Direct business leads Inabox to a $13M net loss

Business was sold after the end of the financial year

Inabox Group has closed the 2018 financial year with a net loss of $13 million, with the hit related to its direct business which was sold after the financial year ended on 30 June.

The publicly-listed company's net loss after tax includes full year impairment charges of $11.9 million relating to the sale of its direct business, which includes Hostworks and Anittel.

Both businesses were acquired by 5G Networks in a $5.7 million deal that took place in early August.

The direct business, which was established in 2014, proved challenging to grow, the company told shareholders on 31 August.

Inabox explained that, despite generating revenues of $48 million for the 2018 financial year, the direct business had a negative impact on Inabox’s profitability and cash flow.

Meanwhile, Inabox's indirect business generates $45 million in revenue per year. The business, which trades under the Telcoinabox, iVox and Neural Networks brands, employs 140 staff in Australia and the Philippines.

"InFY18, the group increased both the number of contracted RSPs [retail services providers] and the average revenue per RSP resulting in six per cent organic revenue growth," the company told shareholders. "The key driver of organic growth was the migration of established RSPs to Inabox and away from competitors."

The enablement business delivered a 61 per cent increase in revenue to $7.9 million with new client acquisitions under the Telstra Wholesale deal and an increase the development projects and services provided to existing clients as the key growth drivers.

"With the direct business now sold, management is fully focused on growing and restructuring Inabox in order to capitalise on its market leadership position in enablement," the company stated.

"The group is now a much leaner, lower cost and more profitable business, with fewer staff, offices and overheads.

"The recent sale and impairment also allows the group to report lower depreciation and amortisation which means that the group will generate improved EBITDA and NPAT results in to the future.

"Inabox is confident this financial year will be much-improved for shareholders and the company provides guidance for FY19 of $5m of underlying EBITDA."