YPB Group Reports Increase in Cash Receipts as Momentum for Product Authentication Technology Builds


With additional contracts ongoing, YPB has the opportunity to “transform” its results in the months to come, said CEO John Houston.

Anti-counterfeiting and product authentication company YPB Group (ASX: YPB) confirmed the recent dramatic change in its business outlook with an impressive quarterly update.

The company said it had cash inflows of $ 207,000 in the September quarter – a significant jump of 73% from the previous quarter and further proof of its recent strong operating momentum.

The $ 207,000 figure also marked the highest quarterly total for 2020 and 2021 since the start of the year, and was driven “almost entirely by orders from existing customers,” YPB said.

Commercial upgrade

Amid a busy quarter of growth, YPB’s recent momentum was evidenced by the signing of a paid commercial trial for its proprietary MotifMicro1 (MM1) platform – a forensic anti-counterfeiting solution readable by an unmodified smartphone.

Announced in early September, the agreement with Opal – one of Australia’s largest producers of recyclable cardboard packaging companies – will test the performance of MM1 “on a variety of coatings and substrates across the company’s entire product line. Opal “, in order to identify the most profitable applications for the most profitable customers in a short time, said YPB.

YPB said it has a unique niche in the market by successfully running paid trials.

While many companies struggle to secure their income from the start, paid trials are “fundamental to YPB’s MM1 marketing strategy,” the company said.

When key customers have their skin in the game, it facilitates “strong customer buy-in, increasing the likelihood of positive outcomes, and it enables YPB to efficiently allocate resources to the most likely opportunities,” the company added.

As proof, YPB Group got another paid commercial trial after the end of the quarter (October 7) – this time with Malaysia-based printing company Holographic, which serves a client base of large government customers.

Commenting on the update, YPB Group CEO John Houston highlighted the operational momentum of the company with two ongoing business trials.

“The ongoing discussions with other parties are encouraging and the value creation that can come from establishing full business relationships with such high volume players is significant,” said Houston.

By the numbers

Along with the growth in YPB’s cash flow, another highlight has been the strength of its operating margins, which have featured in all of its recent quarterly updates.

The ongoing discussions with other parties are encouraging and the value creation that can come from moving to full business relationships with such important players is significant.

Gross operating margins were 98%, in line with the previous two quarters and “reflecting the proprietary IP content of the company’s products,” YPB said.

As revenues increased, the company also implemented key cost reduction strategies which resulted in an 11% drop in cash operating expenses to $ 857,000.

Cost reductions were driven by R&D efficiency, lower rental costs related to the company’s move to Thailand and a 65% reduction in marketing spend after a jump in the previous quarter coinciding with the launch. MotifMicro Global1.

Looking ahead, Houston said it expects the recent upward trajectory in cash inflows to be maintained, even as the company faces headwinds resulting from COVID-19 restrictions in the Chinese market. .

“YPB has a range of powerful and relevant products and a range of FMCG suppliers and governments around the world recognize the relevance, ease and effectiveness of YPB’s solutions to their customers’ counterfeiting problems,” said said Houston.

With tight cost control and strong margins, converting additional opportunities into YPB’s customer pipeline has the ability to “transform our bottom line,” he added.

This article was developed in conjunction with YPB Group, a Stockhead advertiser at the time of publication.

This article is not advice on financial products. You should consider getting independent advice before making any financial decisions.

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