The IGO Ltd (ASX: IGO) share price is surging today despite talks of a potentially transformational copper deal falling through.

Discussions regarding IGO’s acquisition of the CSA Copper Mine – owned by Glencore – have ended without an agreement.

However, the market seems to be far from disappointed. At the time of writing, the IGO share price is $11.81, 8.05% higher than its previous close.

Let’s take a closer look at what’s driving the exploration and mining company’s stock higher on Tuesday.

IGO share price launches on failed acquisition talks

The IGO share price has burst into the green on Tuesday despite the end of talks that could have seen the company acquiring one of the richest copper mines in the world.

IGO confirmed it was conducting due diligence on the CSA Mine last week. As The Motley Fool Australia reported at the time, IGO was rumoured to be considering undergoing a capital raise to afford the acquisition ­– expected to be worth more than $1 billion.

In a statement released to the ASX today, the company said it, “regularly evaluates opportunities to grow its business via disciplined mergers and acquisitions.”

“The company will only complete transactions which it believes will deliver strong and accretive returns and are in the best interest of shareholders at the time,” IGO continued.

Today’s news has the potential to disappoint some market watchers. Luckily, there’s still plenty of hope for an IGO acquisition in the near future.

Fortescue Metals Group Limited‘s (ASX: FMG) Andrew ‘Twiggy’ Forrest gave IGO’s bid for Western Areas Ltd (ASX: WSA) the ‘thumbs up’ last month.

Forrest’s Wyloo Consolidated Investments owns a 9.8% stake in Western Areas.

IGO’s approximately $1 billion all-cash bid for the nickel producer was announced in mid-December.

The IGO share price has soared by around 70% over the past year. However, it is up just 3% this year to date and less than 1% over the past month.

The post Why is the IGO (ASX:IGO) share price rocketing 8% today? appeared first on The Motley Fool Australia.

More reading

• IGO (ASX:IGO) share price tumbles 6% on new acquisition talks
• IGO (ASX:IGO) share price lifts as Twiggy greenlights nickel acquisition
• Why is this broker so bullish on the IGO (ASX:IGO) share price?

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. 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 Sayona Mining Ltd (ASX: SYA) share price is soaring on Tuesday following an announcement from the lithium development company.

At the time of writing, investors have driven the company’s shares to 13.5 cents apiece, up 20%. After entering a trading halt on Thursday, Sayona shares are now rapidly being traded today. Already, more than 37 million shares have exchanged hands today.

So, what’s all the fuss about?

Sayona says double the potential

Grabbing the attention of the market on Tuesday, ASX-listed Sayona has revealed a doubling of its Québec lithium resource base.

According to the update, upgraded resource estimates now peg Sayona’s North American Lithium (NAL) and Authier projects at a combined measured, indicated, and inferred mineral resource of 119.1 million tonnes at 1.05% lithium oxide.

Effectively, the upgrade represents a doubling from the company’s previous estimates. Unsurprisingly, investors are attempting to snap up shares in Sayona as the share price roars ahead.

This information follows independent studies carried out by consultants BBA Inc and SGS Canada. Based on the JORC mineral estimates published, the breakdown of the lithium resource between projects is:

• NAL — 101.92 million tonnes at 1.06% lithium oxide
• Authier — 17.14 million tonnes at 1.01% lithium oxide

For reference, a 0.6% lithium oxide cut-off was used when establishing the total mineral resources. Additionally, the identification of underground constrained resources at NAL was a first for the project.

Commenting on the update, Sayona managing director Brett Lynch said:

This expansion is a major achievement for Sayona as we further enlarge our leading lithium resource base in North America. Since the start of 2020, we have now grown our Québec resource base nearly six times and with further increases expected soon from Moblan.

With lithium prices surging on the back of an increasing structural supply deficit, our upcoming definitive feasibility study for an integrated NAL‐Authier operation, expected in coming weeks, is set to show significantly enhanced profitability for the benefit of shareholders.

How has the Sayona share price been performing on the ASX?

Excitement in the Sayona share price began to peter out towards the tail end of last year. In fact, between September 2021 and the end of the year, ASX-listed Sayona tumbled approximately 32%.

Unfortunately for shareholders, this trend has continued into 2022, with shares down ~6% year-to-date. However, it’s not all doom and gloom for those who have held on over the long run.

Zooming out to a 12-month time frame, Sayona investors are sitting smitten with a 340% return. That trumps the S&P/ASX 200 Index (ASX: XJO) by a long way.

The post Sayona (ASX:SYA) share price lights up 18% as lithium resource doubles appeared first on The Motley Fool Australia.

More reading

• Sayona Mining (ASX:SYA) share price halted ahead of lithium news

Motley Fool contributor Mitchell Lawler 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 Rio Tinto Ltd (ASX: RIO) share price is trading even on Tuesday morning at $118.15, just under its previous close of $118.17.

The Rio share price has been on the receiving end of a now two-year commodities rally that’s helped ASX miners realise the highest levels of free cash flow in decades.

Rio, with its market-leading position and market capitalisation of $43.8 billion dollars, is front and centre stage amid the rally. The company has just posted some of its highest full-year earnings results since changing its name to Rio Tinto in 1997.

The mining giant recorded an 88% leap in free cash flow to US$17.66 billion. This enabled the board to declare a similar 87% jump in the total dividend to US$10.40. Yes, that’s ten dollars and forty cents — the biggest payout recorded on the ASX’s books.

What’s next for Rio Tinto?

Rio’s record-beating results came on the back of the record-beating commodities rally that’s been happening since 2020.

Commodities across the board saw a huge uplift and have remained buoyant, albeit with some minor setbacks along the way.

According to Tyndall Asset Management’s Brad Potter, Rio’s performance in 2021 hinged on this rally in metals last year.

“Rio benefited from very strong commodity prices right across the spectrum during 2021,” Potter said, speaking to an episode of Investment Insights on Livewire.

“It wasn’t just a story of iron ore, though, with their copper and aluminium divisions also reporting very strong results, cash flows and dividends were a record, and the balance sheet remains in a net cash position, so the company is in a very strong place.”

This kind of fundamental momentum should bode well for the company throughout 2022, Potter says, especially if iron ore and copper markets stage another rally to set new record highs.

Undoubtedly, this would also bode well for the Rio Tinto share price. The company is seen as a ‘price taker’ on these markets. That is, it must accept what bids are offered in the spot or forward markets for metals.

We can see this relationship on the chart below. It shows the Rio Tinto share price plotted against the IAS iron and steel index and iron ore futures up to the end of February 2022.

As such, if commodities such as iron ore continue to set new highs, this is sure to beef up revenue, operating profits, and free cash flow for Rio, according to Potter.

“The expectation going forward though is that in 2022 we should see another strong year of earnings, cash flow, and dividends as commodity prices are expected to remain high,” he said.

This is equally important seeing Rio’s cost base widened substantially last year. Its costs are now running ahead of its competitors.

“Operationally Rio was a little disappointing, with costs and volumes not performing to expectations,” Potter said.

“Rio is now the highest cost producer in the Pilbara, from a position of where they were once lower than BHP and Fortescue.”

Rio Tinto share price snapshot

After taking a beating in 2021 and faltering 8% over the last 12 months, the Rio Tinto share price is soaring 18% higher in 2022.

It’s gained 6% in the past month alone.

By comparison, the S&P/ASX 200 Index (ASX: XJO) has dropped 4% since the start of 2022.

The post The latest Rio Tinto (ASX:RIO) dividend is the biggest in Australian history. What’s next for the miner? appeared first on The Motley Fool Australia.

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• Which ASX 200 shares have delivered the biggest dividend payout increases this earnings season?
• Top broker says it’s time to buy Rio Tinto (ASX:RIO) shares
• ASX 200 (ASX:XJO) midday update: Appen and Life360 crushed, Flight Centre posts $188m loss
• Rio Tinto (ASX:RIO) share price in focus today following record-breaking results

Motley Fool contributor Zach Bristow 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 Argosy Minerals Limited (ASX: AGY) share price is powering ahead today. This comes after the lithium miner provided an operational update at the Rincon lithium project.

The company holds a 77.5% interest in the Rincon project, located in Salta Province, Argentina. The mine is situated within the ‘lithium triangle’ – the world’s dominant lithium production source.

At the time of writing, Argosy shares are fetching 32.5 cents apiece, up 8.33%.

How is Argosy tracking along at Rincon?

The Argosy share price is surging after the company advised that 61% of construction works have been completed to bring the Rincon lithium project online. The development of the modular 2,000 tonnes per annum (tpa) of lithium carbonate production operation is currently on schedule and budget.

The company is aiming to achieve the first commercial production of lithium carbonate product from mid-2022.

Argosy noted that major works consisting of the design phase, site construction, and plant commission works have advanced. As such, Argosy provided a snapshot of the current progress:

• 99% of earthworks/land movements completed;
• 87% of site works completed (site camp/accommodation, laboratory and office, and other works);
• 100% of the brine system is now complete (pumping station and plant settling ponds);
• 57% of the process plant completed (plant equipment acquisition and plant warehouse); and
• 58% of utilities and associated services (vapour system, communication system and ancillary services).

Management noted current and recent construction works have concentrated on finalising a number of areas. This includes the accommodation camp facilities, building various industrial sheds, completing the brine system, building the on-site office and laboratory.

Furthermore, upcoming works will focus on plant and equipment delivery and installation, utilities and associated services supply and installation, and auxiliary systems installation. It is expected that significant progress will be made over the coming months.

Argosy hopes to increase the 2,000tpa of lithium carbonate to a 10,000tpa production target. It believes that with lithium prices rising along with tightening market supply and demand conditions, potential off-take arrangements will become more attractive.

Management commentary

Speaking about the development boosting the Argosy share price, managing director Jerko Zuvela said:

The company’s Puna operations team are continuing their significant progress on construction and development works at our Rincon Lithium Project, as we head toward commencing the 2,000tpa lithium carbonate production operations.

The lithium market remains very positive and lithium carbonate prices are at record levels, which is providing great interest in our project and especially our product, noting our Rincon Lithium Project will become the next commercial production operation. Argosy’s transformation into a cashflow generator is nearing, whilst also progressing toward the next stage 12,000tpa scale operations.

We look forward to a significant near-term growth phase from our operations this year and beyond.

About the Argosy share price

In the last 12 months, the Argosy share price has gained around 190%. However, it is flat this year to date.

On valuation grounds, Argosy has a market capitalisation of roughly $420.15 million, with 1.31 billion shares on issue.

The post Argosy (ASX:AGY) share price buzzes 8% higher on lithium project news appeared first on The Motley Fool Australia.

More reading

• Argosy (ASX:AGY) shares climb on ‘significant milestone’ at Rincon

Motley Fool contributor Aaron Teboneras owns Argosy Minerals Limited. 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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After a pretty dismal January, it might come as some relief to investors to HEAR that the S&P/ASX 200 Index (ASX: XJO) recorded a positive gain for the month of February. The ASX 200 managed to eke out a 1.1% rise over the month that was. But it’s not too often you’ll hear this these days – the AMP Ltd (ASX: AMP) share price did far, far better. 

Yes, AMP shares had a February to remember. The financial services company started the month at 88 cents a share, but ended it yesterday at 95 cents a share. That’s a rise of 7.95% for the month, and a multi-fold beat on the broader performance of the ASX 200 Index. 

So what was behind AMP’s successes last month? 

AMP share price notches up some wins

Well, there were a few developments for the company which may have fed into these gains. 

The first was AMP’s full-year earnings that the company delivered on 10 February. As we covered at the time, AMP reported underlying net profits after tax (NPAT) of $356 million. That was up 53% from the $233 million that was recorded the previous year. However, the company reported a statutory NPAT loss of $252 million, with no dividend announced for investors. Even so, the AMP share price reacted very positively at the time. 

But we also got some developments regarding AMP’s planned demerger of its Capital Private Markets business. The company announced that the demerger should be completed “in the first half of 2022”. We even heard what this new business will be called – Collimate Capital. 

A few days later, reports emerged that ‘Collimate’ had a potential suitor in the wings. That would be the Singapore-based real estate company CapitaLand.

So all of these developments seem to have boosted investor sentiment towards AMP shares, and likely contributed to the company’s impressive performance over February. 

But longer term, the picture is still leaving a lot to be desired. AMP shares are still trading very close to their 52-week low of 88 cents a share as it stands today. At the current AMP share price, of 96 cents a share, AMP remains down almost 35% over the past year. As well as down more than 81% over the past 5. 

The post Why did the AMP (ASX:AMP) share price leap 8% in February? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Zip Co Ltd (ASX: Z1P) share price has returned from its trading halt and is tumbling lower.

In morning trade, the buy now pay later (BNPL) provider’s shares were down as much as 11% to a new 52-week low of $1.96.

At the time of writing, the Zip share price has recovered a touch but remains down 7% to $2.05.

Why is the Zip share price falling today?

This morning Zip announced the successful completion of its fully underwritten $148.7 million institutional placement. These funds were raised at $1.90 per new share, which represents a 14% discount to the Zip share price prior to its halt.

This placement will result in the issue of approximately 78.3 million new Zip ordinary shares, representing approximately 13.3% of existing shares on issue.

Zip will now push ahead with its share purchase plan, which is aiming to raise a further $50 million from retail shareholders. These funds will be raised at the lower of the placement price or a 2% discount to the five-day volume weighted average price (VWAP) of Zip shares up to and including the closing date of the share purchase plan. This is currently scheduled for Friday, 1 April 2022.

Why is Zip raising funds?

The proceeds raised under the placement will help Zip strengthen its balance sheet and position the company for sustainable growth.

This is by providing more capital runway to execute on the potential synergies from its proposed $491 million all-scrip acquisition of Sezzle Inc (ASX: SZL), which was also announced on Monday.

Speaking of which, management believes the acquisition of Sezzle will significantly enhance Zip’s scale and product offering, with the capabilities to accelerate in the United States.

It also sees potential material cost synergies and opportunities for revenue and margin uplift. So much so, it is targeting potential EBTDA benefits of up to ~$130 million EBTDA in FY 2024.

Zip’s Co-Founder and Global CEO, Larry Diamond, commented: “We are delighted to be bringing Zip and Sezzle together under a transformational transaction that is expected to deliver immediate scale and enhanced growth, which will support our path to profitability. Combining with Sezzle positions us as a leading global BNPL provider and prioritises our ability to win in the important U.S. market.”

The post Why is the Zip (ASX:Z1P) share price sinking 11% today? appeared first on The Motley Fool Australia.

More reading

• These were the worst performing ASX 200 shares in February
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 (ASX:XJO) midday update: Zip to buy Sezzle for $491m, GrainCorp storms higher
• Sezzle (ASX:SZL) share price on watch after accepting Zip takeover offer
• Zip (ASX:Z1P) share price halted after announcing results, capital raising, and Sezzle acquisition

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. owns and has recommended ZIPCOLTD FPO. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of electric cars leader Tesla (NASDAQ: TSLA) jumped during trading on Monday after its car battery partner Panasonic announced it will produce Tesla’s new 4680 lithium ion batteries at a production facility in Japan — perhaps in as little as one year from now.

Tesla stock closed the session up 7.48%.

So what

The 4680 is a new kind of lithium ion battery, first revealed at Tesla’s Battery Day presentation in 2020. Reuters notes that at a diameter of 46 millimeters (mm) and a height of 80 mm (hence the name), the new battery will be about five times bigger than Tesla’s current battery cells. At that size, the new battery will not only be able to hold significantly more energy but also provide greater range to Tesla’s vehicles and at lower production cost.

Of course, first Panasonic needs a factory capable of producing the thing. As Reuters reported early this morning, Panasonic needs to build two new production lines at its Wakayama factory in western Japan before it can begin production. The Fly notes that production won’t begin before “the fiscal year ending in March 2024.”

Now what

The good news is that “the fiscal year ending in March 2024” is also the fiscal year that begins in March 2023 — so, technically, it’s possible Tesla could start getting its new batteries as early as one year from now. The bad news is that the way Panasonic seems to be describing its plans, it’s more likely to take a bit longer than that — perhaps twice as long, or two full years.

The best news of all, however, is simply that the new battery is no longer vaporware. Sooner or later, this new battery will arrive and extend Tesla’s technological lead over other electric carmakers even further. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock popped today appeared first on The Motley Fool Australia.

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• Is Tesla stock a buy?
• This is how we’ll know the share market has bottomed

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tesla. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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ASX shares, as well as those overseas, have fallen significantly this year due to investor fears that interest rates are about to rise around the world.

According to Montgomery Investment Management chief investment officer Roger Montgomery, the change in mood from the US Federal Reserve “has been dramatic”.

“Back in July last year, the US Federal Funds rate was expected to be 0.3% by the end of calendar 2022. Today, the rate at that time is expected to be 1.25%,” he said in a blog post.

“The repercussions for equity investors have been impossible to ignore.”

The current war in Ukraine will only add fuel to the inflationary fire, as it could push up energy and agricultural commodity prices.

So what does this mean for ASX shares?

A common way to value a stock is to use the price-to-earnings (PE) ratio.

Montgomery set about answering a question that’s been on the tip of many retail investors’ tongues during the current volatility. What will happen to PE ratios when interest rates inevitably head north?

As one goes up, the other goes down

The incontrovertible evidence from the past, according to Montgomery, shows PE ratios shrink as interest rates move up.

“Correlation analysis, on data back to the 1980s, reveals the decline in the earnings multiple is greatest when interest rates move up from lower starting levels,” he said.

“The simple fact is, for the last 4 decades, whenever inflation or interest rates have risen, the multiple of earnings investors have been willing to pay for a share in a company has declined.”

During the current market dip, the prospect of rising rates is complemented by the tapering of quantitative easing and government fiscal support.

Everyone has fewer dollars to invest.

“Investors are simply unwilling to pay as much for a dollar of earnings as they were just 10 weeks ago.”

So which ASX shares are the best buys now?

So what sort of shares should investors buy at the moment?

Montgomery explained that when the price side of the PE ratio starts shrinking, the only way a stock can offset that is with rising earnings.

“To counteract the multiple declines, the underlying company must grow profits,” he said.

“For a company that manages to grow its earnings meaningfully, the PE contraction will prove a depressing but transitory influence on the share price.”

Even if the PE ratio itself doesn’t expand again, any ramping up of earnings will drive up the share price side of the ratio.

“Of course, this takes time for a company to achieve,” he said.

“That delay to prices going up – in tandem with earnings – provides investors with an opportunity.”

The post What happens to PE ratios when interest rates rise? appeared first on The Motley Fool Australia.

More reading

• Why Tesla stock popped today
• Here’s how the Bank of Queensland (ASX:BOQ) share price performed in February
• Dubber (ASX:DUB) share price sinks 13% after first half losses grow
• Own ANZ shares? Here’s the bank’s latest move to ‘better prepare for future growth’
• CBA (ASX:CBA) doubles down on ‘core business’ with $1.8 billion sale

Motley Fool contributor Tony Yoo 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 Bank of Queensland Limited (ASX: BOQ) share price is edging higher on the first trading day of March.

BoQ shares are currently up 0.2% to $8.02.

Yesterday, the Bank of Queensland share price finished off February closing at $8 per share. That represents a 4.7% gain from the closing bell on 31 January.

How did shares move in February?

There were no price-sensitive announcements released from the bank during the month. Or all year, for that matter.

But that didn’t keep the Bank of Queensland share price from making some big moves.

Shares hit a closing high of $8.47 on 17 February. At that stage, Bank of Queensland was up 10.9% for the month.

But as with the big 4 S&P/ASX 200 Index (ASX: XJO) banks, things began tracking the other way later in the month, with shares facing headwinds amid rising investor concerns over geopolitical instability in Eastern Europe.

Bank of Queensland shares have slid 6.1% since the 17 February near-term highs.

Brokers bullish on Bank of Queensland share price

During the course of the month, The Motley Fool reported on several bullish broker forecasts for the Bank of Queensland.

JP Morgan had a $9.80 target for the Bank of Queensland. The broker said that the bank appears “well positioned to deal with industry headwinds” in the year ahead. JP Morgan analysts said that following on from Bank of Queensland’s recent acquisition of ME Bank, its growth and efficiency prospects look strong.

Morgan Stanley, also rated Bank of Queensland shares as a buy, though with a slightly reduced new price target of $10. Part of that stems from the broker’s outlook for the bank’s dividend payments. Morgan Stanley forecasts that Bank of Queensland will pay a grossed-up dividend yield of 8.25% over the full 2022 financial year.

Meanwhile Macquarie also reduced its 12-month price target to $9.50, while Citi raised its forecast target for the Bank of Queensland share price to $10.50.

Whether the price revisions were slightly higher or lower, all the brokers are forecasting significant upside from Bank of Queensland’s current $8.02 per share.

When does the bank report half year results?

The Bank of Queensland’s financial half year ended yesterday, 28 February. But investors won’t receive those half year results until 14 April. (Put it on your calendar!)

The interim dividend will also be announced at that time, which could have an impact on the Bank of Queensland share price on the day.

As for what investors might expect, the market consensus estimate for net profit after tax (NPAT) comes in at just over $202 million for 1H FY22.

Consensus estimate for BoQ’s interim dividend is 24.3 cents per share (cps).

The post Here’s how the Bank of Queensland (ASX:BOQ) share price performed in February appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• The Bank of Queensland (ASX:BOQ) share price has leapt 10% in 3 weeks. How does this compare to the other big banks?
• Why are ASX 200 bank shares getting so much love today?
• 2 ASX 200 shares that could make it rain dividends: experts
• The Bank of Queensland (ASX:BOQ) share price has underperformed the ASX 200 by 10% over the last 6 months. Here’s why

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 Dubber Corp Ltd (ASX: DUB) share price has started the month deep in the red.

This follows the release of the call recording software company’s half year results after the market close on Monday.

At the time of writing, the Dubber share price is down 13% to $1.28.

Dubber share price sinks as losses grow

• Revenue up 122% over the prior corresponding period to $16.4 million
• Annualised recurring revenue (ARR) up 33% to $51.8 million
• Users up 70% to 510,000
• Cash receipts up 111% to $14.7 million
• Loss after tax increased 317% to $31.2 million
• Cash in bank of $108 million

What happened during the first half?

For the six months ended 31 December, Dubber reported a 122% increase in revenue to $16.4 million and a 33% lift in ARR to $51.8 million.

Management advised that this reflects continued and substantial growth across all key metrics, with subscribers continuing to grow at a record rate via a combination of standard SaaS subscriptions and Foundation Partnership subscriptions. The latter is where a Dubber service is embedded as a standard feature of every subscription on a network.

In addition, the company highlights that it reached notable milestones and achieved record growth in its key metrics while finalising landmark commercial agreements and deployments. It also continued to establish critical scale in its business in terms of fundamental additions to its leadership team through the expansion of products and services as accretive revenue generators.

This ultimately led to standard SaaS subscriptions growing organically by over 90,000 in the first half of the financial year to in excess of 510,000.

Things weren’t quite as positive on the bottom line, with Dubber reporting a $31.2 million loss after tax. This compares to a loss of $7.5 million a year earlier. This reflects $11.5 million in share based payments and a large increase in costs as the business scales.

Management commentary

Dubber’s CEO, Steve McGovern, was very pleased with the progress the company made during the half.

He commented: “We entered FY2022 with clearly stated ambitions, to use the positioning of our unique technology platform to grow network connectivity and Annualised Recurring Revenue. Underlying these ambitions was the requirement to scale our business operations to deliver against the opportunity presented by a combination of market conditions and our technology advantage.”

“To that end, we are very pleased with our progress in scaling up company operations whereby key positions have been filled with world class personnel and technology has been developed to a point whereby the delivery of new products and services is as much a driver of new revenue as is continued selling of our core services to a wider audience. By default, delivery of these new services in itself creates a wider audience and increased opportunities to deliver more services via our service provider partners,” he added.

And while no guidance has been given for the remainder of FY 2022, Mr McGovern spoke positively about the future.

He said: “Dubber is the number one source of Unified Call Recording and Voice AI services – and due to its unique capacity within telecommunications networks, the only way to provision voice AI on every phone and every end point. The activities during the half year illustrated this position enabling the Company to expand on its UCR strategy with initiatives with partners such as Cisco, Microsoft Teams and IBM.”

The post Dubber (ASX:DUB) share price sinks 13% after first half losses grow 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. owns and has recommended Dubber Corporation. The Motley Fool Australia owns and has recommended Dubber Corporation. 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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