IkeGPS shares jump 33% on 2017 breakeven forecast

IkeGPS [NZX: IKE] shares soared 33% after the company said it expects to reach cash breakeven in 2017 on improved sales from its new cloud-based product.

The shares rose 22c to 88c, a price not seen since February 2015, after the laser measurement tool developer said it expects continuing sales growth across its portfolio of measurement products, increased margins on new products, operating and cost efficiencies, and product-to-market infrastructure.

The Wellington-based company is also investigating a potential Nasdaq listing, subject to the board's review and approval of the terms and benefits. It raised $900,000 in January from three institutional investors to fund expansion in the US market. The shares were floated at $1.10 in a 2014 initial public offer when the company raised $25 million of new capital as it shifted away from production development to sales and marketing.

"That Nasdaq listing fits with the geographic location of their markets and maybe a different investor appetite but really it's rebounding, it's still below that IPO price," said Peter McIntyre, investment adviser at Craigs Investment Partners. "There will be a number of investors thinking 'at long last' – most investors who've taken a holding in Ike would know that it's a high-growth stock, they'd be prepared for the ups and downs but, from a strategic planning point of view, it looks rather positive."

IkeGPS is foregoing short-term profits to chase long-term international sales growth. IkeGPS said it had about $5.3 million in cash at the end of 2016, down from about $10 million as at September 30, 2015.

The company said its growth outlook for 2017 remains high, and it will build upon the momentum of multi-year revenue growth rates exceeding 100% each year. That's based on predicted sales growth of its cloud-based IKE 4 product, which it said is "well-positioned to grow existing customers and capture larger market share, estimated to be an addressable opportunity of $700 million." IkeGPS expects to announce major new customers tied to Google Fiber deployment projects across the US, it said.

Last month, IkeGPS said its annual sales for 2016 were at the bottom end of its lowered guidance, with $2.2 million of orders received in the final month of its current financial year to be booked in the 2017 financial year.

IkeGPS will announce its annual result on May 20.

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