Spacetalk burns $3.8m in quarter as TPG migration and UK telco talks advance
Spacetalk used $3.8 million of operating cash in the September quarter and ended with $5.2 million, enough for about 1.4 quarters at that rate. It is moving subscribers onto TPG Telecom's network and has signed a non-binding MOU with an unnamed UK operator.
Spacetalk (ASX: SPA) used $3.8 million of operating cash in the September quarter as it moved its network onto TPG Telecom and began talks with a UK telecommunications operator. The company said its funding covers 1.4 quarters at that burn rate, short of the two-quarter level that brings extra disclosure obligations under ASX listing rules. Mobile subscribers grew 20 per cent year-on-year to 61,400, yet revenue dropped 32 per cent to $3.1 million because supply chain constraints hurt device sales and the legacy schools business kept shrinking.
Cash at quarter-end was $5.2 million, against $879,000 at the end of June, following a $10 million placement announced in August at 7.5 cents per share. The $3.6 million debt facility is fully drawn at 9.5 per cent, matures on 30 June 2027 and carries a covenant requiring at least $750,000 in cash at all times. Spacetalk said it expects operating outflows to ease as savings take effect and new revenue streams start, although timing depends on execution and customer adoption.
Recurring revenue accounted for 79 per cent of the total, up from 62 per cent in the prior corresponding period. Mobile revenue increased 4 per cent to $2.0 million, and mobile annual recurring revenue rose 4 per cent to $8.1 million, or 84 per cent of total ARR. Device revenue fell 62 per cent to $648,000, which the company put down to component shortages, including printed circuit boards, driven by demand from AI and data centre infrastructure. Total annual recurring revenue declined 15 per cent to $9.7 million, mainly because of the schools wind-down and weaker app revenue.
The TPG Telecom agreements announced in July remain central to the company's strategy. Under the wholesale MVNO deal, Spacetalk resells TPG network capacity, and the company said the economics improve on its previous network arrangement. A separate agreement has Vodafone Australia launching a co-branded family safety app powered by Spacetalk's platform, with contracted minimum recurring software fees from the first year. Management expects those fees to more than replace schools revenue in that period, though timing depends on contractual commencement and delivery of the app.
Spacetalk also disclosed a non-binding memorandum of understanding with an unnamed UK-based telecommunications operator to explore rolling out its app and platform to the operator's mobile subscribers. Talks are moving toward a monetisation model. The company said the MOU "represents a further opportunity to extend the Company’s software-led B2B distribution model internationally, building on the commercial framework established through its Vodafone Australia agreement".
Management has identified annualised cash cost savings of about $3.5 million, to be implemented progressively across the financial year. Operating payments, excluding inventory and service enabling costs, were $4.7 million, up from $4.3 million a year earlier. Spacetalk plans to leave the schools business in the December quarter as Western Australian schools move to a government platform. A new supplier agreement covers three device variants, the first due in the December quarter, which the company said should lift device gross margins by about 10 percentage points or more. In the second half of the financial year it intends to trial Sibyl, a health prediction and fall detection product built with UNSW and NeuRA.