopolis and Honeywell announced a renewal of their exclusive agreement, whereby the two companies will expand their joint sales and marketing efforts globally. Initial market research indicated a total addressable market in North America of approximately 150,000 units, the expansion to a global market clearly expands the total opportunity. The overall hardware and recurring revenue potential of this one product, the ConneXt Loneworker, is hundreds of millions of dollars.

Bottom line, Honeywell Analytics is the largest manufacturer and distributor of gas detectors in the world. Trakopolis’ IoT platform has enabled them to offer the market a new and unique, next generation product.

Also of note, the news release outlines a collaboration on utilizing the Trakopolis IoT Platform with other Honeywell connected safety products.  Management is pleased with the potential for furthering the revenue opportunities in the future.

To view today’s news release, please click here.

Trakopolis’ Webinar on Advanced Analytics and Internet of Things Now Available Online

On March 23rd, Trakopolis’ Chief Revenue Officer Ted Duffield hosted a webinar on “connecting mobile assets to drive visibility and operational efficiency for businesses.” The 48 minute presentation profiled Honeywell’s ConneXt Lone Worker gas detector, which is powered by Trakopolis.

Here are some key highlights from the presentation:

  • Trakopolis has transitioned traditional asset tracking to an “Internet of Things” platform. Utilizing advanced analytics and providing business intelligence in real time to an organization.
  • Learn how connecting assets delivers a Return On Investment through either operations, safety and in many cases a combination of both.
  • Learn how Trakopolis and Microsoft can improve your business operations through the connectivity of your mobile assets, to provide real business intelligence you can make actionable decisions from
  • Demonstration of Power BI (Business Intelligence) transforms data into rich visuals that collects and organizes information on a desktop or mobile dashboard.
  • Key strategic (and exclusive) partnership with Honeywell in the development and commercialization of ConneXt Lone Worker solution.
  • ConneXt Lone Worker uniquely provides real-time visibility on the safety and productivity of remote workers.

To view the full webinar, please click here.

Trakopolis Featured in Canaccord’s Morning Coffee

This morning (March 1st 2017), Trakopolis was featured in Canaccord’s daily popular newsletter “Morning Coffee.” The publication focused on TRAK because of its recent strength in share price. In just two weeks shares of TRAK have risen 35% from $0.68 to where it sits today in the $0.90 range.

Below is the full article:

Trakopolis* (TRAK : TSX-V : $0.88), Net Change: 0.02, % Change: 2.33%, Volume: 80,450
TRAK-ING HIGHER. JOHN ARE YOU WATCHING?

Trakopolis, the telematics company, provides a user-friendly platform enabling location-based connectivity and cloud-based analytics. It is used by customers across multiple vertical markets to manage fixed and mobile assets (e.g., vehicles, workers, equipment) more efficiently and maximize operational performance and safety. The platform is cloud-based and powered by Microsoft (MSFT) Azure.

What differentiates TRAK is its scalability, the customizability/configurability of its platform, the ease in which new devices can be on-boarded and its carrier/hardware agnostic nature. The company offers a tailored solution at comparable prices to competitors’ standard offering.

In order to grow its market share at a faster pace, the company has partnered with large enterprises such as Microsoft, Bell (BCE), Honeywell (HON) and TELUS (T). The channel enablement program remains a strategic focus for TRAK, as part of its effort to benefit from the secular growth trends in the Internet Of Things (IoT) market. The company now has 340 customers, including several heavyweight reference customers in their respective sectors. The company has publicly stated near-term targets of driving to 500 customers, 25,000 subscriptions (from 11,000 today) and $10M in revenue (effectively doubling the trailing rate).

Click here to access the newsletter online.

The TRAKOPOLIS Operational Update – A Bit More Colour

In the company’s update that was issued on Wednesday (February 1st), there were several positive developments noted that nudged our curiosity and prompted a conversation with management. Most certainly, this is not “inside” information, but it does provide somewhat more dimension as to the progress being made at TRAKOPOLIS.

The news release stated that four new salespeople had joined the team, two in Canada and one each in Texas and Pennsylvania. When it comes to Canada, one is in Ottawa and the other is in Atlantic Canada with the principle responsibility of supporting the company’s partnership with Bell Mobility and the new “Electronic Log Book” offering. Management is providing additional resources to this sales push because of its belief in the size of the prize. The release stated that this is the “first phase” of its growth expansion as it is adding more boots on the ground to its existing sales team.

On the U.S. side, the people now located in Texas and Pennsylvania are there to add weight to the launch of an offering that sees Honeywell’s new Wi-Fi enabled gas detector incorporating TRAKOPOLIS’ software technologies. Even as written in the recent report from Canaccord that placed TRAKOPOLIS on the firm’s Watch List, “the addressable market for this type of offering in North America alone could be 150 thousand units”. It’s very understandable why TRAK management is “enthused” in context of the market opportunity and the partnering with Honeywell that has the potential to greatly accelerate growth in the company’s recurring revenue stream.

The news release also stated that 1036 new devices (subscribers) were added through December and January representing 51 customers. Remembering that in the last corporate presentation TRAK had a subscriber base numbering eleven thousand, a nine percent increase to that base over the course of two months, especially as it was the holiday season, at least deserves an “attaboy.” Of the 51 customers mentioned, 25 were new names representing different verticals such as energy, mining, transportation, etc.

Management says that revenue will be recognized as hardware is shipped, installed and activated, which is ongoing.  

As we were about to end the phone conversation, management adeptly reminded us that this growth came on the heels of all the work required to complete the public listing in November, the four new salespeople were in training and not yet selling and the new product offerings played no role in the recent wins.

The first big target for TRAK is reaching 25 thousand subscribers and 500 customers, which management forecasts puts the company on a $10+ million annualized run rate.

To view news release, please click here.

TRAKOPOLIS Elevated to Canaccord’s Watch List

In what is clearly a blossoming sector, Doug Taylor, Canaccord Genuity’s Director of Technology and Aerospace Research, makes the case for TRAKOPOLIS’s positioning within the “sizeable sandbox” that is the “intersection of telematics and IoT (Internet of Things).”

Mr. Taylor writes that TRAKOPOLIS has positioned itself well in that, “A key differentiator is the hardware-agnostic and carrier-agnostic nature of its business while many competitors’ solutions are built on often inflexible proprietary hardware. Trakopolis prides itself on the flexibility of its platform and the ease with which new applications can be produced and new hardware endpoints integrated. Its API means new devices can be added to the platform quickly.”

In addition to aligning itself with large entities such as Microsoft, Telus and Bell, Mr. Taylor addresses the company’s strategic partnership with Honeywell where its wireless gas monitoring devices are married with TRAKOPOLIS’s solutions. The product offering officially launches in this quarter with management estimating the North American addressable market alone could be 150 thousand units.

Recurring revenues are what speak to future growth and valuations. On this point, 70% of TRAKOPOLIS’s revenues are of a recurring nature.

To read the full report, click here.

TRAKOPOLIS Well Received at Canada’s Cantech Conference

On January 17th and 18th, senior members of TRAKOPOLIS’ management team participated in the Cantech Investment Conference. Held at the Metro Toronto Convention Centre, it is considered Canada’s biggest technology conference.

Brent Moore, CEO of TRAKOPOLIS had this to say about the conference. “We considered it to be a big success, we spoke to a lot of interested individuals, including fund managers, investors and analysts. We had constant interactions and we conducted many demonstrations of our technology.”

At the conference, Mr. Moore delivered a presentation to approximately 70 people. Below is the presentation material.

To learn more about the 2017 Cantech Investment Conference, please click here