Infomedia (ASX:IFM) share price dips 9% on flat earnings

Infomedia Limited (ASX: IFM) shares are plunging to a 4-month low today following the company’s report of flat earnings growth in the first half of FY21 (1H21). At the time of writing, the Infomedia share price is trading 9.44% lower at $1.63.

Why the Infomedia share price is weaker today 

The Infomedia share price is taking a dive today after the company delivered steady revenue of $47.7 million for the 6 months to 31 December 2020. Meanwhile, net profit after tax (NPAT) increased 3% to $9.3 million. Infomedia’s cash balance at 31 December 2020 sat at $97.3 million. 

The business blamed timing delays for the lack of sales momentum in the first half. It cited that sales closed during calendar 2020 are expected to translate into revenue in late 2H21 with strong monthly recurring revenue leading into FY22. 

Infomedia CEO Mr Jonathan Rubinsztein said:

The result is in line with our expectations having anticipated the impact of delayed negotiations and installations. We worked very closely with our customers during the year, initially to offer immediate support in response to COVID, and later to ensure the smooth transition to the Next Gen SaaS platform.

In further news impacting the Infomedia share price, the company was unable to provide a concrete earnings outlook for FY21. It anticipates that some moderate organic growth will return in the second half of FY21. However, it noted that lockdowns and travel restrictions will continue to hamper the timing of sales converting to revenue. Infomedia did highlight that trading conditions are likely to improve as restrictions ease with the rollout of the vaccine. 

It also noted that, since its capital raising in April 2020, it has yet to close an acquisition but remains vigilant in its pursuit of transactions. 

In the report’s closing, the company reminded investors of its aspiration to double revenue to $200 million by 2025, as shared at its 2020 annual general meeting. It noted that, in the medium term, it anticipates a return to consistent, sustained growth buoyed by strategic wins across all regions. 

Company snapshot  

Infomedia is a software-as-a-service (SaaS) provider catering to the parts and service sector of the automotive industry. Its platforms allow users to precisely and quickly identify replacement parts manufactured by the world’s leading original equipment manufacturers.

Recently, the company successfully launched its Next Gen SaaS platform across its entire user base. According to Infomedia, with Next Gen, the company has moved to an integrated SaaS platform that delivers a modern, comprehensive suite of offerings across multiple customer segments. 

The Infomedia share price has fallen by more than 13% over the past twelve months. Year to date, Infomedia shares are also trading nearly 14% lower. Based on the current share price, the company has a market capitalisation of around $675 million.

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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. owns shares of Infomedia. The Motley Fool Australia has recommended Infomedia. 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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