Spirit’s losses deepen as restructure bites
- 26 February, 2020 10:52
Spirit Telecom has continued its downward trajectory after a year of acquisitions and restructuring saw its profits dip by a third.
The Melbourne-based telecommunications company closed the 2020 half year with $739,995 in the red, down from $562,010 year-on-year.
Spirit attributed the loss “in part” due to termination payments and business restructuring costs of $378,000.
The results for the year ending 31 December 2019 come just two months after the company’s co-founder Geoff Neate resigned as managing director. Chief sales and marketing officer Sol Lukatsky was named as Neate's replacement.
Despite also closing the last year with a loss, publicly listed Spirit maintained a commitment to an acquisitions strategy, picking up Arinda IT for $2.6 million and MSP Phoenix Austec for $1.6 million.
Nevertheless, Spirit saw its sales revenue rise by 51 per cent to $12.3 million and underlying EBITDA rise by 343 per cent to $1.61 million year-on-year.
Sales growth predominantly came from its B2B arm, whereby recurring revenue grew by 65 per cent to $12.5 million, while B2C grew by just one per cent.
The telco’s digital platform, Spirit X, stood out as a particular growth point, gaining 5,800 service qualifications and expecting to double its active partners and resellers to 300 by December this year.
Earlier this calendar year, Spirit brokered a $6.9 million deal to acquire two Melbourne managed services providers, Trident Business Group and Neptune Managed Services.
Trident’s IT solutions will now be cross-sold cloud, security and MSP products across the Spirit X platform nationally.
Looking ahead, more acquisitions are in the pipeline, with targets boasting $65 million in annuity based revenue eyed.
The company also hopes to scale the Spirit X platform to $80 million in revenue at the end of this calendar year, 2020, achieve a cash-positive position and “aggressively streamline” opex and capex until the close of financial year 2021.