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Bulletproof posts $6.1M loss after write-downs

Bulletproof posts $6.1M loss after write-downs

Customers going direct to vendors reducing managed services needs

Anthony Woodward - Co-founder and CEO, Bulletproof

Anthony Woodward - Co-founder and CEO, Bulletproof

Cloud services provider, Bulletproof (ASX:BPF), has closed the 2017 financial year with a four per cent growth in revenue, compared to the same period last year, posting a total of $49.2 million.

The company has gone through several changes throughout the year in order to restructure the business. In February, it announced it was letting go of 30 full-time engineers, which would result in $4.5 million savings.

However, closed the year with a net profit after tax (NPAT) loss of $6.1 million. The underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were $2.18 million, down 53.6 percent compared to the previous year.

It should be noted, however, Bulletproof’s net loss includes a reduction of $1.45 million of the goodwill relating to Cloud House and a second write down of software and product development costs of $4.31 million.

The company posted $49.2 million in sales revenue for the year, a four per cent increase from the previous year. Recurring revenues grew 6.5 per cent, while professional services revenues declined 15 per cent, closing in at $5.5 million for the year. 

According to Bulletproof, professional services were among the most impacted areas of the company.

Bulletproof's public cloud recurring revenue was impacted by significant churn of 2.5 per cent on a monthly recurring basis average, reflecting a number of factors in the public cloud space. These include more sophisticated customer buying behavior to reduce costs or acquire infrastructure billing direct from vendors, and reducing managed services in line with business needs due to the appeal of those managed services.

“During the FY17 first half, we continued to face headwinds and challenges that carried forward from the second half of FY16,” Bulletproof CEO, Anthony Woodward, said.

“We have now made significant changes to the business operations and profitability, resulting in a strong second half that reflected the impact of these changes. We are confident that with continued effort, FY18 will benefit from these and other ongoing changes to deliver stronger value to shareholders.”

The New Zealand business delivered NZ$ 3.06 million revenue. Following the news that two directors of Cloud House were taking Bulletproof to court, both left the business.

The former directors claim that Bulletproof allegedly mismanaged the acquired business operations of Cloud House in a bid to miss performance targets and prevent multimillion-dollar earn-outs.

In the annual report, the company stated that the directors consider Cloud House's former directors' claims to have no basis, and therefore no provision has been included in the financial statement. However, the company has been advised that if the matter goes to trial it could pay up to $300,000.

The company expects brand expansion to continue in New Zealand with the AWS Summit, and plans to focus on strong core DevOps-oriented skills and projects.

In late 2016, the partnership with Microsoft was strengthened with the launch of Bulletproof’s end-to-end offerings around the Azure public cloud platform.

The company also signed a partnership with Accenture in May, which is expected to drive further professional services and managed services opportunities to complement that leading consulting firm’s offerings to the enterprise, in future periods.

The board commenced an external review of the organisational structure during the early part of FY18 to ensure the business is well positioned to deliver sustainable profitable growth for FY18 and beyond.

“It really is just having a look at how our organisation is structured around the different revenue lines to make sure we are getting the best return value out of our skills and team capabilities,” Woodward told ARN.

The company expects to start seeing positive results from all the changes in the business on the second half of the 2018 financial year.

Just before the company released its financial results it revealed that Lorenzo Modesto, one of its co-founder and director of strategy resigned from his role effective 1 September.

Bulletproof currently employs 110 people across Sydney, Melbourne, Auckland, Wellington and the USA.


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