The Tesserent Ltd (ASX: TNT) share price is tanking today despite the company reporting a significant lift in revenues and earnings during its first half in FY21.
At the time of writing, the Tesserent share price is down 20.6% to 25 cents a share.
High growth not enough for Tesserent share price
Cybersecurity continues to be a focus area for many businesses and the Australian government. As our lives become more reliant and integrated with technology, the importance it has grows. The target on our critical data infrastructure has also expanded over time.
Consequently, many cybersecurity companies have been called into the fray over the last year as the issue becomes more prominent. The Australian Government also released its Cyber Security Strategy 2020, which will see $1.67 billion invested in the sector over 10 years.
The increased awareness of cybersecurity has aided in Tesserent’s year-over-year (YoY) turnover increase of 500% to $36.5 million.
Heading further down the income statement, operational earnings before interest, tax, depreciation, and amortisation (EBITDA) swung to a positive $2.9 million. This compares to the prior year’s $1.7 million loss.
Considering the falling Tesserent share price today, the question is why? A potential inhibitor could be the bottom-line statutory loss before tax. Due to acquisitions and the company’s employee share option plan (ESOP), losses increased to $6.18 million in the half. This a 55% greater loss than 1H FY20.
Acquisitions centre stage for future growth
Tesserent outlined that the second half will benefit from the inclusion of its recent New Zealand acquisition, Lateral Security. In addition, six months of revenue and earnings will fold into the second half from Seer Security, Airloom, Ludus Cybersecurity, and iQ3.
Furthermore, the company stated that all of its FY21 goals remained intact. Some of these include:
- Focus on capturing market share in three key markets: Government (including Defence), critical infrastructure and banking & finance
- Continuing to drive the company’s acquisition strategy to expand on Cyber 360 capabilities and increase shareholder value through incremental EPS growth
- Explore international expansion opportunities with a focus on Australia’s key Five Eyes allies, which consists of the United States, United Kingdom, New Zealand, and Canada.
Importantly, the company’s results are unaudited and could change upon review. Tesserent informed the market that it would relay any changes once solidified.
Taking in today’s losses, the Tesserent share price is still up a whopping 325% in the last year. The cybersecurity company has been riding the wave of enthusiasm for the sector since mid-2020.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
More reading
- Why the MyFiziq (ASX:MYQ) share price is rising today
- Here’s why the Limeade (ASX:LME) share price is crashing 32% lower
- Elon Musk doubles down on promise to IPO Starlink
- Why is the Bellevue Gold (ASX:BGL) share price frozen?
- Why Fortescue, Genworth, Limeade, & Northern Star shares are sinking
Motley Fool contributor Mitchell Lawler 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.
The post The Tesserent (ASX:TNT) share price is sinking 20% on record revenue appeared first on The Motley Fool Australia.
from The Motley Fool Australia https://ift.tt/3ku3ERG
Leave a Reply