Guess which ASX tech stock crashed 29% on its half-year results

The DUG Technology Ltd (ASX: DUG) share price is having a day to forget on Wednesday.

In morning trade, the ASX tech stock sank as much as 29% to $1.80 following the release of its half-year results.

Its shares have recovered a touch since then but remain down 16% to $2.13.

ASX tech stock sinks on results release

• Total revenue up 23% to US$30 million
• EBITDA up 4.4% to US$7.1 million
• Net profit after tax down 31.6% to US$1.3 million

What happened during the half?

For the six months ended 31 December, DUG Technology reported a 23% increase in revenue to US$23 million. This was driven by a strong performance from its key Services business, which delivered a 28% increase in revenue to US$25.3 million.

Things weren’t as positive for the company’s earnings after its EBITDA margin weakened materially. It was 24% for the half, down from 28% a year earlier and 31% from the second half of FY 2023.

This ultimately led to the company’s profit after tax falling by almost a third to US$1.3 million from US$1.9 million a year earlier (and US$3.1 million in the preceding half).

At the end of the period, the ASX tech stock had net cash of US$1.1 million.

Management commentary

The company’s managing director, Matt Lamont, said:

This result demonstrates further strengthening of our business, driven by increased momentum in the Oil & Gas exploration & production sector. Our Services wins grew strongly by 64% on H1 FY23, whilst delivering record high revenues for the period.

The Company recorded EBITDA of US$ 7.1m. For the first time we incurred third party compute costs; these costs are expected to cease when the compute upgrade is complete. It has been significantly more expensive to purchase third party compute than it is for DUG to provide its own.

Outlook

The ASX tech stock’s Services order book grew by 45% to US$40.5 million compared to 30 June. Management believes this will underpin revenue for the second half and beyond.

In addition, it advised that the outlook for Software looks strong, growing by 9% to US$2.6 million, with new opportunities being pursued outside renewals from existing clients.

Management also aimed to ease concerns about its balance sheet. It said that it expects to continue supporting all planned activities through its balance sheet with support of asset financing for new compute and storage along with cash generated from operations.

Despite today’s decline, DUG shares are still up approximately 150% over the last 12 months.

The post Guess which ASX tech stock crashed 29% on its half-year results appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 Dug Technology. The Motley Fool Australia has recommended Dug Technology. 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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