predicting record annual SaaS for FY 2023I am interested in the level of SaaS (software as a service) revenue, and I think there are published numbers of interest that reflect the Panasonic acquisition, the COVID crash, and the CrossConsense acquisition - as I understand their effect on the business.
Prior to the use of SaaS as a revenue category, we would follow voice and data services. The use of the term SaaS in annual financial reports first occurred in 2018. The corresponding V&D numbers for 2017 are re-categorized in that report and can be used as a starting point.
In the
Letter to Shareholders in Q1 2018 (prior to FLYHT’s involvement with collecting weather data), there is this...
“Historically, FLYHT has reported revenues in categories named Voice and Data Services, AFIRS Sales, Parts Sales and Services.” “Henceforth, FLYHT will report the revenues in categories as described below. SaaS - Software as a Service, is a renaming for clarity of the monthly recurring revenue portion of our revenues, historically called Voice and Data Services, and principally delivered from the UpTimeTM servers. AFIRS Hardware – Includes all the hardware that we sell not associated with license fees. This includes all non-licensing associated hardware components previously included in Parts Sales along with the previous category of AFIRS Sales. Licensing - All revenues associated with our OEM relationships, which currently includes OEM sales for the A320/A330. Technical Services - The charges for bespoke work that we do for clients, which is a renaming of the historical category of Services for clarity.”
Q3 2018 was the last full quarter in which SaaS revenue came only from AFIRS. With the acquisition of Panasonic Weather Solutions, FLYHT began earning SaaS revenue from installations of Tamdar sensors and FlightLink, Panasonic’s SaaS-producing hardware and software. Up until this time, there had been an almost a direct correlation between the monthly reporting of flights and flight hours. This correlation no longer exists.
FLYHT announced in December of 2018 that AirAsia, which had about 90 Panasonic installs at the time, was contracted to take another 100 units increasing this new revenue two-fold. I think FLYHT had had a chance to be consistently profitable from this point forward had the COVID pandemic not happened.
It was stated in the 2018 year-end report that NOAA/NWS was paying $2M USD annually for the weather data at that time. (Too bad FLYHT doesn't report weather data revenue separately, would make progress easier to follow.)
2019 quarterly numbers showed SaaS had more than doubled due to the PWS acquisition – and this from the product that Panasonic “paid” FLYHT to take off their hands in a generous agreement. 2019 also saw the signing with Canada’s E.C.C.C. for the collection of weather data in Canada.
2020 would see SaaS revenue plummet in proportion to the reduction in flights around the world due to the onset of the COVID pandemic. Notably, AirAsia saw reductions on the order of 75% and, I expect, the new contract with them was put on hold.
For a brief time, FLYHT was not even charging for the substantially reduced volume of weather data the Tamdar sensors were collecting. The impact of this can especially be seen in Q2 of 2020. This did turn around and as the world figured things out and airlines began the long climb back up to the record flight numbers of 2019, SaaS revenue did rise accordingly.
In January of 2022, FLYHT announced that it had acquired CrossConsense. While there is really no hardware component to their product line, there is a SaaS component. It began coming into FLYHT coffers in the last 10 days or so of Q1 2022.
In brief, FLYHT SaaS was a steadily increasing revenue stream up to and through Q3, 2018, but growth was slow. Then there was a jump with the acquisition of PWS and its combination of operations efficiency software and weather data. SaaS continued to increase until COVID hit in 2020. As it was slowly rebounding, FLYHT SaaS got a boost from the SaaS revenue CrossConsense was earning.
As sales of services continues to increase, and as FLYHT’s involvement with global weather services continues to grow, SaaS revenue should reach new heights very soon. We are not yet seeing SaaS revenue from the UK Met / Loganair deal and probably not either from the new NOAA/NWS supplemental weather data deal announced back in September 2023.
There will come a time when the profit from SaaS alone exceeds operational expenses. Of course, this is the long-term goal. Profit from hardware sales will help FLYHT get there.
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We should see data for Q4 2023 reported any day now, and for Q1 2024 in a month or so.
One could project that Q4 2023 should see SaaS revenue in the $2.7 million range, rounding out 2023 with the highest annual SaaS reported to date -- about $10.5 million, up from 2022 by more than $2 million, and up from the previous annual high of $10.25 million achieved in pre-COVID 2019.
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These numbers are from FLYHT financial reports dating back to 2017. The growth in SaaS revenue can easily be seen.
| SaaS | Period | Chronological Comments |
| | | |
| $ 1,154,473 | Q1 2017 | Voice and data services as a category |
| $ 1,158,340 | Q2 2017 | Voice and data services |
| $ 998,337 | Q3 2017 | Voice and data services |
| $ 1,001,551 | Q4 2017 | Voice and data services |
| | | |
| $ 4,312,701 | FY 2017 | |
| | | |
| $ 1,043,030 | Q1 2018 | renamed category, SaaS |
| $ 1,079,214 | Q2 2018 | SaaS |
| $ 1,145,368 | Q3 2018 | SaaS |
| $ 2,261,211 | Q4 2018 | PWS acquisition, adds weather and operational services |
| | | |
| $ 5,528,823 | FY 2018 | |
| | | |
| $ 2,405,232 | Q1 2019 | includes additional PWS SaaS going forward |
| $ 2,480,880 | Q2 2019 | SaaS record |
| $ 2,649,345 | Q3 2019 | SaaS record |
| $ 2,711,228 | Q4 2019 | SaaS record |
| | | |
| $ 10,246,685 | FY 2019 | record annual SaaS up until FY 2023 |
| | | |
| $ 2,738,654 | Q1 2020 | SaaS record |
| $ 1,305,049 | Q2 2020 | COVID impact begins |
| $ 1,652,001 | Q3 2020 | SaaS |
| $ 1,627,421 | Q4 2020 | SaaS |
| | | |
| $ 7,323,125 | FY 2020 | |
| | | |
| 1,539,825 | Q1 2021 | SaaS |
| 1,446,221 | Q2 2021 | SaaS |
| 1,507,366 | Q3 2021 | SaaS |
| 1,500,110 | Q4 2021 | SaaS |
| | | |
| $ 5,993,522 | FY 2021 | |
| | | |
| 1,675,072 | Q1 2022 | SaaS |
| 2,155,912 | Q2 2022 | CrossConsense, additional SaaS going forward |
| 2,073,284 | Q3 2022 | SaaS |
| 2,253,618 | Q4 2022 | SaaS |
| | | |
| $ 8,157,886 | FY 2022 | |
| | | |
| 2,413,200 | Q1 2023 | SaaS |
| 2,690,573 | Q2 2023 | SaaS |
| 2,787,664 | Q3 2023 | SaaS record |
| - | Q4 2023 | TBD |
| | | |
| $ 7,891,437 | YTD 2023 | COVID impact nearing its end |
| | | |
| - | Q1 2024 | TBD |
| - | Q2 2024 | TBD |
| - | Q3 2024 | TBD |
| - | Q4 2024 | TBD |
| | | |
| $ - | FY 2024 | |