Today we have the CEO, Glenn Milnes, and the company's CFO, Brian Musfeldt. Before I hand it over to Glenn to go through the presentation up on your screen, I'll just remind you that you can submit questions through the Q&A button at the bottom of your screen. For analysts, you can raise your virtual hand, and I'll allow you to ask a question verbally. Glenn, I'll hand it over to you. Thank you.
Great. Thanks, Simon. Thank you, everyone, for joining this update. Appreciate your time. What we'd like to do is run you through the fourth quarter update. Before we start, please take note of this important notice in terms of the information that's disclosed. What we'll do is run through the performance headlines. We'll talk about our outlook for FY2026. Our year starts in April each year. When we talk about '2026, it's the period through to March 2026. We won't spend a lot of time today talking about the broader addressable market and our products. We've got various update documents coming through early May and early June, which will be a refresh look at some of these items. The fourth quarter was another really strong period for the business. We're really pleased in terms of how the year concluded.
You will see in the charts, Brian will take you through shortly, our subscription revenue exit run rate is up close to 50% through this year based on the sell-through of various subscription products. We do expect, as we go into FY2026, to continue at similar, very strong growth levels into next year. That sets us up, I think, very well as we think about our targets for FY2026. In the quarter itself, pleasingly, we closed almost $12 million of new contracts in the quarter. That included some long-term subscription deals with some of the biggest electric utilities in the United States. We will talk a bit further to who those customers are and the context of those deals to follow. Again, our balance sheet strengthened again through this quarter. We had almost $2 million of cash and receivables growth through the fourth quarter.
We're in a healthy spot from a balance sheet standpoint. The other item, which everyone, I think, is aware of, is we did have an unsolicited, non-binding acquisition approach from a private equity group out of North America at about $1 a share or $170 million enterprise value level through the quarter, which, based on a process, was discontinued from a company standpoint. Be happy to talk about that in the Q&A section. Brian, perhaps if you can take the group through the financial charts.
Yeah, great. Yeah. Please let me first note we did post an amended press release, an investor presentation after market open today. It was really just to correct some misappropriated labels on the X-axis of the three revenue charts. No other information was changed, but just make sure you have that. We apologize for the inconvenience. To start with your exit run rate, the figures on this chart represent the contracted, annualized platform subscription revenue at the end of each reporting period, or what we call our exit run rate. We ended fiscal year 2025 with an exit run rate of annualized platform subscription revenue of $17.6 million, an increase of over 48% versus the same period in the prior year, and a three-year CAGR of over 40%. The company continues to maintain dollar-based local retention rates across all of our current platforms of approximately 95%.
The increase in our exit run rate, strong retention rates, combined with the continued growth of IKE Office and IKE PoleForm and pipelines, gives us confidence that subscription ARR will grow 35% and potentially higher in fiscal year 2026 based on our current contract momentum. This chart represents our contracted platform subscription revenue generated in the period from our key software offerings, including our IKE Office suite of products and our IKE PoleForm and platform. Platform subscription revenue continues to drive our growth, growing 34% to $14.4 million in fiscal year 2025 from $10.7 million in fiscal year 2024. The growth in fiscal year 2025 was driven by the successful sell-through of our newly launched IKE PoleForm and platform, along with continued growth from our IKE Office suite of products.
The revenue growth rate of 34% was slightly lower than forecast due to timing of contract closes related to the conversion of customers to our new IKE PoleForm and platform. This is evidenced by the growth in the exit run rate of our annualized platform subscription revenue increasing 48%, as we noticed on the previous slides. Platform subscription revenue now represents over 50% of our total revenue, and our sales pipeline for new business is strong and growing. This slide summarizes the seat and device license revenue the company had under active contract at the end of each reporting period. These licenses each represent an engineer actively using one of our subscription offerings. Seat licenses have grown over 103% in the last year, and we now have approximately 8,500 active licenses.
Seat licenses have grown at an accelerated pace due to customer additions and upsells, as well as transitioning customers onto a new per-seat subscription model when adopting the new IKE PoleForm and platform. To date, 127 existing and new customers representing over 5,600 licenses have adopted the new IKE PoleForm and product. Our platform transaction revenue came in at $7.7 million for fiscal year 2025, representing a three-year CAGR of 6% and an increase of about 3% from prior year. In addition, margins from the platform transaction revenue improved from approximately 24% in fiscal year 2024 to 32% in fiscal year 2025. This increase is due to software improvements and operational efficiencies made during late fiscal year 2024 that allowed us to deliver these revenues more cost-effectively.
Based on the contracts in place and the strength in our pipeline, the company expects transaction volumes and associated revenue from platform transactions to build into fiscal year 2026. As consistently stated, timing and delivery of these transactions are customer-dependent and therefore variable. Total revenue improved by about $4.1 million, or 19%, to $25.2 million in fiscal year 2025 from $21.1 million in fiscal year 2024, primarily driven by growth in our platform subscription revenues. Recurring platform subscription revenue represented 50% of our total revenue in fiscal year 2025, up from 51% in fiscal year 2024. Recurring subscription and reoccurring transaction revenue, shown in the green and the blue segments in this chart, continue to dominate our revenue mix, representing over 87% of the revenue for fiscal year 2025.
The continued growth of our existing software offerings gives the company an expectation to continue healthy growth into fiscal year 2026, including 35% or potentially greater growth in subscription ARR for fiscal year 2026. This table summarizes the key revenue segments, revenue drivers, and gross margin metrics for the company. We have covered most of the key revenue metrics on this table in the previous slide, and note that all of the metrics are tracking in line with our current plans. Regarding the gross margins, our blended gross margin profile continues to improve, with gross margin dollar growth of 37% versus prior year, and gross margin percentage improving to 69% in fiscal year 2025 versus 60% in fiscal year 2024.
The increase in gross margin was driven by improvements across all segments as management continues to drive cost efficiencies in the business and a continued shift in the product mix toward higher margin subscription revenue. We expect this trend to continue into fiscal year 2026 and beyond. The company also added 72 new subscription customers during fiscal year 2025. Fifteen of these were added in the fourth quarter. During the fourth quarter, the company completed its conversion process to the new IKE PoleForm and platform, discontinuing support of the legacy PoleForm and platform. As a result of this process, we have converted 68 key customers, representing approximately 90% of the ARR from the legacy platform. On average, we increased the ARR from the converted customers by about seven times.
In addition, we have added 59 new customers, bringing our total customer count to the new IKE PoleForm and platform to 127 customers, adding over 5,600 new seats and adding over $17 million in total contract value to the business. In turn, approximately 40 legacy PoleForm and customers, representing about $100,000 of ARR, did not convert to the new IKE PoleForm and platform upon the discontinuance in the fourth quarter. We have recorded these customers as lost in the attached table, which is reducing our customer count from 420 at the end of Q3 of 2025 and keeping it flat year- over- year at 395. We do expect some of these customers will eventually adopt the new platform based on the project timing and budget cycles, but note that the average ARR lost from these customers was under $3,000 per customer.
Total cash and receivables as of March 31 were $15.4 million, comprised of $10.3 million in cash, $6.1 million in receivables, and $1 million in payables with no debt. Our cash balances remain consistent over the past 12 months during a period of substantial investment into building new products and continued customer expansion. Our balance sheet remains strong. I will turn it back to you, Glenn.
Thanks, Brian. I think just being respectful of everyone's time, we will not go into the broader slides around the market, our products, and what we do. I think there are some really important things as we head into this next year. Brian touched on IKE PoleForm. Since we acquired that asset, I think by the end of this year, we would have grown that revenue stream by about 20 times in terms of recurring subscription revenue. That matters a lot because as we win these big electric utility customers, they own the network. If you are a communications company or if you are an engineering company doing work on an electric utility grid, if IKE is the standard, then we get that long tail of adoption that starts to sit behind the IKE PoleForm and products.
We have some really interesting opportunities to expand across our customer footprint, and we think some very meaningful opportunities to extend our customer footprint. I mean, today we have in total about 500 enterprise customers, but this is a universe of perhaps 6,000 targets. Our goal is to keep landing and expanding across this customer footprint. As I mentioned, we'll be delivering some new market information through May and through June in terms of how we're planning our growth journey from here. We feel very well positioned in the industry at the moment. Feel we're in the right place at the right time in terms of market trends. Again, the United States has to double the electric capacity of the grid over the next 20 years, and it's got to harden the network so that it doesn't fail when storms or weather events, etc.
We're serving a really important industry at an important time. We're going to stay very focused on that strategy. I'll pause there, Simon, and happy to take questions.
Perfect. Thanks for that, Glenn. Just a reminder, if you did have a question, to submit it through the Q&A button at the bottom of your screen. First up, we have a question from James Bisinella at Unified Capital Partners. I will just allow him to talk. James, please go ahead.
Thanks, Simon. Congrats on the result as well, Glenn and Brian, and a strong finish to the year. Look, just a few from me. Firstly, I mean, just on the FY2026 guidance in terms of subscription ARR growth, it's pretty solid at 35% or greater. Just keen to understand the drivers to that number. I guess, is this coming through in the pipeline? Just some additional context there. In terms of where the growth is coming from, is it a combination of IOU, co-ops, and municipalities? Just a bit more context would be fantastic. Thank you.
Thanks, James. Look, that guidance is based on contracts that are in place and are being deployed, plus obviously some pipeline opportunities. We continue to grow our footprint. It is being driven mostly by electric utilities in terms of their grid hardening and grid capacity build. There is some growth that comes from the fiber build-out. We can talk to actually the fiber market in some more detail because that is the item that has a bit more risk around it in terms of the industry. Mostly, if we look at our five-year, ten-year forecast, we are growing because of electric utility expansion rather than the fiber component.
Okay, fantastic. Just a couple more as well. Just on the point of operating leverage. There is good growth in gross margin also coming through. Just keen to understand incremental cost required to scale the business as ARR comes through. Should we be assuming that the majority of the cost build is now out of the way and a lot of that revenue growth is dropping through to the bottom line?
Yeah, broadly, that's the case. I think we've invested substantially into two things, not just product development, but we've invested in systems so that we can keep scaling without adding people as we become larger. We've invested a lot in brand and customer experience, and that drives pricing power. Those two things help to enable scale and obviously get to becoming a very profitable business over time. Brian, you might want to add to that. I mean, I think we're still a relatively small company in a very, very large industry, and the companies we serve are the biggest infrastructure businesses in the world. You do have to keep scaling to support these groups, but we think we can do it very efficiently from here.
Yeah, and just to add to that, I think you will see improvement in the margin, as we said, over the next years. The cost base around the subscription revenue is fairly typical of what you see of a subscription company, just in hosting fees and some minimal support. We expect to see margin improvement, and then we should be able to gain leverage. As Glenn said, we've overinvested against the curve in our sales and engineering teams over the last few years. You won't see matching growth in that over the next year or two.
Just lastly, kind of digging into the transactional business as well, should we expect gross margin improvement there also, just given the IKE staffing out of Mexico and the like?
Yeah, yeah. Again, we talked about that. We've shifted a lot of the team to Mexico. That team continues to get more and more efficient, and we'll continue to invest the resources there in that space. Yeah, we expect the revenue in that space or the margin in that space to also kind of incrementally improve as well.
I think it's important for our shareholders and investors to understand the revenue flywheel for IKE because this matters a lot. I mean, we're a technology company. We ship software products on a subscription basis to our customers. As the flywheel goes around, we offer value-added strategic services and technology-enabled services, which creates stickiness with our customers. It's building one thing on top of another. Again, we think that matters in terms of differentiation and stickiness with these groups. I mean, every time we close a utility customer, we think about them as a multi-decade account opportunity. The transaction piece of what we do is an important part of that, but it's sort of the last piece of the revenue flywheel.
Fantastic. Look, that all makes sense. Thanks for taking my questions. Congrats again. All the best.
Thanks.
Right, thanks there, James. I'll just allow Jules Cooper from Shawn Partners. Jules, please go ahead. Sorry, Jules, if you just unmute. Just give him a little. Perfect. Go ahead, Jules.
Okay, all right. Sorry for that. Everyone can hear me now?
Perfect.
Great. The ARR growth, really strong year, I should say, just opening. I think about migrations of existing customers from what we've seen in other companies to take 60-odd customers, 90% of your legacy revenue, and uplift that seven times in the space of a year. Glenn, congratulations. Well done. That is definitely very impressive. The ARR exit rate too was very strong, particularly in the fourth quarter. I just wondered, you've guided to sort of that ARR growth continuing at + 35%, but just given that really strong exit rate, should we see the subs revenue in FY2026 being higher than 35%? I just wanted to sort of make sure people are clear between booked revenue and what you're sort of guiding to there.
Yeah, Brian, do you want to take that first?
Yeah, so we're guiding right now to 35% exit run rate growth, Jules. That exit run rate kind of compounded up over the year. Right now, we're guiding to 35% on exit run rate. We'll probably give a little more guidance with the May release on the actual revenue number and what that guidance will be. Probably not quite as strong on an overall percentage, but in that range.
Yeah, okay. All right. Look, PoleForm, like I said, has been very successful. Can you give us any perspective just within the sort of eight and a half thousand seats, how many of those would be PoleForm and is at the end of Q4 and maybe the ARR that underpins those seats, if that's possible?
Yeah, we do disclose that. We did say about 5,600 of those seats are for PoleForm. We do not break out the ARR by segment at this point. It is probably not equal as far as seats to ARR. PoleForm, because of the conversion process this year, some of the larger IOUs get a little higher discounts just because of volumes and terms they are committing to. PoleForm, as a dollar amount, will be probably closer to 40% of our ARR by the end of next year.
Okay, fantastic. I guess you've guided to 35% exit rate ARR for FY2026. Just as a broad sort of brush statement, are you able to sort of give us a sense for what you're expecting from existing versus new customers that sort of underpins that target in the year ahead?
We can. Obviously, we've got that set out in our plans and targets and sales quotas, etc., but we haven't published it. There's still, on the upside, a go-get number which gets us into a better place. Again, just for context for everyone on the call, we talk about being the standard in eight of the ten largest investor-owned utilities in the U.S. There are 106 investor-owned utilities delivering distribution power across the U.S. There are 3,000 electric utilities across the whole market. We haven't even scratched the surface in terms of market development. I think that's a really important thing. We've purposefully targeted the very biggest utilities to begin with as we've come to market here in the United States. There's a really large rest of the market to go and get.
There is a very long tail of electric utilities that might not sound so big in a U.S. context, but they are still big companies and big accounts for us to chase. That is how we are thinking about our sequencing of go-to-market focus.
Got it. It does sound like you're quite confident that the new customer growth of the business is going to maintain at very strong levels by the sounds of what you've just said there, Glenn.
Yeah. Look, it's one of these fascinating industries. A, keeping the power on, it really matters. It's critical to an economy or a country. The second thing is these folk, they're all natural monopolies. They're not competing with one another. They share best practice. It's unique for the electric utility markets, unique in that sense. If you win the thought leaders and the biggest and best customers, they tend to share their practices with other folk. You sort of have that ecosystem effect that can potentially flow from here. We're trying to build not just the best technology, but also a really great brand and customer experience for this industry. Hopefully, that has that ecosystem effect in the medium term and long term.
Excellent. All right. That is it from me. Yeah, well done again. Very impressive.
Thanks, Jules. Just some submitted questions that I'll get to now. Did the balance sheet still strengthen if you exclude receivables growth?
Yeah, receivables actually were almost flat as well. The receivables were slightly, I think the receivables are up just under $1 million. Cash has continued to grow with receivables.
Perfect. Thanks, Brian. When will the company achieve its first half-year statutory profit? Once it does, will it try to grow profit every year or just keep it flat around break-even while trying to maximize revenue growth?
I mean, that's the great question. In terms of what capital markets are looking for, we're trying to build value for shareholders. I think we've got to keep watching what's required in the markets to maximize shareholder value. Obviously, we're still a small business and a massive industry, and we're looking at things with a multi-decade view. We want to be the standard for distribution design for the North American electric utility market. I think that requires that we keep investing and being substantial enough to serve these really, really large infrastructure companies. We'll keep balancing things in the short term and medium term.
Great. Thanks, Glenn. Can you comment on the overheads and bottom line result?
Yeah, we'll cover that in our May meeting when we do our full financial release.
Perfect. Thanks, Brian. Just last question. What sort of feedback are you getting from customers with respect to impacts and tariffs and other White House policy communication? Is this creating any CapEx or investment uncertainty from customers?
Yeah, it's sort of chaos at the moment, obviously, in terms of policy and the tariff situation. We're very fortunate. We're a US software company delivering US software to US customers. So we're largely unaffected in terms of how you think about pricing and margin erosion. I think the uncertainty at the moment sits, it's not with the electric utilities. They're on five-year, ten-year, twenty-year CapEx network programs. The uncertainty sits with perhaps folk that are deploying fiber networks. A lot of these groups source their fiber infrastructure. So this is their cost of capital, right? It's their infrastructure from Corning and a couple of other US groups that manufacture within the United States. But anyone that's sourcing fiber infrastructure from outside of the US, obviously, blindsided at the moment. We're seeing a few groups that are frozen, but we're truly fortunate most generally in terms of tariff implications.
Great. Thanks, Glenn. That concludes the Q&A segment. I might just hand it back to you for closing remarks.
No, thanks, Simon. Thanks all for taking the time to join. We will have various other releases coming through May and through June. Look forward to staying in touch.
Awesome. Thanks all for joining. Thanks, guys.