The Etherstack PLC (ASX: ESK) share price surged more than 45% in early trade today. This was before settling back to a more modest rise of around 19% at the time of writing. The increase came following the company’s release of a promising trading update.
What did Etherstack announce?
Earlier today, Etherstack released an unaudited update on the company’s performance for H1 FY20. It also published a report detailing its operations for the fourth quarter of FY20. The update was highlighted by revenue growth of 40% for the first half of 2020 (on the prior corresponding period). According to the company, revenue growth was fuelled by a broad mix of equipment sales, support, technology licencing and royalty revenues.
Etherstack also reported strong, positive operating cashflow, generating US$1.354 million in net cash from its operations in the first half of 2020. The company posted cash on hand of US$1.4 million from sales of US$2.2 million for the quarter ending 30 June 2020.
The ASX tech also noted the combination of new and expansion orders as driving Etherstack’s recurring revenue growth. The trading update further highlighted various strategic and expansion wins the company was able to achieve.
What does Etherstack do?
Etherstack is a wireless technology company that specialises in the development, manufacturing and licencing of radio technologies. The company’s technology allows safety-grade, ‘push-to-talk’ capabilities that can be implemented for radio communications on the 4G and 5G networks. As a result, Etherstack’s technology is focused on servicing the public safety, defence, utilities and transportation sectors.
In late June, Etherstack made headlines after entering a strategic, multi-year agreement with electronics giant Samsung. The deal will allow Etherstack to generate revenue by supplying Samsung customers with next generation, ‘mission-critical, push-to-talk’ technology. The deal will span 2 years, with an option to extend it for another 2 years.
The Etherstack share price
The Etherstack share price initially surged to $3.70 following announcement of the Samsung deal on 1 July before being sold off. Following today’s announcement, the company’s shares rallied to $1.06 before falling back to 84.5 cents at the time of writing. This was after closing yesterday’s session at 71 cents per share.
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More reading
- Why Etherstack and these shares were the most traded on the ASX last week
- Etherstack share price skyrockets 900% on Samsung partnership
Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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