Melbourne IT gets boost from fresh acquisitions

The company's enterprise services business saw a 35 per cent year-on-year revenue surge
Martin Mercer - CEO, Melbourne IT

Martin Mercer - CEO, Melbourne IT

At least three acquisitions made by Melbourne IT (ASX:MLB) in 2017 have contributed to a substantial boost in the company’s financials for the year ending December 2017, with its enterprise services business growing by more than a third.

The publicly-listed domain name registration and IT services provider reported a 17.4 per cent increase in consolidated revenue during the year ended 2017, from $168.436 million to $197.760 million, according to its full year financials, published on 21 February.

At the same time, the group saw earnings before interest, tax, depreciation and amortisation (EBITDA) of $31.9 million, an increase of 13.3 per cent from the previous year. Consolidated net profit after tax (NPAT) was $14.279 million, up 12.4 per cent from the previous year.

The company told shareholders that its annual revenue increase was driven by continued growth in its enterprise services business and its small to medium-sized business (SMB) solutions segment, which was supported by the acquisition of three businesses, Web Marketing Experts, Nothing But Web and Results First on 31 May 2017.

The company’s enterprise services business grew by 35 per cent year-on-year during the period, with EBITDA growing by 14 per cent compared to the previous year.

Altogether, the enterprise services business pulled in revenues of $95.3 million, just a sliver under half of the group’s entire takings, with its SMB solutions segment reporting revenues of $102.4 million.

While enterprise services was on the way up, the company’s legacy domain registration business saw a marked 15 per cent decrease in revenue, from $44.916 million to $37.912 million.

According to Melbourne IT, the decrease was driven by the sale of its International Domain Name Registration (IDNR) business, which occurred on 31 March 2016. IDNR contributed $5.355 million revenue in FY16.

Looking forward, Melbourne IT told shareholders that it expects to report underlying EBITDA for 2018 in the range of $41.5-$45.5million.

The company also flagged a forecast headcount expansion in 2018, driven by continued growth in the solutions businesses, the expansion of the SMB solutions account management model, and investments in shared services.

“We are confident of sustainable organic growth across both ES and SMB. We are investing to deliver this growth, execute well, and enhance returns to shareholders,” Melbourne IT CEO, Martin Mercer, said.