eResearch | On May 26, mCloud Technologies Corp., (TSXV: MCLD) (OTCQB: MCLDF), released its 2019 annual & Q1/220 financial results and announced a $4 million capital raise in pre-NASDAQ listing offering.
mCloud is a provider of asset management solutions combining IoT, cloud computing, artificial intelligence, and analytics. The Company, a CleanTech leader, helps businesses reduce energy waste, maximize energy production, and get the most out of critical energy infrastructure.
2019 Financial Results
mCloud reported 2019 revenues of C$18.3 million representing a 922% growth compared with C$1.8 million revenues reported in 2018. The increase in revenues was due to the consolidation of Agnity Global Inc. and Autopro Automation revenues, acquired in 2019, as well as some organic growth from AssetCare.
In Q4/2019, revenue was a record C$10.0 million with gross margins of 63% are explained by new customer engagements driven by higher-margin AssetCare solutions and the reductions in legacy technical project services revenue, which are lower margin.
The Company’s acquisition of Construction Systems Associates, which did not close until January 27, 2020, was not included in revenues in 2019.
EBITDA in 2019 was a loss of C$5.7 million compared with an EBITDA loss of C$11.3 million in 2018 even with the increases in Operating Expenses caused by the transaction costs, acquisition consulting fees, legal and professional fees caused by the acquisitions.
“Going forward, mCloud’s organic growth in recurring revenues are expected to outpace the Company’s non-recurring expenses related to corporate development, including our market up-listing activities and recent acquisitions”, explained Russ McMeekin, Co-founder, CEO and President.
Q1/2020 Results
Even with COVID-19 related travel restrictions, mCloud added 7,584 connected assets to increase the total connected assets under management to 48,672. Revenue was C$6.6 million in Q1/2020, and increase of almost 200% from C$2.2 million in Q1/2019. Approximately 63% of Q1/2020 revenues were from AssetCare solutions.
However, due to the mCloud’s revenue recognition policies, AssetCare revenues attributed to technologies from mCloud’s acquisitions were lower in Q1/2020 as compared to Q4/2019, although the AssetCare revenues are expected to increase quarterly with the largest contribution coming in Q4/2020.
The Company developed a substantial backlog of new AssetCare implementations and expects to monetize it shortly after pandemic restrictions ease.
2020 Guidance
On its conference call hosted on May 26, mCloud released its revenues guidance for 2020 within the C$70M – 72M with a gross margin above 60%. In addition, the Company stated that over 65% of its revenues should come from its AssetCare platform.
Results in 2020 should be driven by growth in its 3D Digital Twins and Connected Worker solution segments but 65% of revenues should still come from AssetCare solutions. The Company has experienced a major uptick in the demand for the remote connectivity that AssetCare provides.
According to mCloud, many heavy industry sites, Oil & Gas companies and process companies are looking for ways to continue operations when they cannot get people on the ground.
Barry Po, President of Connected Solutions and Chief Marketing Officer, remarked on the conference call that Smart Glasses provided by RealWear are allowing workers to maintain assets even when they are miles away. Additionally, the 3D Digital Twin capabilities are allowing workers to deal with asset problems using large-scale 3D models of those assets. Problems are solved in a matter of hours rather than days or weeks.
The Company expects C$8M to C$10M revenues from the Digital Twins and Connected Worker businesses.
“The bottom line is that we’re well positioned to achieve scale in a very large market. And when you look at that, combined with the average monthly recurring revenues that we see today per connected asset, we’ve really just scratched the surface of what mCloud is going to be able to achieve at its full market potential”. Barry Po, President of Connected Solutions and Chief Marketing Officer.
Moreover, mCloud informs that M&A activity will continue to expand the Company’s technology, geography, and market footprint.
Q1/2020 Growth and COVID-19
Due to COVID-19, customers are more focused on the health and safety of their employees and customers. mCloud highlights a big growth in remote asset connections so workers do not have to travel to site.
The Company has seen a lot of activity around Connected Workers in multiple industries. This is due to the acquisition of Agnity Global – the foundation for AssetCare Mobile – and the post-Covid world.
The AssetCare Mobile technology is quite advanced and has brought the Company to new markets as RealWear hardware users are getting to know what AssetCare Mobile offers.
According to the Company, COVID-19 requires that many industries, such as Oil & Gas, remain connected to their critical assets and field workers. The AssetCare platform puts mCloud in a good position to help industrial customers meet their goals.
mCloud Raises C$4 Million in Pre-NASDAQ Offering
On May 26, mCloud announced the completion of a C$4 million unit offering from an investor based in Europe. Each unit will be valued at C$4.00 and will consist of one common share and one-half of one common share purchase warrant, exercisable at a price of C$5.40 for 5 years.
“We are proud to have attracted the attention of investors all over the world as we continue our journey toward being listed on the NASDAQ this year”, said Chantal Schutz, mCloud Executive Vice President and Chief Financial Officer.
The Company explained the net proceeds of the Offering would be used for working capital and general corporate purposes.
NASDAQ and TSX
The Company reported that they are preparing to move listing to the Toronto Stock Exchange as well as to the NASDAQ exchange in 2020. In anticipation of the uplisting, in Q1/2020, mCloud closed a C$13.3 million special warrant financing.
“We are working very actively to list to the NASDAQ and uplist to the TSX main board”, said Russel H. McMeekin, Co-founder, CEO and President of the Company.
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To learn more about, mCloud, read our article about the Adelaide Capital’s CleanTech conference where mCloud presented – Canadian CleanTech Companies Speak about the Current Market
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GRAPH 2: mCloud 1-Year Stock Chart
