Good morning, and welcome to ikeGPS's H1 of Financial Year 2024 update, released on the ASX and NZX this morning. From the company today, we have the CEO, Glenn Milnes, who'll run through the presentation up on your screen before we get to Q&A, post the conclusion of the presentation. I'll just remind you, you can submit questions through the Q&A button at the bottom of your screen, and we'll get to those, as I said, post-presentation. Glenn, I'll hand it over to you to go through the presentation. Thanks very much.
Great. Hey, thanks, Simon. Thanks, everyone, for taking the time to catch up and meet this morning. So further to our update that was released to the market, I just wanted to go through... We've got quite a number of slides, but obviously want to focus on some performance outcome items and then open things up for Q&A. So, please take note of that important notice. Yeah, I want to chat through the H1 performance numbers, and then talk as we did through the Annual General Meeting, talk about the addressable market and IKE's value proposition. I think most of you on the call know the background for I. We've, you know, we've grown and grown through the last couple of years.
Over through FY 2023, we grew 90% to NZD 31 million of revenue. We've got about 400+ customers in the North American landscape, driving productivity outcomes for electric utilities and also for communication companies that are deploying fiber networks. So in terms of the H1 of the year, we've had a mixed period. This is really well signaled, I think, to customers and to investors. We've continued to grow our subscription revenue base pretty strongly. We've had a temporary slowdown in terms of transaction revenue from some core customers.
This transaction revenue is coming back, we expect pretty strongly through the second half of the year and also through, you know, taking a medium-term and long-term view in terms of IKE. And just as a recap, we generate revenue from subscription revenue customers, and then on top of that, some of our customers pay us transaction revenue as they do more engineering with our software over time. So we had a slowdown through the H1 of this year. If you look at the way that our revenue mix builds, the subscription piece of what we're doing has grown strongly. We've kept adding customers, they're pretty sticky, and we've got a next generation PoleForeman product that's adding to this over time.
So this will continue to build, we think, in a really positive way over the coming second half of the year and into next year. The transaction piece has been influenced by some really large national U.S. communications companies. Again, these long-term customers of ours are indicating that they will continue to grow pretty strongly over the next half of year and the rest of the year. So while we've had like a dip down in terms of transaction revenue, we expect that to come back quite significantly over the second half of the year and definitely into next year.
We've got very close relationships with some of these big national communications groups, and we feel really confident about where they're at and how they're using IKE software going forward. And we always publish the same table in terms of kind of the key metrics across the business. So, taking a medium-term or long-term view, again, we think we're in a really healthy position across the broader business. So some of these slides for some of you is repetition, but for others it might be new. But we have these slides to represent what IKE does from a software standpoint and the, you know, the value we bring to the market in North America.
So I'm just gonna pulse through this really quickly, but more than 3,000 electric utilities in the North American landscape, more than NZD 200 million distribution assets. So IKE's value proposition is to digitally improve the way that engineering companies and electric utilities design and maintain their assets. We think this is a 20- to probably 30-year market tailwind. And again, just to provide something of a visual view of just how big this market landscape is, you know, we serve all 50 states across the United States. We're based here in Colorado, in the U.S. That these—this is the footprint of investor-owned utilities across the North American market.
Today we're in seven of the 10 largest investor-owned utilities, but it's simply an enormous market opportunity in terms of what we do for the electric utility landscape. And we're, you know, expanding our footprint fast. And then if you look down below that investor-owned utility landscape, again, you know, there's more than 2,500 municipalities and cooperatives that again run the electrical grid across the United States. And they all represent really large annual software opportunities for the IKE footprint in terms of designing the network, running the network, and maintaining the network over time. And again, another chart just showing the sheer scale of what's being invested in terms of building distribution capacity and resiliency across the U.S.
So these numbers are in $hundreds of billions in terms of distribution network spend. So yeah, we really feel we're in the right place at the right time. We have a suite of 3 software products. One's around understanding how to design your network, so doing pole loading analysis for every pole. That product is called IKE PoleForeman. We've got a system around assessing and designing your network, which is called IKE Office Pro, and then we've got a like a bulk data processing product called IKE Insight, which allows these electric utilities to like see their network at whole of scale. That's called IKE Insight. So IKE's around building out a whole suite of capability for productivity and efficiency around the electric utility grid.
So again, you know, we mentioned today we're in 7 of the 10 largest investor-owned utilities. We're in hundreds of utilities overall and a bunch of the communications companies that are designing these networks, most of which is going overhead in the United States. We go to market directly. We're building out a team of experts who really understand how to assess, design and build and engineer an electric utility grid. As I mentioned, we're based here in Colorado, in the United States, and we've got a sales motion that supports that. So we do work with partners, but we have a direct go-to-market strategy.
We have a direct go-to-market sales playbook that lets us, address and deliver these really, really large but important customers in the electric utility market. So pulsing pretty fast here through what we do. But, there are some visuals on kind of how our software actually gets used in practice. And I know in with an Australian or New Zealand lens, sometimes it's difficult to understand the size and scale of the U.S. market. This is like looking at the very bottom end of Florida in the United States. But here, here's a lens of how our customers are using IKE software. So, this is with Crown Castle. Crown Castle is the biggest shared fiber communications network in the United States.
They use IKE everywhere they go in the United States. Just a view on how they use IKE software to think about designing their network. And then, you know, zoom out. Looking at AT&T, it's the biggest communications company in the world, how they think about using IKE for all of their markets across the United States as they roll out fiber. So just a visual representation of their use of IKE software. And the reason they use IKE is 'cause we just help them deploy their networks faster and faster and better in terms of the whole deployment process. So again, just an enormous market opportunity.
Again, we talked to this in the Annual General Meeting a few weeks back, but we're just at the very start in terms of how electric utilities and communications companies are deploying capital and de-deploying, deploying their network dollars, which is how, you know, which is how we play. So, some examples here of some logos that are relying on IKE every day at the moment. At the top, we've got the communications companies, some of the biggest groups in North America. On the electric utility side, in the middle, again, we're just getting started in terms of our footprint, but we do have some of the very largest electric utilities in North America.
Then down the bottom, the very important engineering partners that we work with, that do a lot of this work for us. Some more market data for this group to look at, but the spend is extremely high. It's growing and growing and growing. It's not going to stop for the next 10 to 20 to 30 years based on requirements in terms of the grid itself. So we, you know, we're lucky to be in the right place at the right time. And some more detail here on just the market drivers. Again, IKE helps this process happen faster, better, cheaper, in a digitized standard. But, you know, again, some really significant market tailwinds in terms of driving our business.
Some more detail there on, on the customer footprint. We added one of the 10 largest investor-owned utilities through this last quarter, which we're very excited about in terms of being able to expand footprint. I'll just go quickly through the H1 period. There were a number of significant items. Although from a total revenue standpoint, we stepped backwards, we bought on some of these big customer footprint items. And I think that really supports our view on the broader revenue growth item through the second half of the year, and especially as we look at FY 2025. Brought on some new tier one customers in terms of one of the larger national fiber businesses operating.
Initially, we've closed a $1.5 million subscription contract in California with a big communications company. We converted one of the 10 largest investor-owned utilities on the East Coast of the U.S. in terms of our next-generation IKE PoleForeman products. And we also actually brought on one of the largest national engineering companies that serves the electric utility market. So we've continued our run rate of new customer wins. I think, with an investor lens, we've invested a lot as a business into new products and new product capability.
We've launched this quarter, the next generation IKE PoleForeman product, with a pretty amazing customer council in terms of the support of a standards group and customer council that includes these logos below, which might not necessarily mean a lot, but it's expected to increase our recurring subscription revenue just very substantially with our existing customer footprint for IKE PoleForeman. So that has occurred, and we're already converting customers into this new business model through the second half of this year. And then finally, from a product innovation perspective, we've partnered with Google to bring a capability to market around doing things like network viability for telecommunications companies.
So I won't labor too long on the technical capability here, but we're giving our customers the ability, like at whole of network scale, to understand how they can deploy a fiber network as fast and as efficiently as possible. And there's some imagery here around how between ike and Google data, we can start to show a network company around where they should go and how they should go in terms of overhead network deployment. So some imagery here around how easy it's gonna be and how fast and how cheap it's gonna be to get a network deployed at scale. So with some graphics around understanding how these networks get deployed over time. Added some great talent in terms of the team.
Really pleased to introduce Brian, who's here on the call as our CFO. Well, Brian's got a huge amount of experience in the public markets and private markets on the communications and network side of things here in North America. Also with Brett Willitt joining us from Bentley and SPIDA Software. They're a key competitor on the structural analysis side. So Brett's joined us as our SVP of product, among some other people. We acquired the assets of Marne & Associates, so that gives us more capability in terms of training and education. So just touching and being much closer to our customers...
An ability to talk about some of the problems that our customers face, but also talk about some of the technology that we have that helps our customers to do things better, faster, cheaper, over time. So that's a key part of our go-to-market and sales and marketing strategy. I think as you... Most folk on the call know, you know, we expect to just continue to grow and grow. There's a number of avenues to do that through winning new customers. You know, we've only scratched the surface in terms of winning logos. There's a very significant cross-sell and upsell item in terms of how we win a customer and grow over time.
We are still looking at more M&A, which has been a successful route for us, as well. And eventually, you know, we're looking outside of North America in terms of market landscape. So, you know, we feel really optimistic about the ultimate avenues for growth. So, Simon, I'll pause there. Thank you. I know I went through a bunch of slides quickly, but keen to take questions.
Great. Thanks, Glenn. Just a reminder, if you did have questions, Q&A button at the bottom of the screen. But first question, Glenn. Enterprise customer numbers appear to have fallen in the period contrary to the commentary. Please explain what's going on here and why it was removed from the operational data table.
Yeah, [crosstalk] I can, I can take that one. [crosstalk] I'll take that one. Yeah. So sorry, guys. I, we removed that... I removed that line from the subscription. You know, we had that enterprise customer line buried in the subscription revenue line on that table. I didn't think that was appropriate. That really represented all the enterprise customers of the company, so some of those customers would probably be better reflected in the transactions or the other categories. So I removed that. We will bring that back in the right categories, next time, but I, I see the follow-on question here. So just to give you the, the numbers again, we added 31 customers this quarter or H1, excuse me, and that brings our total customer count up to around 408 right now. So just want to make sure everybody's clear.
When we say enterprise customers, that's all customers across all three of those segments, and we'll get that broken out better in the next, in the next disclosure.
Perfect. Thanks, Brian. Well explained. Have transactions returned to prior levels yet? The commentary makes me think the recovery may be more of a slow build back rather than a step change.
I think the, I mean, we've, we've, you know, we've always explained to shareholders in the market that we've, you know, we've got some customer concentration risk. And we've almost had a perfect storm, actually, through the Q2 of the year. These customers are long-term customers. They're all communicating that they expect items to come back at real pace, I think, through the second half of the year and into the next financial year. So none of them are going anywhere. We've just run into some regulatory hurdles indirectly through them, through this period. So, you know, we actually couldn't be more optimistic in terms of how the whole prospective period is appearing.
Great. Thanks, Glenn. You probably just sort of answered this question just with your answers then, but how often can we expect slowdowns similar to this to reoccur?
Look, I think the market tailwinds are so strong behind what we support. So, you know, take a big picture lens. I think things are really robust. So we're talking about national communications companies deploying networks, and they've got 3-, 4-, 5-, 6- or 7-year CapEx programs committed to their network builds. So yeah, you know, I think overall, you know, we're in a really good spot. Yeah, we've run into some regulatory challenges, not related to us and not actually not related to our customers, where these groups have slowed down. But, you know, we expect them to speed right back up.
Great. Thanks, Glenn. Just last question. What's the rollout timetable for Pole Foreman? How many of your enterprise customers would you hope to have upgraded to Pole Foreman by the end of this financial year or next financial year?
That's a good question, and it's really meaningful for our revenue profile. So next-generation PoleForeman is rolling out right now, so it's with lead customers. And then the hard launch has, you know, occurred, and we expect a lot of our major customers to convert through the second half of the year. And that, that's really. It is really meaningful for our revenue profile. So, you know, that's driving recurring revenue of NZD 5 million-NZD 7 million of annual revenue from some of these big investor-owned utility customers. And they, our expectation is they are all converting. And again, we're talking about customers that have hundreds, if not, in some cases, you know, more than 1,000 engineers that use the PoleForeman software every day for design.
All of these customers are on our customer council. They've helped us design the product and release the capability. So, it's a, you know, really meaningful step in terms of product capability.
Great. We just had a few late questions come in which we'll address. When will the Google relationship generate its first revenues for IKE Insight?
It already has. Or it's, you know, it's generating revenue right now. So it's an opportunity for us to engage with different infrastructure companies in a different kind of way. So it's been a while in development, but it's taking place at the moment.
Great. Thanks, Glenn. Can you give us some more color around the type of regulatory challenges that have caused the slowdown in transaction revenue?
Yeah. The... They've been somewhat unrelated. In one case, in state of Kansas, it's been tied to cities and city councils. And they're. The way that they think about joint use, and like in their case, it's been around like clearance regulations. So again, it's kind of out of 's control. You know, we help fiber companies design their network, put network applications into process. The way that a fiber company deals with a utility or with a city council is not something that we necessarily can control.
And in another case, with a big national fiber business, it's just that the utility does things in their own separate kind of way in terms of engineering standards and, and you know, this fiber business is trying to fit into that standard. All, like, all of the volume and all the revenue for IKE is coming. It's just based on some timing items. So it's the nature of the industry that we're in, to some extent.
All good. And just in terms of the three customers, do you expect to have them back to transactional revenues by the end of the third quarter, or will the fourth quarter also be affected?
I mean, we, yeah, we expect the fourth quarter will be going at really high volume. But we can't be sure, and it's something that's a little bit out of our control. We've got... And we've also got some new customers that are signing on, or we expect to sign on, at high volume that could really drive Q3 and Q4, but we can't be certain on timing.
And just on the new customers, Glenn, you're gaining about one customer per week. Can you give us some better detail as to where they're mostly coming from, whether it's telco, electric, utility, or engineering?
Yeah, we run, we run, essentially two sales divisions. One's focused on the electric utility market. So again, context here is like 110 investor-owned utilities, 3,200 municipalities and co-ops that run power networks in the U.S. And then we've got one sales organization that just focuses on winning those underlying folks, and that pipeline is continuing to build really strongly. We've got another sales group that focuses on communication, so this is the team that's... These are the companies that are building fiber networks and 5G networks. There's about 200 communications companies, and so they're focused on winning those groups. And so our run rate has, if anything, just quickened over the last period of time.
And yeah, at the moment, touch wood, there's nothing to suggest that we'll slow down in terms of new logo acquisitions, if that's useful.
Perfect. Thanks, Glenn. That concludes the Q&A. I'll just hand it back to you for closing remarks.
Thanks, Simon, and thanks everyone for joining. So yeah, it's obviously, it's been a bit of a mixed report for this H1 of the year, but we feel really confident about the broader picture. So, look forward to keeping everyone abreast of progress and thanks again.