The Spirit Technology Solutions Ltd (ASX: ST1) share price has lifted today after the company announced a positive trading update.
Spirit is an IT and telecommunications provider with a range of product and service offerings including traditional internet products, managed IT services and cloud-based business solutions.
At the time of writing, the Spirit share price is up 2.90%, trading at 35.5 cents.
Spirit share price higher on record growth, integration
Today, the company reported “very strong growth again in FY21” with a 150% increase in recurring and S&P (solutions and projects) revenue to $35.7 million between January and April this year. Recurring revenue increased 94% year-on-year to $16.6 million, while S&P revenue growth surged 224% to $19.1 million.
Spirit notes the strong Jan-April growth represents an 8% increase off the seasonally high September-December 2020 period. September to December was further boosted by a school infrastructure renewal project, while January typically represents a quieter B2B holiday period followed by the Easter holidays.
On the lookout for merger and acquisition (M&A) opportunities, Spirit has acquired some 13 cloud, IT and telecommunications companies in the last two years. With so many different companies coming under the Spirit brand and business, integration represents an integral part of maximising the value of its acquisitions.
Spirit’s update highlights that 8 of 13 companies are completely integrated across people, systems, processes and brand. By June, 10 of 13 companies will be integrated with only Reliance, and recent purchases of Intalock and Nexgen remaining.
From a technology perspective, the company has decommissioned 35 of 45 systems across the acquisitions, with 29 of 45 scheduled integration events completed.
The Spirit share price so far
Spirit has marked 10 consecutive quarters of recurring revenue growth to March 2021 alongside numerous growth accretive acquisitions. However, the Spirit share price has stayed level since August 2020.
The company is in its early days of profitability, delivering a net profit of $508,117 in the first half of FY21. Despite the lack of recent share price upside, Spirit remains confident of achieving organic revenue growth through the integration of its acquisitions, building its product portfolio and national expansion.
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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 SPIRIT TC FPO. The Motley Fool Australia has recommended SPIRIT TC FPO. 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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