The Zoono Group Ltd (ASX: ZNO) share price has been a poor performer this morning following the release of its fourth quarter.
At the time of writing the biotech company’s shares are down 6% to $2.78.
How did Zoono perform in the fourth quarter?
Zoono’s strong form continued in the fourth quarter thanks to the increasing demand for its antimicrobial solutions during the pandemic.
According to the release, unaudited fourth quarter revenue came in at NZ$20.9 million. This compares to negligible sales in the prior corresponding period and sales of NZ$15.7 million in the third quarter of FY 2020.
During the quarter the company generated positive operating cash flow of NZ$5.3 million, lifting its cash at the bank to NZ$10.3 million.
What were the drivers of its growth?
This impressive quarter was driven partly by strong sales in both the B2B and B2C markets in the ANZ region.
During the period, Zoono signed agreements with Johns Lyng Group Ltd (ASX: JLG) and Qantas Airways Limited (ASX: QAN). The latter has seen Zoono individual wipes become part of the Qantas “Fly Well” programme.
Management also notes significant sales into the childcare and educations sectors and opportunities in aged care and public transport.
Also contributing to its growth was its UK & Europe segment. It generated quarterly revenue of NZ$7.8 million in these markets thanks to channel partners working across facilities management, transport, and healthcare sectors.
The company’s Asia & China segment is also making progress. It recently signed a direct deal with ecommerce giant Alibaba and will open an online store shortly. This will be followed by a TMall flagship store later this year.
Finally, the company has bought out its U.S. distributor and is now selling directly in the country. Its primary goal over the coming years is to grow its North American business. It hopes to replicate the success of its UK business in the lucrative market.
Should you invest?
I’ve been very impressed with Zoono’s transformation over the last 12 months. It has gone from a business fighting for survival to one with explosive sales growth.
However, at this point I believe it is unclear whether these sales will be sustained once the pandemic passes.
In light of this, I think there are too many uncertainties with Zoono for an investment. Especially given its lofty ~$500 million market capitalisation.
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Motley Fool contributor James Mickleboro 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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