TZL bags $1m locker deal with DSV, bolsters recurring revenue

The deal with DSV demonstrates TZ’s commitment towards a recurring revenue model, and solidifies its strong partnership with the South African giant.

Smart locker and IoT devices company TZ Limited (ASX:TZL) has just bolstered its annuity revenue, securing a $1 million deal with DSV in South Africa.

The three-year agreement involves TZL providing hosted infrastructure, system monitoring, network management, software subscription and maintenance services for DSV’s network of 450 locker banks.

This includes 100 TZ-upgraded ByBox locker banks, and 350 TZ locker banks that DSV had previously purchased from TZL in the past three years.

Today’s deal demonstrates TZ’s ability and focus in transitioning from perpetual licensing strategy, to an annuity revenue business model.

 

A deep and meaningful relationship

The deal with DSV, which was channeled through its partner Ricoh South Africa, underpins TZ’s strong client relationship with DSV.

DSV is one of the largest transport and logistics companies in  the world.

In South Africa, it owns a network of 450 locker banks supporting its last mile delivery and e-commerce businesses.

Within this fiscal year alone, it has purchased about $3 million in new locker banks from TZ.

The new contract signed today represents a 25 per cent increase in TZ’s annual recurring revenue from South Africa.

It’s also another example of existing clients returning to TZ, which is testament to the company’s highly valued cutting-edge software and services, according to TZ CEO Scott Beeton.

“Existing clients are returning to TZ for deeper, more meaningful relationships, and that’s where most of the company’s growth is coming from,” Beeton said.

“As global economies emerge from the COVID-19 pandemic, there is a heightened demand for TZ’s access control, smart lock and self-serve locker bank solutions,” he added.

 

Recurring revenue model

The deal announced today follows TZ’s significant growth in its US pipeline since April.

Over US$2.2 million in purchase orders were received from TZ’s existing US customers since April 2021, including one from Microsoft worth US$547k.

The company has also won contracts with the university sector in the US, where its technology is increasingly being recognised as the best-in-class software platform and electronic hardware solutions.

The growth in the US pipeline coincides with a shift in its revenue model, from fixed capital sale towards recurring SaaS revenue.

This and the DVS deal have reinforced TZ’s strategy to transition into and expand its annuity service offerings with existing customers.

The company  is operating in a potentially huge market.

The global market for smart locks is tipped to reach US$3.3 billion by 2025, while the market for parcel lockers alone is expected to grow from US$645m in 2020 to US$1.44 billion by 2027.

The TZL share price has risen from 4c to 12c in the past 12 months.

This article was developed in collaboration with TZ Limited, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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