RPMGlobal share price up 9% amid tech stock rally

The RPMGlobal Holdings Ltd (ASX: RUL) share price is up 8.91% at $2.14 amid a broader tech stock rally on Friday.

RPMGlobal provides technology solutions, advisory consulting, and training to the mining industry.

The company is outperforming its ASX All Ords peers, with the S&P/ASX All Ordinaries Index (ASX: XAO) up just 0.49% by comparison.

But technology is the hottest market sector of the day, with the S&P/ASX 200 Information Technology Index (ASX: XTX) currently up 1.49%.

This follows a 2.94% surge for the NASDAQ overnight.

Popular US tech stocks made impressive gains, led by Nvidia Corp, which shot up 16.4% to a new record high of US$785.75 after the semiconductor company released its 4Q FY23 numbers.

Meta Platforms gained 3.87%, Amazon rose 3.55%, and Apple lifted 1.12%.

As earnings season continues, RPM Global released its 1H FY24 numbers last week.

Let’s take a look at the report.

1H FY24 results disappoint market despite 466% profit surge

The RPMGlobal share price fell 5.7% the day after the company released its 1H FY24 results post-close.

Despite reporting a 466% increase in profit, ASX investors punished the stock. Perhaps they were expecting even better?

For the half year ended 31 December 2023, RPMGlobal reported:

• Group revenue of $56.3 million, a 20.6% rise on the prior corresponding period (pcp) of 1H FY23
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $10 million, up 88.7% pcp
• Profit after tax $6.8 million, up 466.7% pcp
• Net assets of $58.2 million, up $0.8 million as of 31 December 2023
• Cash of $23.3 million and no debt.

What else happened in 1H FY24?

RPMGlobal said net revenue from the software division increased 24.9% to $37.1 million, with software subscription revenue up 26% to $21.3 million. The company said some of this growth was due to customers converting their software licenses from perpetual to subscription.

Software consulting revenue rose 22.6% to $6.5 million. Maintenance and support revenue fell 9.7% to $6.5 million. Perpetual licence sales were steady at $1.1 million.

The company noted that it has outlaid $10 million in an on-market share buyback over the past year.

What did RPMGlobal management say?

The company said its software products and advisory services were gaining market share from competitors, evidenced by Southeast Asia sales and the reputation built by the advisory business.

Management commented:

AMT continues to be selected and implemented by the world’s major mining companies, and XECUTE is quickly becoming the ‘go-to” operational product for tier two miner’s and has started to make serious inroads into the tier one global miners.

We believe XECUTE will begin to rival AMT in terms of market acceptance and revenue generation in the next few years.

What’s next for RPMGlobal?

Management said it was optimistic about the years ahead, given RPMGlobal’s strong balance sheet, healthy cash flow, and competitive advisory and software offerings.

RPMGlobal share price snapshot

The RPMGlobal share price has risen 34% over the past year, while the ASX All Ords has lifted 5.4%.

The post RPMGlobal share price up 9% amid tech stock rally appeared first on The Motley Fool Australia.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, Meta Platforms, Nvidia, and RPMGlobal. The Motley Fool Australia has recommended Amazon, Apple, Meta Platforms, Nvidia, and RPMGlobal. 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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