Icetana AI Faces Cash Burn Challenges Despite Securing Key Asia Pacific Deals

Quarterly Financial Overview

Icetana Limited (ASX: ICE), the AI video analytics software provider, released its December 2024 quarterly report revealing a mixed performance. The company’s annualised recurring revenue (ARR) slipped 4% year-on-year to $1.7 million, impacted primarily by the exit of a key customer. Quarterly revenue also declined sharply by 80% compared to the prior year, a drop largely attributed to a one-off large hardware sale in the comparative period.

Despite these declines, the company maintained a strong gross margin of 84% and a net ARR retention rate of 98%, indicating that expansion sales from existing customers nearly offset churn. However, net operating cash outflows remained significant at $1.2 million for the quarter, underscoring ongoing cash burn challenges.

New Contracts and Market Traction

On the commercial front, Icetana AI secured over $500,000 in new purchase orders during the quarter, signaling promising growth opportunities. Notably, a $465,000 contract was awarded by Malaysia’s largest shopping mall, 1 Utama, through local partner AE Security System, spanning 36 months. Additionally, a $100,000 order was received from Singapore-based Henderson Technology, also on a multi-year basis.

Further traction was reported in Japan via partner Macnica, including contract renewals and proof-of-value sales with property operators. The Middle East pipeline remains robust, with a potential landmark Safe City project in Iraq nearing final proof-of-concept stages, potentially worth up to US$1.1 million (approximately A$1.77 million) to Icetana AI.

Capital Raising and Cost Management

To support ongoing operations and growth initiatives, Icetana launched a $2.65 million rights issue, fully underwritten by its second largest shareholder, Lance East Holdings Pty Ltd. This capital raise follows a convertible note agreement with Skiptan and Macnica, which provided interim funding.

The company emphasized intensified cost control measures, including headcount reductions and tighter expenditure management. Operating cash outflows averaged $217,000 per month over the past year, with total quarterly operating expenses of approximately $1.4 million, dominated by staff costs.

Product Development and Strategic Positioning

Icetana AI continues to enhance its core video analytics capabilities, focusing on safety and security features such as improved fire, smoke, and left luggage detection algorithms. Advances in facial recognition and license plate recognition technologies aim to boost operational efficiency for large-scale surveillance networks.

Strategic partnerships remain a cornerstone of the company’s market approach, highlighted by strengthened ties with Milestone Systems and high-profile sponsorships at key industry events, enhancing brand visibility and lead generation.

Looking Ahead

While the recent quarter reflects some financial headwinds, Icetana AI’s new contracts and ongoing product innovation offer a foundation for potential recovery. The successful completion of the rights issue and execution of the Iraq Safe City project will be critical milestones to watch in the coming months.