New acquisitions boost Melbourne IT’s financials

New acquisitions boost Melbourne IT’s financials

The WME Group alone delivered revenues of $2.24 million during the half

Martin Mercer - CEO, Melbourne IT

Martin Mercer - CEO, Melbourne IT

The acquisitions undertaken by Melbourne IT (ASX:MLB) earlier this year have given the company’s half-yearly financials a boost.

In May, the Australian Securities Exchange (ASX)-listed domain name registrar and IT services provider unveiled plans to acquire digital marketing agency, Web Marketing Experts (WME) Group, with the domain name registrar raising new capital to fund a $39 million deal.

In its half-yearly results, released on 25 August, the company has revealed just how much extra revenue its new additions have brought in.

The WME Group, consisting of Web Marketing Experts Pty Ltd, Nothing But Web Pty Ltd and Results First Ltd, which became part of Melbourne IT on 31 May 2017, has contributed revenues of $2.24 million during the period, and net profit after tax (NPAT) of $577,000.

Meanwhile, the WME Group’s pre-tax earnings (EBITDA) came in at around $931,000 during the period.

Additionally, Melbourne IT also bought out the remaining 24.9 per cent of app developer, Outware, during the period, to acquire 100 per cent of the company, which it had held a stake in since mid-2015.

The company told shareholders that the acquisition of the remaining non-controlling interest has been brought forward in order to accelerate the integration of the Outware operations into the broader group.

Across the board, Melbourne IT reported an 11 per cent year-on-year rise in revenue, to $91.7 million, during the period, and a 37 per cent increase in earnings before interest, tax, depreciation and amortisation (EBITDA), to $15.3 million for the six months ending June.

The company said its Enterprise Services (ES) operation delivered strong growth, with revenue increasing by 43 per cent and EBITDA increasing by 22 per cent compared to the same half last year.

“ES delivered very strong growth on the back of the contribution from the rapidly growing businesses in data analytics and mobile apps,” Melbourne IT CEO, Martin Mercer, said. “This is expected to continue in H2 and underpin a great year of organic growth.”

At the same time, the company’s small and medium-sized business (SMB) operation delivered a 39 per cent improvement in EBITDA compared to the same period last year.

The acquisition of WME Group – a leading provider of managed marketing solutions for SMBs – in the first half of this year promises to see the growth in SMB accelerate in the second half, the company said.

The latest financials come as Melbourne IT works to transform itself into a full-blown digital solutions business, a strategy that is paying, according to Mercer.

“Our strategy of transitioning Melbourne IT to a digital solutions business is well advanced and is delivering strong organic growth,” he said.

Melbourne IT has reiterated that it expects to report underlying EBITDA for 2017 in the range of $37.5 million to $41.5 million. 

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Tags Melbourne ITMartin MercerOutwareWME Group


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