MOQ Ltd has posted a net loss after tax of $770,242 for the six months ending December 2019, a substantial tumble from the $854,931 net profit it posted for the corresponding period the year prior.
At the same time, the company saw a 36.6 per cent decline in earnings before tax, depreciation and amortisation (EBITDA), to $953,393 for the period.
Moreover, the publicly-listed cloud-focused tech company saw a 5 per cent year-on-year fall in revenue for the period, pulling in $32.7 million.
The company told shareholders that its technology sales revenue, a key income stream for the group's IT services business MOQdigital, was down by 37 per cent over the equivalent period in FY19 -- its best half ever for technology sales -- a factor that weighed heavy on its bottom line for the first half.
“This has had a significant impact on bottom line performance for the period,” MOQ told shareholders in its half-yearly financial report.
“Whilst industry feedback seems to indicate that this was a common experience across the mid-tier market and a range of our competitors seem to have had a similar experience, from an MOQ perspective this has predominantly been driven by decision making delays by clients who were hesitant to commit to major investments during the 2019,” it added.
A “slow start” in professional services during the half also weighed on the company’s financials.
However, the company also flagged one or two bright spots for the coming six months, with MOQdigital continuing to recover momentum after a disappointing second half to the 2019 financial year.
“This is particularly evident in services momentum and the quality of key opportunity conversion in the latter period of this half,” the company said.
“The latter part of the half showed a marked improvement for professional services and gradually improving technology sales into H2FY20.”
Also on the horizon is the anticipation of a revenue boost following its $7.5 million acquisition of Wardy IT Solutions, which closed on 1 September 2019.
“With the addition of Wardy IT’s market offering the digital services and solutions side of the business has become an equivalent contributor both in recurring and professional services revenues to the more traditional infrastructure services MOQ had on offer and consequently the value proposition to market,” the company said. “This is a significant and positive shift for MOQ Limited.”
However, as is often the case, the company’s financials were hit to some degree by the cost of the acquisition, along with several associated costs, which together came to just under $1.8 million.
“The Wardy IT business is performing well, the phased integration process is proceeding as planned and importantly we have received a very positive response from customers, staff and business partners,” MOQ said.