Here’s why the Volpara (ASX:VHT) share price is edging higher

The Volpara Health Technologies Ltd (ASX: VHT) share price is edging higher today. This comes after the company reported its trading update for the third-quarter of the 2021 financial year.

In early morning trade, the Volpara share price is up 1.3% to $1.50. It’s worth noting that most of the ASX market is down from Wall Street losses overnight. The All Ordinaries Index (ASX: XAO) has fallen 1.6% to 6,994 points.

How did Volpara perform for Q3?

The Volpara share price is on the move today following the announcement of a positive trading update.

For the period ending December 31, the health technology software company delivered its largest ever Q3 sales performance. Annual Recurring Revenue (ARR) stood at NZ$20.7 million, reflecting a 20% increase over the prior corresponding period (pcp). Volpara noted that robust sales came from a mix of significant upsells, new major contracts, and the transition to its Aspen Breast software platform.

The Average Revenue Per User (ARPU) lifted to US$1.22, a 5% jump over the same time last year. In particular, Q3 deals ranged from US$1.43 for a single product to upwards of US$5.12 for Volpara’s multi-product packages. This represents a huge opportunity if the company can upsell the integrated Volpara Breast Health Platform to its existing customers.

Cash receipts from customers also grew, with the business recording NZ$4.6 million for Q3, up 2% on the pcp. This is despite COVID-19 affecting normal trading conditions, and the weakening United States dollar against other currencies. The company highlighted that this was the sixth straight quarter of cash receipts above NZ$4.5 million.

Net operating cash outflow for the quarter came to NZ$3.1 million, which is less than what the company originally forecasted. Capital spend has continued on a downward trajectory since Volpara’s MRS Systems acquisition, and management’s focus on controlling costs.

Volpara revealed a healthy cash balance of $60.3 million, and $2.8 million in bank debt facilities.

Management commentary

Volpara group CEO, Dr. Ralph Highnam, hailed the outstanding quarter, saying:

It has been a truly remarkable sales quarter, with a set of outstanding new deals coming over the line and growing our recurring revenue significantly, despite COVID-19. Very encouragingly, our ability to identify women at high cancer risk who should have genetics testing has potential to be a game-changer and significantly increase our ARPU. Over the next few quarters, our focus will be on ramping up those genetics relationships and connections as quickly as we can.

About the Volpara share price

The Volpara share price is down around 20% over the past 12 months, after reaching a 52 week high of $1.89. In the months following, its shares fell to a 52 week low of 79 cents in March, and stagnated ever since.

Based on the current share price, Volpara commands a market capitalisation of roughly $371 million.

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Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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