5G Networks Ltd (ASX: 5GN) shares are having a positive day on Wednesday after the company posted upbeat third-quarter results. At the time of writing, the 5G Networks share price is trading 7.34% higher at $1.17.
Let’s take a look at how the telco has been performing.
Quarterly update
The 5G Networks share price opened just 0.9% higher this morning but increasing optimism has boosted it further in midday trade.
5G Networks today reported achieving revenues of $26.5 million in the third quarter, with a $14.1 million contribution from its 44.6% ownership of Webcentral Group Ltd (ASX: WCG). By comparison, the telco reported $13 million in cash receipts for the March quarter last year.
The company’s performance reflects strong growth across all three core products and increasing demand for its Voice Bridge One Microsoft Teams product.
This helped it achieve earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $4.7 million for the quarter, with $3.2 million of this coming from Webcentral. The company achieved an EBITDA target of 20% of revenue for the month of March. Looking ahead, 5G Networks expects continued margin growth as cloud, data centre and network services continue to be consolidated within its infrastructure.
The company is eyeing a number of initiatives to act as growth drivers. These include the launch of a wholesale automated service fulfilment portal in early May, new data centre fibre builds and integration synergies from previous acquisitions.
5G Networks has traditionally put its foot on the pedal for strategic acquisitions to drive scale and growth. This includes its acquisition of ColoAU back in July 2020, ex-Pipe Networks Data Centre in Fortitude Valley in November 2020 and acquiring 100% of leading dedicated cloud provider Intergrid Group in March 2021.
Today’s quarterly report hinted that a number of strategic acquisitions are currently being reviewed.
5G Networks share price performance
The 5G Networks share price has struggled to make headway after topping out at $2.44 in late August 2020. Even with today’s boost, the company’s shares remain almost 19% lower year to date. Over the past 12 months, however, 5G shares have gained 30%.
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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO and owns shares of and recommends Microsoft. The Motley Fool Australia has no position in any of the stocks mentioned. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. 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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