Fintech ramping up for personal investors
For most people it is either the French word for wine, or the number on a car engine, but for the tech savvy it stands for Virtual Invisible Network, an evolutionary step in virtual networking that can be used over any type of established public or private network including the internet.
Behind the Virtual Invisible Network is the $141 million capped ASX-listed Netlinkz (ASX: NET), a company that has received numerous industry awards for its technology, including as a worldwide winner of the Global Security Challenge.
Netlinkz's technology makes Fortune-500 cloud network security commercially available for organisations of all sizes, but its Virtual Secure Network (VSN) product that evolved from VIN has helped it become a leading global VSN company for blue chip corporations and government.
This software developer has a presence in Australia. Its awards include: the Telstra Innovation Challenge, Asia Pacific ICT Awards, APICTA Awards International Winner and Netlinkz was the first international company accepted into Cyber Incubator by Northrop Grumman (US).
The company belives multinational corporations taking up its VSN is an excellent validation of the technology, meaning it now expects to deploy the product in other international markets in which they operate.
Further, as telecommunication companies adapt to changing times and with cybersecurity is becoming an increasingly important factor, Netlinkz says it has seen heightened demand for its communications products.
Transformational change in train
While the company has been slowly building its presence and accolades, the last three weeks have contributed to a transformational change for the company.
Driving this is the appointment of former Australian ambassador to China, Dr Geoff Raby (AO), who will further NET's existing footprint in the Asia Pacific region.
Given his knowledge of the Asia Pacific region NET says Dr Raby's appointment is extremely important.
Dr Raby is well-connected in China, and this isn't his first board appointment in relation to an ASX listed tech and communications company looking to expand its presence in the country.
He also brings experience to the team in terms of dealing with big corporates through his company directorships with the likes of Yancoal, Oceana Gold and Fortescue Metals Group (ASX: FMG) with the latter having a robust relationship with China.
NET says China forms the bedrock for the company's revenue growth.
In fact, the success of NET's technology is driving exceptional growth, with the company recently reporting fiscal 2020 sales of $5.25 million, up 846 per cent on the previous corresponding period.
Revenue growth has been mainly attributable to rapidly increasing sales in China, however the company has also entered the Indian market in a recent deal.
Importantly for investors with an eye to future growth, the $179 million capped company remains on track for its previously stated guidance of $15 million of customer receipts by year's end.
Investors are now catching on as well, with Netlinkz shares increasing more than 60 per cent in the last month, including a surge of 27 per cent on Monday.
Netlinkz is also benefiting from the increased focus on cybersecurity given the significant benefits that its technologies offer in this field.
Executive chairman James Tsiolis believes this growth is the start of something much bigger.
"The 2020 financial year has been a transformational one for Netlinkz and we now have in place the foundation to capitalise on the initiatives we undertook during the year to really fast-track growth in the current financial year and beyond," Tsiolis said.
"We remain on track to meet our previously stated guidance of $15 million of customer receipts by year-end, with the Board being of the firm view that we are only just in the very early stages of growth.
"We have market-leading VSN (virtual secure network) technology, an expanding global footprint, quality partners, a growing base of blue chip and government customers, as well as other revenue streams and technologies that underpin this confidence. As such, Netlinkz is exceptionally well positioned to capitalise and it has a very strong market advantage."
From a corporate perspective, the company held $3.9 million in cash at June 30, 2020, and in late July proposed to raise $18 million through a Convertible Note issue to strengthen the balance sheet and underpin sales growth, subject to shareholder approval at a General Meeting this week.
The convertible notes have a conversion price of A$0.10 each, which is a premium to NET's current share price. The funds from the capital raise are intended to be used to repay loan facilities with Lind Global Marco Fund, LP and CST Capital Pty Ltd, and seek to drive sales across multiple growth opportunities across the globe.
The China/India outlook
In order to capture the value of the potential market in China, Netlinkz has worked with large carriers like China Telecom, Government Authorities and established distributors, to develop a made for China business model which includes the necessary corporate, regulatory and legal infrastructures that satisfy the demands of enterprise businesses in China.
This means the IP developed for the VSN line of products is owned by iLinkAll, a Chinese company which Netlinkz owns 80 per cent of in conjunction with Isoftstone, an engineering technology development company with operations in China and around the world.
As for India, in late August, NetLinkz entered India and other international markets through a Master Services Agreement (MSA) signed with emerging technology software solutions provider Natsoft Corporation.
Founded in 2004 in the US and with a delivery centre in Hyderabad, India, Natsoft has a global network of offices staffed with over 700 professionals delivering enterprise solutions and digital technologies like Blockchain, Robotics Process Automation, Big Data, Artificial Intelligence, Industrial IoT and Behavioural Analytics solutions that seamlessly integrate into the transactional systems.
Natsoft's customers include blue chip organisations such as Novartis, Equinox, Twitch, Sun Power, IBM, TechM, and Wipro.
Netlinkz has engaged Natsoft to develop and source selected international markets and customers through a reseller agreement for Netlinkz's products.
Part of the agreement also includes establishing an IoT Lab in Natsoft's offices in Singapore and India, as well as managing the software source codes for the company's VSN technology.
NET says the decision to partner with Natsoft will deliver commercial benefits to both parties in a relatively short period of time.
India has been identified by the company as the first high growth market opportunity, given many industries in that region are migrating to cloud service providers which in turn increases demand for VSNs.
Tsiolis says India is a large market in Asia Pacific and therefore presents enormous upside for Netlinkz with more immediate sales opportunities.
"This partnership is a great opportunity to fast-track our organic growth in India and other international markets with a capable, well-established and highly regarded partner in Natsoft," says Tsiolis.
"While we continue to experience very high demand for our VSN technology in our existing markets, India represents a huge opportunity that we can quickly tap into without a huge upfront investment.
"We know the Natsoft team well and there are some promising near-term customer opportunities that we will aggressively pursue."
Netlinkz says it is now aggressively pursuing sales in several regions with medium and large enterprise engagements, as the VSN is more saleable for enterprise-grade corporations and government customers.
For the remainder of the December half, the company says it will focus on enhancing the VSN and VIN technology, and introducing additional features to provide flexibility and scalability for secure enterprise network solutions.
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