On a lacklustre day, when Index is marginally up, a few stocks are surprising the market with their moves.
EML Payments Limited (ASX: EML)
In FY24, EML Payments Limited (ASX: EML) underwent significant restructuring to address long-standing challenges and set the stage for future growth. The company successfully completed a UK remediation program, appointed a liquidator to limit exposure from its Irish entity, and sold Sentential/Nuapay for €32.75 million. EML also resolved the PFS acquisition liabilities, achieving a $15.1 million discount on vendor loan repayments. These actions resulted in a simplified business with a healthier balance sheet, allowing the company to focus on its transformation under the "EML 2.0" strategy. Financially, EML delivered strong results, with a revenue increase of 18%, totaling $217.3 million for its continuing business. EBITDA grew by 54% to $57.1 million, and the company moved from net debt to net cash.
EML's future strategy, EML 2.0, focuses on three key growth pillars: nurturing and growing its existing customer base, accelerating into new verticals, and expanding into new geographies. The company plans to deepen relationships with over 1,000 existing customers, allowing for new revenue opportunities. Additionally, EML aims to enhance its go-to-market execution to capitalize on growing demand and expand into new regions, leveraging partnerships before investing in new market teams. Three strategic enablers will support this strategy: transitioning to a global operating model, scaling the revenue engine, and implementing a single global technology platform. The latter will help streamline operations, reduce costs, and drive innovation across the business.
EML has set ambitious financial goals for FY25 through FY28. The company targets double-digit transaction revenue growth by FY27, with a focus on achieving cost efficiency and maintaining a low cost-to-revenue ratio under 40%. Underlying EBITDA margin is expected to reach around 35%, with a significant improvement in earnings per share (EPS), targeting approximately 13 cents per share by FY28. For FY25, EML is projecting underlying EBITDA in the range of A$54-$60 million, supported by a strong start to Q1, where gross dollar value (GDV) and revenue both showed healthy growth, and EBITDA increased by 46% compared to the previous year.
Aussie Broadband Limited (ASX: ABB)
Aussie Broadband Limited has announced a strategic on-market share buy-back program, targeting up to 10% of issued capital over 12 months post its HY25 results release in February 2025. This initiative aligns with ABB’s disciplined capital management, supported by a robust balance sheet. As of June 30, 2024, ABB’s net debt was $138m (1.1x FY24 EBITDA leverage), well below its target range of 1.75x-2.50x. Proceeds from the $99.8m sale of its Superloop stake further enhance financial flexibility, enabling ABB to maintain its $55m-$60m FY25 capex guidance aimed at driving operational efficiencies and growth.
ABB has reaffirmed its FY25 EBITDA guidance of $125m-$135m, reflecting ongoing investments, including Buddy Telco, which continues to reduce group churn and serve as an innovation hub for customer experience enhancements. The company declared a fully franked dividend of 4 cps for FY24, underscoring its commitment to shareholder returns. The 1Q FY25 trading update highlights strong operational performance, with broadband connections growing by 22,119 services (+21% QoQ). ABB’s NBN market share increased to 7.60% at September 30, 2024 (excluding Satellite/Origin). Key client wins included a 400-site, 5-year SD-Branch network deal with The Reject Shop and high-speed international links for Auto & General. A 36-month SD-WAN solution for Ventora Group further demonstrates ABB’s ability to secure enterprise clients with scalable, secure, and efficient network solutions.
Symbio, acquired in 2024, continues to perform strongly, securing a 5-year partnership extension with MEDION Australia, a leading MVNO, validating its robust MVNE software capabilities. The MVNO market's dynamic growth positions Symbio for sustained expansion, with potential to enable additional brands and new entrants. Red Energy’s new partnership with ABB marks a significant channel expansion, allowing Red Energy and Direct Connect to sell broadband alongside energy products. Meanwhile, Buddy Telco surpassed 4,500 broadband services with accelerated growth expected from November’s marketing push. Buddy has contributed to innovations in ABB’s MyAussie app, enhancing customer support and engagement. ABB’s ongoing strategic initiatives highlight its ability to balance growth, innovation, and capital management. The strong start to FY25 across all business segments and continued client wins in Enterprise & Government and Wholesale underpin confidence in ABB’s growth trajectory. The share buy-back and continued investment in core platforms position ABB well for sustainable shareholder value creation.
Source: Company’s Report
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