Tesserent share price falls despite quarter of ‘continued strong growth’

Woman looking at her smartphone and analysing share price.Woman looking at her smartphone and analysing share price.

Shares in Tesserent Ltd (ASX: TNT) are falling lower during trade on Wednesday, down 2.78% at 17.5 cents.

Earlier, the Tesserent share price was in the green, trading as high as 19 cents. But it has since backtracked and fallen into the red.

This comes on the back of Tesserent releasing its quarterly update today, reporting a jump in turnover and earnings before interest, tax, depreciation and amortization (EBITDA).

Tesserent grows revenue, EBITDA year on year

Key highlights from the company’s unaudited earnings this quarter include:

  • “Continuing growth for first three quarters of FY22”, with an 82% gain in turnover and 148% jump in EBITDA this Financial Year to date (FYTD)
  • For Q3 FY22, the company says it recognised $41.5 million in revenue, up 97% year on year (YoY)
  • Organic growth (excluding acquisitions) recorded at 36% for both the third quarter and YTD
  • Annual Recurring revenue (ARR) reaches 45% of annual turnover
  • Further innovation investment of $1.1 million made in strategic partner Daltrey focusing on biometric security
  • The Group’s reported cash position is $10.0 million as at 31 March 2022

What else happened this quarter for Tesserent?

Third quarter revenue grew 97% YoY for Tesserent, made up of both organic sales growth and the impact of acquisitions.

Tesserent also recorded a net operating cash outflow during the period of $1.1 million. It puts this down to “an increase in debtors and unbilled WIP balance – driven by growth in the Group’s workforce coupled with a seasonal step up in the level of consulting activity in Q3”.

Aside from that, the group had grown its headcount to 404 by the end of the quarter, adding another 24 employees last quarter, and 96 employees this FYTD.

“The business is focused on recruiting and retaining key talent to continue to provide an
outstanding level of customer service to our clients, whilst continuing to grow our coverage in all
aspects of the Cyber 360 delivery to the market,” Tesserent said.

Tesserent has also recently appointed Samantha Riddle to the role of Director of People and Culture (P&C) and Samantha has taken on leadership of the P&C corporate team as well as developing the P&C plan for implementation in FY23 across all the operating businesses.

What’s next?

The company expects its earnings to be lumpy due to the seasonality of its business. Specifically, it says:

As highlighted in previous releases, earnings within the business are highly seasonal, and the profile of earnings is exhibiting a similar seasonality within the current year. This is expected to continue into the last quarter of FY22.

Aside from that, no specific earnings or sales guidance was provided for the coming periods in Tesserent’s release today.

Tesserent share price snapshot

The Tesserent share price has fallen 22% in the last 12 months, however, it has held a 3% gain this year to date. Shares have also spiked more than 13% in the past month of trade.

The post Tesserent share price falls despite quarter of ‘continued strong growth’ appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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