Category: Stock Market

The Australian Ethical Investment Limited (ASX: AEF) share price is gaining after the company released its financial year 2021 (FY21) earnings this morning.

Right now, the Australian Ethical Investment share price is $9.73, 6.34% higher than its previous close.

Australian Ethical share price jumps on 5 cents of dividends

Here’s how the ethically-focused wealth management company performed in FY21:

• Profit after tax of $11.3 million, 19% more than that of FY20
• $58.7 million of revenue, up 18%
• $6.07 billion of funds under management, up 50%
• 4 cent fully franked final dividend, with a 1 cent fully franked performance fee dividend

Over FY21, Australian Ethical saw a 43% bump to the amount of funds managed by its super services while its managed funds’ balances increased 63%.

It reported a record $1.6 million donated to its Foundation throughout FY21.

At the same time, its operating expenses were $43.6 million, up 18% on that of FY20, driven by reinvestment into the business.

What happened in FY21 for Australian Ethical?

Here’s what drove Australian Ethical and its share price in FY21:

Over FY21, the company’s customer base grew 23%. Managed fund customers increased 31% while super customers increased 22%.

Additionally, it was recognised by Morningstar as 1 of 6 global leaders for its commitment to ethical, social, and governance (ESG). Morningstar described the company’s shares fund as “setting the ESG standard for Australian domestic-equity strategies”.

Australian Ethical reduced fees on its Defensive super option, its Income and Fixed Interest funds, its Australian Shares and International super options, its Balanced, International, Diversified, Advocacy, Australian Shares and Emerging Companies retail funds, and its Balanced and International wholesale funds.

Australian Ethical also reduced the threshold on its Balanced wholesale fund.

The company’s highlights include the performance of its Australian Shares Fund (retail) which returned 41.9%. Its Emerging Companies Fund (retail) returned 50.3%. Additionally, Australian Ethical’s Emerging Companies Fund generated performance fees of $2.9 million.

Australian Ethical’s Balanced option also delivered a 17.5% return while its Australian Shares super option delivered a 38.8% return.

COVID-19‘s impact on the company’s business has been minimal.

What did management say?

Australian Ethical’s CEO John McMurdo commented on the results driving the company’s share price today, saying:

Despite the ongoing challenges posed by the pandemic, it has been a pivotal year for ethical investing, climate pledges, and sustainable commitments around the world. As the coronavirus continues to reshape economies and global markets, a near-universal desire for the more sustainable future is emerging.

As a result, out ethical approach is rapidly gaining popularity for its inherent tilt towards quality, resilience, and long-term capital appreciation…

However, the most recent Intergovernmental Panel on Climate Change (IPCC) report makes for sobering reading and tells us that the climate emergency is here, and the clock is ticking, Recent climate pledges and commitments must now be accelerated with a clear role for investors to push for mandatory climate action plans. Because as much as the report is bleak and troubling, it is also a historic moment for investors to step up and support urgent and large-scale initiatives to reduce emissions.

What’s next for Australian Ethical?

Here’s what might drive the Australian Ethical share price in FY22:

The company is expecting to experience an increase in demand shortly as ethical investing nears the mainstream.

As a result, it’s embarking on a growth strategy to reinforce and expand its market share.

In the short term, Australian Ethical will focus on deepening its investment capability, expanding its product offerings, and growing its brand awareness.

Over the long term, it plans to cement its leadership with the above short term focuses and scale its business.

Australian Ethical also plans to update its digital channels in FY22.

Australian Ethical share price snapshot

The Australian Ethical share price has gained 98% year to date. It has also gained 116% since this time last year.

The post Australian Ethical (ASX:AEF) share price soars 6% on FY21 results appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. 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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Blackmores Limited (ASX: BKL) shares are edging lower on Thursday after the supplements company released its FY21 full-year release. At the time of writing, the Blackmores share price is trading 0.74% lower at $79.20.

Blackmores share price struggles whilst profit surges

The company reported the following key performance results for the 2021 financial year:

• Revenue up 1.3% on the prior corresponding period (pcp) to $575.9 million.
• Underlying group earnings before interest and tax (EBIT) up 51.7% to $47.6 million.
• Underlying group net profit after tax (NPAT) up 51.7% on the pcp to $25.4 million.
• China segment revenue up 17.7% with Australia segment revenue down 14.0%.
• Final dividend of 42 cents per share, fully franked.

The Blackmores share price is struggling to stay in the green on Thursday morning as investors digest the company’s latest results.

What happened in FY21 for Blackmores?

Despite a “challenging” operating environment amid the COVID-19 pandemic, Blackmores posted revenue, earnings and profit growth in FY21.

Strong momentum in the group’s international and China segments helped offset softer conditions in Australia and New Zealand.

Some of the group’s key initiatives for the year included its business improvement program, targeted investment strategy to capitalise on organic growth in Asia and efficiency and price/mix initiatives.

The Blackmores share price has climbed around 17% in the past 12 months despite the challenges faced.

What did management say?

Blackmores CEO Alastair Symington had the following to say about the result:

Blackmores has made strong progress towards delivery against our strategic priorities over the past 12 months by aligning our resources to capitalise on growth markets, channels and segments.

We have a clear path and focus towards achieving our stated FY24 strategic and financial objectives and I am pleased with the progress we are making which is evidenced from the improvements in our earnings profile.

Blackmores remains focused on delivering growth and operational excellence across its 3 brands, 3 focus markets and 5 consumer growth pillars, while maintaining a discplined risk and capital management framework to capitalise on the opportunities and navigate through the challenges that will arise.

What’s next for Blackmores?

Blackmores said it is continuing to adapt to the demands of the “rapidly changing health sector”. That includes a focus on generating efficiency and cost savings in Australia and New Zealand.

The outlook for its international and China segments remains positive with strong sales momentum to start FY22.

Blackmores share price snapshot

The Blackmores share price has climbed 5.4% higher in 2021 but lags the S&P/ASX 200 Index (ASX: XJO) gains this year. At the current share price, the company has a market capitalisation of around $1.5 billion.

The post Blackmores (ASX:BKL) share price edges lower despite profit surge appeared first on The Motley Fool Australia.

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• What happened to the Blackmores (ASX:BKL) share price last earnings season?
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. 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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The Endeavour Group Ltd (ASX: EDV) share price has opened lower on Thursday after the company released its maiden FY21 results as an independent listed business.

At the time of writing, shares in the retail drinks and hospitality business are down 2.5% to $7.03.

Endeavour share price lower on volatile earnings

The Endeavour share price is off to a wobbly start on Wednesday despite a solid FY21 performance. Some key highlights include:

• Group sales up 9.3% to $11,595 million
• Group earnings before interest and tax (EBIT) lifting 22.1% to $899 million
• Group net profit after tax of $445 million
• Final dividend of 7 cents per share

What happened to Endeavour in FY21?

The Endeavour share price made its ASX debut on 24 June following its demerger from Woolworths Group Ltd (ASX: WOW). The company’s shares closed at $6.02 on its first day.

Endeavour delivered a solid 9.3% increase in group sales to $11.6 billion, with both retail and hotel segments delivering higher sales than the prior corresponding period.

Endeavour believes its BWS and Dan Murphy’s businesses are well-positioned in the market with customer engagement metrics improving again in FY21.

Retail sales increased 9.6% to $10,178 million while EBIT grew 17.6% underpinned by a shift to in-home consumption as a result of COVID-19. The company said that the closure of on-premise venues which began in March 2020 has “increased retail demand which remained elevated across the first half of FY21”. While in the second half of FY21, “on-premise restrictions eased and retail trading began to normalise”.

Endeavour continued to invest in its digital capabilities during the year, improving the customer experience for its website and apps. The company believes this created a strong foundation to drive online sales, which increased 24.7% in FY21. Online sales now account for 8.4% of total retail sales compared to 6.9% a year ago.

Endeavour’s hotel business continues to face challenging conditions due to COVID-related restrictions and associated costs. Despite these challenges, sales increased 7.3% to $1.4 billion while EBIT grew 49.1% to $261 million.

The positive outcome was mainly due to the cycling of hotel closures in FY20.

In the past, once restrictions were lifted in each market, the company said that strong trading conditions quickly resumed as customers returned to hotels. Unfortunately, the resurgence of COVID-19 cases towards the end of FY21 has brought back lockdowns and restrictions, again impacting operations.

Management commentary

Looking ahead, Endeavour managing director and CEO Steve Donohue said:

The strength of this year’s result has demonstrated the resilience of our business model and the commitment of our team to living our purpose and values and delivering for their customers and communities. We are excited that we are entering the new year with a robust balance sheet and a significant number of opportunities to create value, including growing our digital engagement, expanding and enhancing our network and optimising our business through a focus on profitability and capital management

What’s next for Endeavour?

Endeavour advised that its performance so far in FY22 continued to experience significant volatility due to COVID-19 outbreaks.

In the first eight weeks, retail sales were “tracking well” and cycling through trading highs of 1Q21. Retail sales were down 1.7% compared to FY21, but up 21.5% compared to FY20.

Its hotels business was off to a “very challenging start”. The company advised that as at 24th August, 41% of its hotels were closed due to public health orders. Hotels sales in the first eight weeks of FY22 are down 7.3% against the prior corresponding period and down 36.2% compared to FY20.

The volatility in the first eight weeks of sales could be a drag on the Endeavour share price in today’s trading session.

The post Endeavour (ASX:EDV) share price down 2% after maiden FY21 results announcement appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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The LiveTiles Ltd (ASX: LVT) share price is down 12% on Thursday as the software and technology company reported its FY21 earnings.

Let’s investigate further.

LiveTiles share price on watch after strong revenue and EBITDA growth

• Total revenue growth of 5% year on year to $46.7 million.
• Operating revenue increased by 19% to $45 million
• Underlying EBITDA grew by $11.4 million, or 91%, to a loss of $1.1 million
• Total contracted licenses growth of 48% year on year to 2.3 million
• Mobile licences up 1,211% over the year prior
• Cash receipts expanded by 26% to $51.8 million, with net operating outflows improving by 71%

What happened in FY21 for LiveTiles?

In a potential positive for the LiveTiles share price, the company grew total revenue and operating revenue by 5% and 19% respectively year on year.

LiveTiles explained this comes from growth “across both new and existing customers via upsell and product loss sells”. Its software subscription business also saw 19% growth and software sales revenue was also up 20% on the year prior.

As such, gross profit climbed 16% to around $33 million in FY21 although the company’s gross margin decreased by 16 basis points to 73%. LiveTiles said this was due to “platform maintenance resources and higher licensing costs”, alongside increasing its customer support.

Underlying EBITDA saw an $11.4 million improvement and grew 91% year over year. This was coupled with operating expenditure of $41 million that was a saving of 22% or $11.4 million on FY22.

Consequently, the company’s net profit after tax (NPAT) also improved by about $1.5 million to a statutory loss of $30.1 million.

LiveTiles also recorded its highest ever cash receipts of $51.8 million which is 26% higher year on year. The company explained the result means cash receipts have grown at a compound annual growth rate (CAGR) of 96% over the last 3 years.

Finally, the company left the year with $16.8 million in cash on its balance sheet, which it says is sufficient “to manage ongoing operations with growing cash receipts and disciplined cost management”.

What did management say?

LiveTiles Co-Founder and CEO Karl Redenbach said:

We are pleased with LiveTiles FY21 results in a year that was not without its challenges; operationally, and on a global scale due to the ongoing uncertainty with COVID-19. Despite this, we have continued to make significant improvements across the business during the year, growing our contracted licence base +48% to 2.3m, delivering 19% growth in operating revenues to $45m, reducing our operating expenditures and have now put the company
on a path to profitability with Underlying EBITDA at $(1.1)m, a 91% improvement from 2020.

Regarding LiveTiles’ strategic review, Redenbach added:

During FY21, the Company commissioned an independent Strategic Review, which was presented to the Board in Q4, and we are pleased to be able to share the review findings; as well as the new Company Strategy, the LiveTiles “Premiership Plan”. A detailed outline of the review and the strategic plan is provided in the Director’s Report of the Appendix 4E 2021 Financial Statement.

What’s next for LiveTiles?

Due to uncertainties surrounding the COVID-19 pandemic, LiveTiles opted against providing guidance for FY22.

The company did “reiterate its continued focus on disciplined cost management strategies” amid other measures.

These measures include “reshaping the go-to-market model” whilst reviewing the company’s product portfolio.

In addition, LiveTiles also expects “strong medium to long-term growth potential” which, it states, is driven by “increased remote working and the employee experience solutions” post-pandemic.

At the time of writing, the LiveTiles shares are trading at 15 cents, down 11.76%. The LiveTiles share price has faced challenges this year to date, posting a loss of 29% since January 1. This extends the previous 12 months’ slip of 26%.

Both of these results are well behind the S&P/ASX 200 index (ASX: XJO)’s return of about 25% over the past year.

The post LiveTiles (ASX:LVT) share price plunges as EBITDA grows 91% in FY21 appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of the stocks mentioned. Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended LIVETILES FPO. The Motley Fool Australia has recommended LIVETILES 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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The Air New Zealand Limited (ASX: AIZ) share price is in the red in early trade as the Kiwi airline reported a 48% drop in full-year operating revenue.

Air New Zealand share price slips on weak operating revenue

Shares in the Kiwi airline are on the move after the company reported its results for the year ended 30 June 2021 (FY21). Some of the key takeaways include:

• Operating revenue down 48% on the prior corresponding period (pcp) to $2.5 billion
• Net loss after tax of $411 million, a decrease of 34.6% from FY20’s $628 million loss
• Operating cash flow up 40.4% to $323 million
• No interim dividend.

The Air New Zealand share price has fallen more than 1% at the open following this morning’s result.

What happened in FY21 for Air New Zealand?

Unsurprisingly, COVID-19 was the name of the game in 2021. Ongoing border restrictions impacted on revenues with Air New Zealand reporting that international revenues reduced by 55% compared to FY20.

Cargo flying revenue jumped by 71% thanks to airfreight support schemes in an otherwise disrupted year. The financial result included $450 million of government assistance throughout the year as well further one-off subsidies and initiatives.

The Air New Zealand share price has managed to climb 16.1% higher in the past 12 months despite a year of significantly disrupted operations. That includes an inability to fly two-thirds of the airline’s passenger network due to restrictions.

What did management say?

Air New Zealand chair Dame Therese Walsh had the following to say about the result:

In a severely, constrained environment, Air New Zealand maintained cost discipline, focusing on delivering with excellence in areas in its control.

The return of a strong domestic business and growth in the cargo services that underpin our key export markets was a reminder of the airline’s crucial role in New Zealand’s infrastructure.

Air New Zealand CEO Greg Foran added:

Our people developed new capabilities and dexterity, adapting quickly when conditions changed. Although the return of long-haul travel seems some time away, the changes the team made this year will serve us well when it returns.

We have reimagined our domestic business, increasing the choice of flight times and introducing greater price differentiation for peak and off-peak flying. This allows us to offer more lower priced fares, which will unlock new demand for domestic tourism.

What’s next for Air New Zealand and its share price?

Air New Zealand has deferred its planned capital raise from 30 September until the first quarter of calendar year 2022. The Kiwi airline also suspended 2022 earnings guidance citing the ongoing uncertainty with travel restrictions.

The Air New Zealand share price has slumped 12.7% lower in 2021 amid persistent headwinds for the Trans-Tasman travel industry.

The post Air New Zealand (ASX:AIZ) share price slips as revenue falls 48% appeared first on The Motley Fool Australia.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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The A2 Milk Company Ltd (ASX: A2M) share price is out of form again on Thursday.

In morning trade, the struggling infant formula company’s shares are down 10% to $6.17.

This means the A2 Milk share price is now down 66% over the last 12 months.

Why is the A2 Milk share price crashing lower again?

Investors have been selling down the A2 Milk share price following the release of a disappointing full year result and weak outlook for FY 2022.

For the 12 months ended 30 June, the company reported a 30% decline in revenue to NZ$1.21 billion and a 77.6% reduction in earnings before interest, tax, depreciation and amortisation (EBITDA) to NZ$123 million.

This was in line with the very low end of its final downgraded guidance for FY 2021.

What else is weighing on its shares?

Also weighing heavily on the A2 Milk share price was news that the company won’t be returning any of its sizeable cash balance of NZ$875.2 million to shareholders.

Earlier this year, the company revealed that it was considering a capital return. However, this morning it advised that the Board has instead decided to preserve balance sheet strength, having regard to market volatility and potential opportunities to reinvest in growth and supply chain.

Also causing some alarms to sound was the company revealing that it is reviewing its growth strategy in response to a rapidly changing China infant formula market and structural factors in the daigou channel.

A2 Milk’s Managing Director and CEO, David Bortolussi, commented: “We recognise that the China market and channel structure is changing rapidly and we are undertaking a comprehensive process to review our growth strategy and executional plans to respond to this new environment.”

Outlook

Finally, perhaps the biggest drag on the A2 Milk share price was management advising that the tough times may not be over any time soon.

Mr Bortolussi explained: “Overall, although a2MC believes the business will continue to make significant progress on many fronts, FY22 is expected to continue to be a challenging and volatile year. Due to the actions taken in 4Q21 to address channel inventory and improve product freshness, coupled with strong brand health, the business is well-placed to adapt its strategy and execution to drive growth in the longer term. However, recovery in English label channels is expected to be slow and market growth in China will be subdued for some time.”

The post A2 Milk (ASX:A2M) share price crashes 10% on disappointing FY22 outlook 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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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The IOOF Holdings Limited (ASX: IFL) share price is climbing in early trade after the wealth manager’s latest full-year results.

IOOF share price on watch as profit jumps 19%

Some of the key takeaways from the IOOF result include:

• Revenue up 31% on the prior corresponding period (pcp) to $770 million
• Group funds under management, advice and administration (FUMA) of $453 billion including 15% organic growth
• Underlying net profit after tax (UNPAT) up 19% on pcp to $147.8 million
• Final franked dividend of 11.5 cents per share, including a 2 cents per share special dividend

The IOOF share price is climbing higher on Thursday following the latest full-year result.

What happened in FY21 for IOOF?

The MLC acquisition was completed in May 2021 and represents a major strategic pillar for IOOF. IOOF reported its synergy run-rate of $12 million per year was achieved by 30 June and remains on track to deliver $80 million to $100 million by the end of FY22.

The company’s Evolve21 migration saw over 38,000 accounts transferred and is on track to complete by December 2021.

IOOF reported net inflows of $1.1 billion into its Portfolio and Estate Administration business with a turnaround in net flows into Investment Management in Q4 2021.

The IOOF share price fell 7.6% lower throughout FY21 despite climbing steadily higher in calendar year 2021.

What did management say?

IOOF CEO, Renato Mota, had the following to say about the full-year result:

This year has been transformational with the successful completion of the MLC acquisition on 31 May.

The increase in our revenue and UNPAT evidences our commitment to growth, both through transformation as well as benefits of recent acquisitions. The MLC acquisition is proceeding well and our integration plans remain on track.

Through the transformation of our business, we expect to deliver synergy benefits during FY22 and beyond.

Longer-term, we continue to see significant opportunities through the expanding addressable market and changing demographies which are increasingly driving demand for our quality financial wellbeing advice, contemporary administration services and expanded investment capabilities.

What’s next for IOOF and its share price?

IOOF outlined some key priorities for the current financial year. These include delivering annualised run-rate synergies of $80 million to $100 million from the MLC acquisition and completing its product and platform review.

The IOOF share price has climbed 43.1% higher in 2021 and is outperforming the S&P/ASX 200 Index (ASX: XJO) by 30.4% this year.

The post IOOF (ASX:IFL) share price jumps as profit surges 19% appeared first on The Motley Fool Australia.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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The Damstra Holdings Ltd (ASX: DTC) share price is falling this morning following the Aussie health and safety software company’s latest full-year results.

Damstra share price slumps despite revenue surge

In early trade, the Damstra share price is down more than 5% after the company provided its results for the year ended 30 June 2021 (FY21). Some of the key takeaways include:

• Revenue up 40% on the prior corresponding period (pcp) to $27.4 million
• Annual recurring revenue (ARR) up 63% on pcp to $34.5 million
• Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) down 3% to $6.6 million
• Cash receipts up 51% on pcp to $31.7 million
• 737,000 users, up 74% from 423,000 in FY20

What happened in FY21 for Damstra?

The Damstra share price has slumped 39% lower over the past 12 months despite a year of headline growth. One significant event was the October 2020 acquisition of Vault Intelligence Ltd (ASX: VLT) for non-cash consideration of $99.3 million.

Damstra increased its ARR, cash receipts and user numbers throughout the year. Other significant achievements for the year include global footprint expansion and new product launches.

Damstra now has 737,000 global users with its products used in more than 20 countries. The Aussie software group also announced several major contracts including with NBN Co. and a trial with a new global mining client.

What did management say?

Damstra CEO Christian Damstra had the following to say about the result:

FY21 has been a transformational year for Damstra, having strategically repositioned our product offering under the Enterprise Projection Platform (EPP) banner, while delivering strong revenue growth and EBITDA performance.

We are pleased to have successfully integrated Vault into the Damstra ecosystem following its acquisition during the year. Signficantly outperforming the targeted operational synergies from the deal has helped us to drive strong operating leverage in the business, resulting in robust EBITDA and margins in FY21.

What’s next for Damstra and its share price?

Damstra is targeting free cash flow breakeven in FY22 based on a higher revenue base and run-rated cash synergies from the Vault acquisition.

The Damstra share price has fallen in early trade, down 4.62% at the time of writing to $1.135. It is also down 25.5% year to date.

The post Damstra (ASX:DTC) share price slumps 5% despite revenue surge appeared first on The Motley Fool Australia.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings Ltd. 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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The Link Administration Holdings Ltd (ASX: LNK) share price is sliding in opening trade on Thursday.

This follows the release of the superannuation fund’s FY21 annual financial report earlier this morning.

Just after the market open, the Link share price is down 4.5% trading at $4.91.

Link share price sinks on revenue and net tangible assets drop

Highlights of the company’s FY21 results include:

• Revenue of $1.16 billion down 6% year on year from $1.23 billion
• After tax net loss of $163 million, versus a loss of $102.5 million the year prior
• Operating EBIT down 21% from FY20 at $141 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) of $208 million, a 16% decrease year on year
• Operating net profit after tax and amortisation (NPATA) of $113 million, down 18% on the previous year
• Fully franked dividend of 5.5 cents per share, paid on 20 October 2021.

What happened in FY21 for Link?

The Link share price is in focus today as the company recognised a 6% drop in its revenue from FY20.

Link also saw headwinds across the park in its FY21 results, with a 21% decrease to earnings before interest and tax (EBIT) and a net loss that blew out to $163 million, compared to $102.5 million a year ago.

As such, EBITDA of $208 million came in 16% behind the same time last year, even though amortisation increased by 11% to about $47 million. Link advised that this came from the “prior year’s acquisitions reaching the end of their useful lives in FY20 and FY21”.

The net loss was underscored by lower operating income and a “higher income tax expense”. Link also recorded an 8% decrease in net operating cash flow to $293 million.

In addition, recurring revenue in its retirement and superannuation solutions business, which accounts for almost 90% of this segment’s sales, was down $4.5 million on the year.

This was compounded by the fact that non-recurring revenue (which makes up the remainder of sales in this part of Link’s business) also came in 10.4% behind FY20.

Link left the quarter with $395 million in cash, an almost 50% gain from the year prior. The company said this was due to the “$200 million of cash proceeds received… as a partial repayment of PEXA shareholder loans” prior to the PEXA initial public offering (IPO) on 1 July 2021.

Under this IPO, Link received $180 million in cash and retained a 42.8% equity interest in PEXA. In addition, PEXA contributed about $33 million to “Link Group’s operating NPATA in FY21”.

In addition, Link declared a 5.5 cents per share dividend in its FY21 annual report. This brings the total dividends for FY21 to 10 cents per share, on par with the previous year.

Finally, the company also started the transition of Vivek Bhatia as the new Group managing director and CEO in FY21.

What did management say?

Link’s new managing director and CEO Vivek Bhatia said:

With the repositioning and resetting of the business underway, Link Group is well placed to return to medium-term growth. The markets we operate in have attractive macro fundamentals and our proprietary technology platforms and experienced people capabilities are supporting an increasing number of large clients.

Moving to FY22, Bhatia said:

Our focus for FY22 is to further our Simplify, Deliver and Grow strategy by progressing the global transformation program and enabling reinvestment in key technology and people initiatives.

This investment, together with continued positive markets and the benefits of the global transformation
program, is expected to underpin an increased growth in revenues and a return to earnings growth in FY23 and beyond.

What’s next for Link Administration?

Link Group expects “low single-digit” revenue growth in FY22 and that operating EBIT will be “broadly in line” with FY21.

The company also expects to achieve $75 million in gross annualised savings from the completion of its global transformation program next year.

Moving beyond FY22, the group expects to “deliver stronger revenue growth” in FY23 versus the year prior.

Growth in operating EBIT is expected to resume in FY23 as the company completes this global transformation program.

The Link Administration share price has had a choppy year to date, posting a loss of 7.2% since January 1. Despite this, Link shares are up 17% over the last 12 months.

These returns have both lagged the S&P/ASX 200 index (ASX: XJO)’s return of about 25% over the past year.

The post Link (ASX:LNK) share price down as revenue slides 6% in FY21 appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. 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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The Appen Ltd (ASX: APX) share price has dropped by more than 17% in early trading on Thursday.

This follows the annotated dataset provider releasing its FY21 first-half results this morning.

Appen share price slides after reporting steep earnings fall

• Group revenue down 2% to US$196.6 million
• Annual contract value increased 16% to US$119.6 million
• Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) down 14.3% to US$27.7 million
• Interim dividend of AUD4.5 cents per share 50% franked declared, flat on 1H20 dividend.
• Net profit after tax down 55.1% to US$6.7 million
• Appen to acquire location data provider Quandrant for US$25 million upfront
• Outlook: higher confidence in the pipeline supported by a stronger order book

What happened in FY21 for Appen

Investors seem to be squeamish this morning after the company dished out its half-year result.

The significant reduction in profits will no doubt be a point of interest for shareholders as Appen continues to navigate a challenging environment. In addition to this, ongoing regulatory scrutiny and a changing privacy landscape were mentioned as impactful factors.

According to its release, Appen recorded group revenue of US$196.6 million in 1H21 — representing a 2% reduction compared to 1H20. The company noted this was expected with its project delivery skewed to the second half of the year.

Additionally, global services revenue was impacted during the period as global customers allocated resources to new and non-advertising related projects.

However, Appen reported further growth from its new markets revenue segment. In 1H21, new markets revenue jumped 31.5% to US$47.8 million as the business pushes forward with its new ‘product led’ approach. As a result, new markets now make up 24% of total revenue.

Moving towards the bottom line, underlying profits were down 35% following the realisation of increased amortisation expenses associated with investment in product development.

Despite the weaker earnings result, Appen declared an interim dividend of 4.5 cents per share — in line with the previous year. Based on the current Appen share price, the interim dividend alone presents a yield of 0.32%.

Acquisition

In addition to its half-year result, Appen also announced the acquisition of location data provider Quadrant today. This acquisition is slated to expand the company’s capabilities and product offering in the global location intelligence market.

Quadrant was founded in 2014 and provides location data services to enterprise customers to perform location analytics. Similar to Appen’s core products, Quadrant’s Geolancer provides point-of-interest data that is manually verified by crowdsourced workers.

Moreover, Appen plans to acquire 100% of Quadrant with an upfront cash consideration of US$25 million. An additional US$20 million payment in Appen shares will be conditional on revenue milestones in 2022 and 2023.

What did management say?

With the Appen share price in focus, Appen Chief Executive Officer Mark Brayan said:

As expected, our first half results were impacted by our global technology customers’ focus on new AI products and applications, as they broaden their revenue base outside of digital advertising and respond to data privacy changes. This resulted in lower ad-related services revenue, but higher product revenue as Global customers used our market-leading annotation platform and tools for new AI use cases.

Additionally, regarding the company’s acquisition of Quadrant, Mr Brayan said:

The acquisition of Quadrant enables Appen to increase our addressable market and to expand our product and service offering to our customers to include more mobile location and POI data capabilities.

We already have the broadest AI training data offering in the industry, and we see an opportunity to grow in the mobile location and POI data space. With Quadrant’s Geolancer and our global crowd, we will be strongly positioned to serve our customers’ scale, speed and quality requirements.

What’s next for Appen?

Looking ahead, Appen reduced its full-year underlying EBITDA guidance due to the impact of the Quadrant acquisition. Specifically, the market expansion is expected to reduce its EBITDA range by US$2 million to between US$81 million and US$88 million.

Additionally, year-to-date revenue plus orders in hand for delivery in FY21 is now roughly US$360 million. This represents a 10% increase on the August 2020 guidance.

Overall, Appen anticipates full-year revenue growth for global services to be mid to high single digits. Meanwhile, new markets revenue is expected to be circa 25%.

Appen share price snapshot

It has been a disappointing 12 months for the Appen share price. Over the period, shares in the dataset provider have dropped 68%.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has gained 23%. Multiple downgrades to guidance shifted investor sentiment during the year.

The post Appen (ASX:APX) share price tanks after 55% profit fall appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler owns shares of Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd. 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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