The Damstra Holdings Ltd (ASX: DTC) share price is today falling as the company released its results for the financial year ended 30 June 2020 (FY20). Damstra’s share price is currently trading 5.64% lower at $1.84 per share.
Damstra is an Australian-based provider of integrated workplace management solutions to multiple industry segments across the globe. The company develops, sells and implements integrated hardware and software-as-a-service (SaaS) solutions in industries where compliance and safety are important.
How did Damstra perform in FY20
In Damstra’s FY20 results, the workplace management provider delivered a record full-year performance with revenue and other income of $23.5 million – a 47% increase on FY19.
The company also announced pro forma earnings before interest, taxes, depreciation and amortisation (EBITDA) of $6.8 million, significantly higher than the prior corresponding period’s $1.8 million.
Damstra points to existing client project rollout, multiple new clients, new product sales and international revenue growth as drivers for the strong numbers. This has seen the company’s revenues grow 42% per year over the last 3 years.
The number of clients the company services increased to 279, representing a 116% increase. This increase was likely in part due to Damstra’s acquisition of Vault.
Damstra reported there was no reduction in demand for its services even during the height of the pandemic.
Also of note was Damstra’s continued strong spending on research and development (R&D). The company spent $2.2 million on research to position itself well for future growth. Using R&D and acquisitions, Damstra has already increased its number of products from 14 (2018) to 28 this year. Some of the products developed include topical temperature detection software and fever detection integrated with facial recognition.
However, despite impressive reporting growth, investors were clearly expecting more as the Damstra share price is currently trading 5.64% lower.
Balance sheet strength
Damstra’s balance sheet increased to $9.4 million, following its capital raise and strong underlying operating cash flow in FY20. The increase in receivables and income received in advance reflected the revenue growth generated in the period. Damstra continues to operate on a long-term, debt-free basis, as its strong availability of cash underpins its ongoing growth.
On that note, the company announced there would be no dividend, with cash to be reinvested in growth.
Outlook
Looking forward, the company anticipates an increase in demand for its services and an expanded product offering. In FY21, this is expected to be underpinned in Australia by federal and state funding for major infrastructure projects, whilst increased pressures to manage COVID-19 will support a North American expansion.
The company has provided guidance of $33 million–$35 million for FY21 revenue.
At the time of writing, the Damstra share price is almost 6% lower for the day, although it is up 49% on this time last year.
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Daniel Ewing owns shares of Damstra Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra Holdings Ltd. 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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