ASX-listed software licensing distributor, rhipe (ASX:RHP) has indicated a solid start to the 2018 financial year, seeing growth across the business.
During the first quarter of FY18, ending September 30, the distributor’s group revenue rose 24 per cent to $42 million, gross margin increased 27 per cent to $8 million and operating profit also went up to $1.2 million from $400,000 in the previous corresponding period. Reported EBITDA has also jumped from $600,000 in Q1 FY17 to $1.1 million.
In his annual general meeting (AGM) presentation, rhipe CEO, Dominic O’Hanlon, revealed that the accelerated transition to public cloud will continue to drive its revenue growth and that it expects its margin mix to change as public cloud activities increase and private cloud incentives reduce.
O’Hanlon expressed confidence in reaching its operating profit target for FY18 of more than $7 million.
From 1 November, the distributor also paid $2.2 million to buy back 3.3 million shares.
“The board is extremely pleased with the executive leadership group and entire staffing team, and feels confident in their ability to continue to deliver positive licensing subscription growth and earnings,” rhipe chairman, Mike Hill, said in his AGM address. “On a foundation created 14 years ago and a solid finish to FY17, rhipe entered FY18 in a strong trading position. With a focus on both program and geographic growth, rhipe has leveraged its ongoing monthly subscription revenues to deliver a solid start to 2018.”
During FY17, the distributor delivered an operating profit of $5 million and EBITDA of $4 million - a “material improvement” from the prior year.
In particular, its Solutions business, which specialises in providing consulting services and support with Microsoft Office 365, SharePoint and Azure solutions, clawed its way from a $1.8 million loss in FY16 to a better-than break even result during FY17.
rhipe's partnership with Microsoft reached new heights in June when it was appointed as a globally managed licensing partner.
The new status, pinned rhipe as one of just eight globally managed partners in Microsoft's channel ecosystem, and the only one to be headquartered in the Asia Pacific region.
On 8 May, rhipe told shareholders that the CSP program continues to grow fast, and has seen the company drive consumption of over 117,000 Office 365 seats across the Asia Pacific region.
As at the end of May, rhipe reached $20 million in annualised revenue from the CSP program, with over 700 transacting partners, a big jump on its figures for the same period the previous year, which saw $4.6 million in annualised revenue and 340 transacting partners.