Publicly-listed telco supergroup CommsChoice has mounted a turnaround for the year ending 30 June, posting net profit after tax (NPAT) of $2.6 million, a substantial improvement on the net loss of $19.4 million it weathered the year before.
The company’s full year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) stood at $2.3 million, which is up almost 700 per cent on its FY19 result of just $300,000, and at the top end of market guidance.
Total FY20 revenue, meanwhile, was $19.3 million, which was actually lower than the $21 million it posted in FY19, due mainly to some large one-off revenue items booked in FY19.
However, gross margin has improved from 43 per cent to 48 per cent through better margin management and purchasing controls, the company told shareholders.
At the same time, the company claimed to have shown good operating cost control in FY20, with annual operating costs (excluding restructuring costs and non-cash long-term incentive plan) falling from $8.7 million to $6.7 million.
“FY20 has seen a significant turnaround in the profitability of CommsChoice with underlying EBITDA of $2.3 million, up almost 700 per cent compared with the previous year,” CEO and managing director Peter McGrath said. “We are extremely pleased to have achieved the guidance we provided to the market some 12 months ago and to deliver a result at the top end of expectations.”
The company is also working on the assessment of a number of merger and acquisition (M&A) opportunities and intends to grow via strategic growth if the “appropriate” opportunities arise.
Looking ahead, the company continues to receive a “good level” of enquiries and interest from corporate prospects and its wholesale partners for their own customers.
Additionally, a number of proof of concept (POC) trials are underway with unified comms solutions with key local government and corporate prospects.
However, customers have been taking longer to make buying decisions, due to COVID-19 related issues, the company said.
The small- to medium-sized enterprise (SME) sector particularly was impacted in late Q3 and Q4 and continues to be impacted, with the company expecting to see some lower call volumes and revenues in this area as a result of the recent lockdowns.
But the company does expect to see some steady growth into the second half of the financial year and is hopeful of closing some “sizeable” unified communications-as-a-service (UCaaS) deals domestically and offshore.
CommsChoice Group is the result of the merger of five different telco resellers, including its namesake, CommsChoice, along with Telegate, Telaustralia, Oracle Telecom and Woffle.
Together, the companies mounted a $7.5 million initial public offering (IPO), listing on the Australian Securities Exchange (ASX) in December 2017.
In June last year, the company said it planned to restructure its business, which saw its offshore call centre downsized with key functions moving back to Australia and a handful of staff made redundant as it worked to remove non-core costs from operations and sales areas in Australia.
In February this year, CommsChoice Group saw a return to profitability for the first half of the 2020 financial year, ending December 31.
Earnings before tax increased in the first half to $1.5 million and statutory net profit returned to $1.5 million in the black from $700,000 in the red in the previous corresponding period.
In August, the company rolled out Microsoft Teams calling capabilities to the Philippines as part of widespread expansion efforts across Asia Pacific.