Spirit Technology Solutions Ltd, growing sales orders

Team Veye | 27 Feb 2021 ASX - ST1
Spirit Technology Solutions Ltd, growing sales orders

Spirit Technology Solutions Ltd (ASX: ST1)

Spirit Delivers Profitable H1 21 & Record Revenue

Spirit Technology Solutions Ltd (ASX: ST1) (“Spirit” ASX: ST1) on 23 February 2021 lodged its Appendix 4D (reviewed financial results) for the six months ended 31 December 2020 (H1 FY2021). Following a period of rapid revenue growth and business transformation Spirit has delivered an NPAT of $508K for the first half and record revenue and other income of $44.0M.

(Chart source: TradingView)

Strong performance across all key financial metrics (reviewed):

  • Record H1 21 with Revenue and Other Income of $44.0M, up 253% on H1 20.
  • NPAT up 169% year on year to $508K, compared to loss of $740K in H1 20.
  • H1 21 Underlying EBITDA* $4.4M, upper end of guided range (H1 20 was $1.6M).
  • Positive Operating Cashflow for H1 21 of $4.3M.
  • Healthy balance sheet with $23.3M of cash and available debt as of 31 December 2020.
  • Average deal size increasing with major contract wins across corporate; education and health illustrating the strength of the Spirit offering and leverage of cross-sell opportunities.

The revenue mix continues to reflect a shift towards the medium & corporate markets with higher value contracts.

Overall sales reflect the traction in the SMB and corporate markets with B2B TCV of $23.1M for the half, an increase of 221% PCP and up 226% on H2 20. Recurring revenue is at $21.1M, up 99% YOY.

Spirit is securing larger value recurring revenue contracts of longer duration as a direct result of its ability to cross-sell its premium managed services and cyber security offerings, alongside a comprehensive data product range. (Data Source – Company Reports)


Veye’s Take

Spirit’s excellent result validates the strength of its business strategy and its sharp focus on execution. Total recurring revenue for the half was at $21.1M, up 99% YoY and 63% on H2 20. It delivered a profitable H1 21 in a period of investment in scaling up the business and building a national brand and integrating multiple acquisitions. The stock is trading in a band for a long with support at $0.375. It is turning bullish on both short as well as longer t/f. RSI has just turned upside indicating the potential for a strong upside breakout in the near term on the price chart. The stock price has managed to hold above the middle band of the Bollinger. Veye maintains a "Hold" on “Spirit Technology Solutions Ltd” at the current price of $0.40


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