SteveSage3You09:57 09/10/2023Is this a new subscription contract...

SteveSage3

You

09:57 09/10/2023

Is this a new subscription contract (i.e. was SXP doing this inhouse previously), or is this a renewal (and upfront payment) of an existing subscription contract.

I assume that margins on resellers are lower than direct sales, and if so, would this contract increase/decrease the overall margins for Spectur (FY23 gross margin was ~56%).

Spectur

ASX:SP3

10:45AM 09/10/2023

SXP have been a customer for some time and were purchasing systems in a conventional way. They wanted to lock in future pricing and extended warranty for 5 years from the time of purchase for each system. This meant that some systems had subscriptions paid for in advance for an extra 3 years, some for just less than 5 and everything in between (you can imagine the spreadsheet). We also provided a small discount as they are a volume customer / reseller for us. This contract extended all systems to be fully subscribed for 5 years from the date of purchase.

Recurring revenues from subscriptions are quite a bit more than 56% and have been increasing this quarter in line with our plan (a lot of which is around managing data costs, with the improvements expected to continue for the duration of the FY). We are also having a good look at our AI models and testing a variety of alternatives which we expect will also lead to cost reductions per system in this area.