Publicly-listed telecommunications services provider Over the Wire has posted a 50 per cent year-on-year decline in net profit after tax (NPAT) for the year ending 30 June, thanks to a previous acquisition and COVID-19.
The company’s NPAT for FY20 came to a nudge over $5 million, roughly half of the restated $10.2 million net after-tax profit it generated during FY19.
Over The Wire told shareholders in its annual financials that the prominent NPAT decrease was due the recognition of around $4 million of other income in the prior year relating to a reduction in stretch target earn out payable for its acquisition of Comlinx in 2018, as well as a delay in non-recurring sales resulting from the impact of COVID-19.
Despite the NPAT fall, the company’s revenue grew by roughly 10 per cent, year-on-year, to $87.6 million, although earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 18 per cent, to $17.4 million.
Recurring revenue, meanwhile, grew by 14 per cent, to $74.7 million and customer revenue retention held at 98.5 per cent, the best result since Over the Wire’s first year of reporting this metric.
Over the Wire managing director Michael Omeros said that despite the disruptions caused by COVID-19, he was pleased with the performance of the company and its employees.
“In challenging market conditions impacted by COVID-19 restrictions, our team has shown commendable focus and resilience,” Omeros said. “We are delighted to deliver a full year result that exceeds the profitability expectation outlined in our May 2020 business update, and an exceptional customer retention rate of 98.5 per cent.
“Our three solution pillars, ‘cloud, connect, collaborate,’ are benefitting from industry tailwinds and our investment in capability and systems over the last 12 months positions us well to take advantage of these.
“We are excited by the potential opportunities for organic growth complemented with quality strategic acquisitions that accelerate the delivery of our strategy,” he added.
Looking forward, the company told shareholders that its business performance was tracking well against its strategy and that it continues to generate positive operational cash flow and maintain a strong balance sheet.
“We will continue to proactively support our customers and remain well positioned to continue to deliver organic growth and pursue further accretive acquisitions. The company remains confident that it will achieve solid growth in FY21 and continue to deliver value for shareholders,” it said in a statement.
In February, Over The Wire revealed that its net profit after tax and amortisation (NPATA) was down by four per cent to $4 million for the half year ending 31 December 2019, and that net profit after tax (NPAT) was down 27 per cent to $2.3 million.
Omeros said at the time that although revenue was behind budget, it had a strong sales pipeline forecast for the second half to the financial year and is in line with expectations.