eResearch| This week, mCloud Technologies (TSXV: MCLD | OTCQB: MCLDF) released its financial results for the second quarter ended June 30, 2021, with reported revenue of C$7.2 million, an increase of almost 44% year-over-year compared to C$5.0 million earned in the same period last year.
AssetCare Over Time revenues, which are recurring revenues associated with AssetCare™, were C$6.4 million and showed strong growth of 137% compared to C$2.7 million in Q1/2020.
Gross margins in the current quarter improved slightly to 64% compared to 62% for Q2/2020, a result of the higher-margin recurring revenue from AssetCare Over Time.
Cash expenses incurred by mCloud in Q2/2021 stood at $7.8 million, out of which, $2.1 million were spent on extraordinary nonrecurring items, such as fees related to financing, audit, and legal services. Other expenses also included loan repayments of $2.2 million, and $1.1 million was paid for third-party IP licensing and R&D.
In the second quarter, mCloud added 1,019 new connected assets to its managed portfolio, with the quarter-end total at 62,508. A key cash flow breakeven point for the Company is 70,000 connected assets and mCloud believes it will hit this level in the second half of 2021.
FIGURE 1: mCloud Quarterly Revenue and Connected Assets
mCloud – AI-Powered Asset Management and Quantifiable ESG Solutions
mCloud, a CleanTech leader and physical asset management solutions provider, combines advanced technologies, such as Internet-of-Things (IoT), artificial intelligence (AI), cloud computing, and analytics to help companies reduce energy waste, increase energy production, and get the most out of their critical energy infrastructure.
mCloud’s Smart Building solutions for improved energy efficiency and Indoor Air Quality (IAQ) provide a quantifiable Environmental, Social, and Governance (ESG) solution that can improve HVAC energy efficiency by up to 25% and actively manage a building’s ventilation and air purification systems to ensure the health and safety of indoor occupants in real-time through a QR code and smartphone. (Scan the QR code below with a smartphone or click on the image to see the IAQ for the mCloud Calgary office.)
FIGURE 2: IAQ App to Monitor Office Air Quality
In May, the Company announced it went live connecting its first AssetCare™ solutions to the customer buildings associated with three utility program partners. mCloud estimates these utility partnerships will make its solutions available to approximately one million commercial buildings in the US and Canada.
The three utilities were BC Hydro, which is the provincial utility in British Columbia, the Bay Area Regional Energy Network (BayREN) in California, and Con Edison in New York. The Company expects to quickly roll out the next round of buildings that include new restaurants, manufacturing, and retail spaces.
mCloud Shows Growth Despite COVID-19 Restrictions
Despite the COVID-19 restrictions in the quarter, which had a significant impact on mCloud’s earnings through lower engineering services and new AssetCare™ installations, the Company has been able to maintain its growth in the second quarter of 2021 and is expected to see more normal business patterns in the second half of the year as travel restrictions ease up.
COVID travel restrictions continue to be a roadblock for mCloud and AssetCare™ initializations were delayed in the second quarter, primarily in Alberta and certain parts of the United States.
As restrictions ease, the number of connected assets is expected to go higher as the Company moves forward with a very strong backlog, expected Total Customer Value (TCV) of approximately $80 million, and detailed planning for new AssetCare™ initializations.
First Half of the Year Setting a Positive Tone
Even with the negative impact of COVID, mCloud’s revenue in the first half of 2021 was C$15.6 million, up almost 35% year-over-year compared to C$11.6 million in H1/2020.
AssetCare™ revenues showed a tremendous growth of more than 100% and stood at C$14.4 million in H1/2021 compared to C$7.1 million in H1/2020.
Even with additional research and development expenses that amounted to be C$1.1 million, Operating EBITDA in H1/2021 improved by approximately C$2.2 million compared to H1/2020. This growth was primarily due to a reduction in payroll expenses in H1/2021. Professional and consulting expenses stood at approximately C$4.4 million in H1/2021, a decrease of C$0.2 million compared to C$4.6 million for the same period in 2020.
Figure 3: H1/2021 Revenue Highlights
mCloud’s International Expansion in H2/2021
In July, mCloud announced it had partnered with URBSOFT, an advanced ground and aerial inspection technology solution provider in Saudi Arabia, to bring AssetCare™ to the oil and gas, refining, and petrochemical operators alongside retail and real estate markets in the Middle East.
The move has paved the path for AssetCare™ to support the digitalization and ESG objectives of Saudi Vision 2030, the Kingdom of Saudi Arabia’s national economic action plan.
According to Russ McMeekin, President and CEO of mCloud, “The Company is well-positioned to scale through the remainder of 2021 and beyond via efforts on all fronts, including our expanded reach through our new partnership with URBSOFT, which enables us to collaborate on the enormous opportunity to reduce GHG emissions and energy waste across the Saudi petrochemical industry through the Kingdom of Saudi Arabia’s Vision 2030 program.”
mCloud has also seen increased growth in business activity in Asia Pacific regions in the first half of 2021. In the second half of this year, efforts in the Middle East are expected to make meaningful contributions to the Company’s overall bookings.
Strong Balance Sheet
mCloud also reported that it completed its previously announced C$0.4 million equity offering that is directed towards advancing its Alberta-led ESG and oil & gas decarbonization agenda, including the commercialization of its fugitive gas and leak detection solution.
In addition, the Company’s ATB Credit Facility is only 50% utilized. It is expected to be fully available in the second half of 2021. mCloud had executed a commitment letter with ATB Financial in May 2021 for a $5 million secured operating line.
NASDAQ Listing
On August 17, 2021, mCloud took a major step towards the NASDAQ listing when it filed its Form 40-F with the SEC.
The listing of mCloud‘s shares on the NASDAQ exchange still requires the approval of NASDAQ and the satisfaction of all listing and regulatory requirements.
Once approved, the Company will issue a press release announcing its first trading date on the NASDAQ.
mCloud Connect 2021 – Annual User Conference Set for September 14
mCloud also announced that it will host its annual user conference, mCloud Connect 2021, on September 14, 2021, as a live-streamed virtual event. Registration for the event is free and available at www.mcloudconnect.com.
The event will be headlined by Lucas Joppa, Microsoft’s Chief Environmental Officer, and Chris Hadfield, Canadian astronaut and commander of the International Space Station.
At the event, mCloud plans to showcase its AssetCare™ solutions, including unveiling new technology developments, new capabilities for HVAC and IAQ, developments in its solutions for the oil and gas industry, and advancements to its connected worker portfolio.
mCloud closed yesterday at C$2.28, with a Market Cap of C$82.0 million. It is currently covered by two analysts with a consensus Target Price of C$4.50 and a 2021 Revenue estimate of C$37.5 million.
Other articles about the Company:
- Easing of Pandemic Restrictions Accelerates mCloud’s Customer Onboarding & International Expansion
- mCloud Reports 47% Yearly Revenue Increase and Closes $14.5M Financing
- Adelaide Capital’s CleanTech conference where mCloud presented – Canadian CleanTech Companies Speak about the Current Market
FIGURE 4: mCloud 1-Year Stock Chart
Notes: All numbers in USD unless otherwise stated. The author of this report, and employees, consultants, and family of eResearch may own stock positions in companies mentioned in this article and may have been paid by a company mentioned in the article or research report. eResearch offers no representations or warranties that any of the information contained in this article is accurate or complete. Articles on eresearch.com are provided for general informational purposes only and do not constitute financial, investment, tax, legal, or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this information should consult with a financial advisor. The article may contain “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements are based on the opinions and assumptions of the Company’s management as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein. Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Please read eResearch’s full disclaimer.
