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Enterprise services growth boosts Melbourne IT half-year earnings

Enterprise services growth boosts Melbourne IT half-year earnings

Managed service provider reports $2.2 million half-yearly net profit

Melbourne IT CEO, Martin Mercer.

Melbourne IT CEO, Martin Mercer.

Growth in enterprise services has helped to boost Melbourne IT’s (ASX:MLB) profit after tax (NPAT) for the six months ending June 2016 by 83 per cent compared to the same period last year, to $2.2 million.

In its latest financial results, the publicly-listed company reported a 115 per cent increase in half-yearly earnings before tax (EBITDA) to $11.2 for the period, and a 23 per cent lift in revenue, to $85 million.

According to Melbourne IT CEO, Martin Mercer, much of the growth has come from the managed service provider’s enterprise services division, which saw see customer wins during the period, including Crown, REST Superannuation, Jetstar, and Office Works.

“Possibly the most important aspect of these results is the growth in our solutions revenues in both enterprise services (ES) and small to medium businesses (SMB),” Mercer told investors in a statement.

“Our SMB division has turned the corner, returning to topline growth…after a protracted period of decline. We anticipate that this top line growth will flow through to the bottom line late this financial year or early the following year,” he said.

Mercer also cited strong growth in sales for the company’s managed digital marketing solutions as a contributing factor to its latest results, as well representing a “very significant milestone”.

The company told investors that its acquisition of data analytics business, InfoReady, in April this year has completed the transformation of its enterprise services division, which it claims is now a leading end-to-end digital solutions provider for large enterprise and government customers.

“ES delivered very strong growth on the back of the contribution from the rapidly growing businesses in data analytics and mobile apps,” said Mercer. “This is expected to accelerate further in [the second half] and underpin an even stronger full year performance.”

The company revealed that its latest results were also boosted by the realisation of savings from the integration of NetRegistry, which it bought in 2014 in an agreement worth $50.4 million, and Uber Global, which it acquired early last year for $15.5 million. Contribution from the two companies also bolstered Melbourne IT’s half-yearly bottom line.

Looking forward, Melbourne IT expects to report statutory EBITDA in its 2016 full-year results in the range of$26-28 million, with an underlying EBITDA in the range of $28-30 million.

“Melbourne IT has a clear strategy to transition [the company] to a solutions business with higher quality earnings,” said Mercer. “I’m pleased to report that execution of this strategy is well advanced and is delivering the expected benefits. After a solid first half we reaffirm full year guidance.

Melbourne IT's share price was $1.85 at the time of writing.

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Tags Australia ITMartin MercerMelbourne ITManaged Services

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