Senetas Corporation Ltd (ASX: $SEN) Half Year Results for the six months to 31 December 2023

Senetas Corporation Ltd (ASX: $SEN) has announced its half-year results for the six months ended 31 December 2023. The company reported strong growth in third-party sales of Senetas products and services, with a significant increase of over 40%. Additionally, Votiro's annual recurring revenue (ARR) has surged by over 75% from December 2022, although it fell below target due to a delayed large contract. The company's cash on hand at 31 December 2023 was $11.7 million.

Senetas CEO, Andrew Wilson, on HY2023 Results

Senetas CEO, Andrew Wilson, commented on the results, highlighting the return to growth in completed orders for Senetas products following the resolution of industry-wide electronic component shortages. He also noted the significant increase in third-party sales of Senetas products and services by Thales, up over 40% compared to the prior period. Despite the lower inventory transfers and Variable Consideration, the Senetas segment gross profit remained similar to the prior period, with lower reported revenue offset by lower cost of goods sold. Wilson also addressed Votiro's performance, acknowledging the delay in a large deal in the Asia Pacific market, which impacted its annual recurring revenue. However, he expressed confidence in Votiro's strong growth in 2024 and its expected cash flow breakeven around the middle of the 2024 calendar year.

Outlook and Variable Consideration Impact

Looking ahead, Senetas anticipates continued sales momentum in 2024, with increasing demand for its products and services. The company expects higher cash flow and third-party sales of Senetas products in FY2024 compared to FY2023. Votiro's business is projected to build its customer base and sales pipeline further, with over 75% ARR growth since December 2022. Despite some delays in pipeline conversion, the company remains optimistic about its progress through the remainder of FY2024. Additionally, Senetas provided insights into the impact of Variable Consideration, highlighting the practical effect of AASB15 on its reported revenue and the expected fluctuations due to Thales's inventory levels. The company emphasized that the cash flow breakeven target around the middle of the calendar year 2024 remains on track.