Melbourne IT posts double-digit growth

Melbourne IT has chalked up its sixth consecutive year of growth

ASX-listed Melbourne IT (ASX: MLB) has chalked up its sixth consecutive year of growth with a 17 per cent increase in net profit to $16.2 million.

The hosting provider also experienced a 21 per cent increase in revenue to $186.2 million for the full year ending December 31. CEO, Theo Hnarakis, said despite the strong performance, it would take a cautious approach to sustain growth in the volatile economic environment.

“We need to overcome significant challenges if we are to meet our objectives of having a seventh consecutive year of growth,” he said. “Each year we face these challenges – there’s nothing new about the cautious approach that we start each year on – regardless, we see 2009 as being a successful year.”

Hnarakis cited a slowdown of business in the last quarter of 2008 as one challenge last year.

“We think the December quarter was a reflection of the current times, but also an anomaly given we’re now starting to see growth,” he said. “The domain industry as a whole is going to grow.

“We expect IT budgets to be cut and SMBs to continue to be under pressure in the short term.”

Ninety per cent of Melbourne IT’s revenue was derived from annuity services. This would help insulate the company from the continuing turmoil, Hnarakis said.

Over 2008, its strongest performing business section was Corporate Brand Services, which grew by 22 per cent to $20.9 million. Going forward, Hnarakis expected its Digital Brand Management Services business, which it acquired last May, would experience the strongest growth.

“We also see our corporate, government and hosting division showing good growth numbers,” he said.

In the six months to December 31, Melbourne IT recorded a net debt totalling $79.6 million, which has grown due to the changes in US dollar exchange rate and the DBMS purchase. However, the company still has $28 million in cash.

Hnarakis said Melbourne IT’s web traffic revenue was up 75 per cent year-on-year and software-as-a-service (SaaS) revenue increased by over 40 per cent. Melbourne IT is also in the process of developing a cloud offering for customers that will be offered as a pay-as-you-go solution.

“Our datacentre expansion in Queensland and the US has given us greater capacity to service and build more customers going forward,” Hnarakis said.

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