Don’t underestimate the risk of a recession in fortress Australia, which could leave many ASX 200 shares vulnerable in its wake.

The fact is, the S&P/ASX 200 Index (Index:^AXJO) is not pricing in any chance of a recession here. Otherwise, it won’t be trading this close to its record high.

But we could get our first taste of a recession as early as Wednesday. That’s when the government’s June quarter GDP figures are released.

Economic hit in the June quarter

Economists at Citigroup and AMP Ltd (ASX: AMP) are warning that our economy may have slightly contracted in the latest quarter, reported Bloomberg.

The period is before the full impact of the COVID-19 lockdowns in Victoria and New South Wales is felt.

The harsh lockdowns brought on by the highly virulent delta-strain is almost certain to cause the economy to contract in the September quarter.

ASX 200 shares could get rocked by a recession

If the GDP figures are negative in the three months to end of June, we are almost certain to be in a technical recession. That’s defined as two consecutive quarters of negative growth.

However, if the June quarter figure can keep its head above breakeven, there is a good chance Australia can avoid a recession.

This is because many are expecting a big bounce back in the December quarter as vaccination rates increase and the states loosen restrictions.

Uncertain outlook not priced into ASX shares

The jury is still out on Wednesday’s GDP release though. A survey of economists conducted by Bloomberg runs from the -0.1% forecast by Citi and AMP to up to more than +1%.

It’s highly unusual for such a wide range of responses, which underscores how volatile and difficult it is to read the economy at this point.

The more important question is whether ASX 200 share investors should care.

How ASX 200 shares could hold up in a recession

Many of our large cap shares generate a good proportion of their income from overseas. The economic outlook for the rest of the world is rosier than ours.

Further, GDP reports are backward looking. By the time we get a firmer read on a recession, the December recovery party could already be in full swing.

And in case you haven’t noticed, any dip in the market has been short-lived. The amount of cheap money that’s pumped into the system by dovish central bankers is floating all boats, even leaky ones!

ASX banks in the firing line

On the other hand, there is one very large sector on the ASX 200 that could take a big hit if we do slip into a recession.

This is the ASX banking sector where many retail investors hold significant holdings in, according to Citi. The Commonwealth Bank of Australia (ASX: CBA) share price did well through the August reporting season.

Its peers have also outperformed the ASX 200 this month. These include the Westpac Banking Corp (ASX: WBC) share price, Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price and National Australia Bank Ltd. (ASX: NAB) share price.

ASX bank profit growth at risk

“Like many investors, we were unsurprised by reporting season’s low bad debts,” said Citi.

“We were, however, taken back by the second order of low rates, with NIM compression and markets revenues hitting core profits. Despite core profit concerns and a growing delta outbreak, the Majors’ share prices outperformed over the month.”

No leaving record low rates

Further bank profit growth will have to rely on interest rate hikes. That’s looking less likely anytime soon due to the economic weakness.

“With low rates set to continue to weigh on core profits, but share prices at or around 2-year highs, we turn more bearish with consensus seemingly pricing in little for the risks around the delta variant,” added Citi.

If the broker is right, this might not be a bad time to be thinking of taking some profit.

The post Australia’s rising delta recession risk could hit these ASX 200 shares badly appeared first on The Motley Fool Australia.

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• ASX 200 Weekly Wrap: A mixed bag of earnings dominates ASX
• 5 things to watch on the ASX 200 on Monday
• How has the Westpac (ASX:WBC) share price performed against the banking sector in August?
• The NAB (ASX:NAB) share price has gained 10% in the last 6 months

Motley Fool contributor Brendon Lau owns shares of AMP Limited, Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking Corporation. 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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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.

Most people have heard of the social network company Facebook (NASDAQ: FB); and with 1.9 billion daily active users, nearly 1 in 4 people worldwide use Facebook daily. But for investors, the business story goes well beyond being a website where people post pictures of their pet cat; here are four reasons Facebook is a compelling investment opportunity today.

1. A dynamic business model

Facebook started as a simple social media network in the early 2000s, but founder and CEO Mark Zuckerberg has been active in positioning the company for future growth. Zuckerberg famously predicted the importance of images to social media, buying Instagram for $1 billion in 2012, in what is commonly looked back on as one of the “steals” of corporate history, now that Instagram boasts more than 1 billion users.

Facebook later bought WhatsApp in 2014 in a deal worth $16 billion in cash and stock; the WhatsApp platform now has more than 2 billion users and is the world’s most popular mobile messenger. Zuckerberg has also leaned into augmented reality (AR) and virtual reality (VR), buying VR hardware company Oculus in 2014 for $2 billion, and recently announcing a new team to develop Facebook’s “Metaverse” business.

2. A “cash cow” with growth

These strategic moves have created value for Facebook over time via both user growth and monetization. Facebook makes the majority of its revenue from advertising, so by growing users and generating increasingly more revenue from them, it’s a two-sided way to grow revenue.

Facebook’s total number of daily users has grown 20% over the past two years, to 1.9 billion. Facebook is increasing its average revenue per user (ARPU) at the same time, hitting $10.12 per user in 2021’s second quarter, a 43% increase year-over-year.

With more users generating more revenue, Facebook’s overall revenue growth is impressive. In its Q2 2021, Facebook did $29 billion in revenue, a 56% increase over 2020.

3. An aggressive stock buyback

The company is very profitable and is generating a lot of cash as revenue grows larger. Facebook converted $8.5 billion, or 29% of its revenue, into free cash flow (FCF) in Q2; FCF is the cash remaining after spending what it needs to on the business.

Rather than pay a dividend to investors, Facebook is buying back its own stock. When a company buys back its stock, it increases the value of the remaining shares because its profits are split between a smaller number of shares. The result is an increase in earnings per share (EPS), which typically drives the stock price higher over time.

Facebook bought back $7.1 billion of its stock during 2021 Q2, and its total number of shares outstanding has decreased to 2.877 billion from 2.921 billion at the end of 2018. The company has $64 billion on its balance sheet in cash and securities, so investors should look for the buybacks to continue.

4. A stock that’s on sale

Facebook is a huge company, trading at a market cap of $1.05 trillion. The company is expected to earn $14.08 per share for the full year of 2021, which values the stock at a price-to-earnings ratio of 26.

Hitting its estimates would mean a 40% increase in EPS from 2020, and that’s an impressive jump for a company of such size. Analysts are also expecting double-digit growth in 2022, so the current valuation seems very reasonable.

One aspect of Facebook that’s difficult to account for in its valuation is the company’s versatility. With all of that cash on its balance sheet and a forward-thinking management team, it’s hard to put a number on the potential value that Mark Zuckerberg can create in the future that isn’t obvious today. We can only look at what Facebook currently is. Still, the company’s ability to create new business segments through acquisitions or innovating is something that investors should keep in mind, especially given Zuckerberg’s enthusiasm for the Metaverse.

Still room to grow

Big technology companies rule the world, and Facebook is one of a select few in the trillion-dollar market cap club. But don’t be fooled; the business continues to grow, makes a ton of money, and returns value to shareholders through share buybacks and strategic moves that create long-term value in the company. There is a lot to like in Facebook, which makes it a compelling investment idea today. 

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

The post 4 reasons Facebook is a compelling buy appeared first on The Motley Fool Australia.

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Justin Pope has no position in any of the stocks mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Facebook. The Motley Fool Australia has recommended Facebook. 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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The Afterpay Ltd (ASX: APT) share price is having a great start to the week’s trading this Monday. At the time of writing, Afterpay shares are up a healthy 1.03% to $131.69. That’s well outperforming the broader S&P/ASX 200 Index (ASX: XJO), which is pretty much flat today, up 0.03% to 7,490 points so far.

So why are Afterpay shares having such a strong start to the week?

Well, it’s not entirely clear. There are no major news or announcements out of Afterpay itself today. However, there have been some interesting developments in the buy now, pay later (BNPL) space that Afterpay helped pioneer.

We got some news yesterday in regards to the BNPL aspirations of one of the largest companies on the planet. According to a report in the Australian Financial Review (AFR) over the weekend, Amazon.con Inc (NASDAQ: AMZN) has just inked a deal with the US-based BNPL provider Affirm Inc (NASDAQ: AFRM).

Amazon join’s Afterpay’s BNPL party

According to the report, Affirm will now be offered as a payment option on Amazon’s American e-commerce platform. Customers will reportedly be able to select Affirm’s BNPL option for purchases of US$50 or more, with the ability to ‘pay later’ in monthly instalments.

The report states that Affirm has confirmed that “the service was being tested with select customers now” and “would become more broadly available to shoppers in the coming months”. This won’t encompass the entire Amazon universe though. The company’s Whole Foods Market and Amazon Fresh divisions will not be eligible for BNPL to start with.

Given a company like Amazon is embracing BNPL is arguably great news for all BNPL providers, including Aftepray. This is why we might be seeing the Afterpay share price rising this Monday.

This development is just the latest chapter in what has been a phenomenal year for BNPL shares.

Just last month, the blockbuster announcement that Afterpay is to be acquired by Square Inc (NYSE: SQ), another US e-commerce giant, really put a rocket under the entire sector.

At the current Afterpay share price, the BNPL pioneer is up 36.2% over the past month alone, and up 10.66% year to date in 2021 so far. It’s also up 44% over the past 12 months.

At the current Afterpay share price, the company has a market capitalisation of $38.14 billion.

The post Afterpay (ASX:APT) share price rises amid Amazon’s BNPL move appeared first on The Motley Fool Australia.

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• Afterpay (ASX:APT) share price slips as CEO spruiks company’s new direction
• How does Afterpay (ASX:APT) earnings result compare to Zip?
• ASX 200 rises, WiseTech soars, Zip drops
• Got Afterpay (ASX:APT) shares? Here’s what to look out for in FY22

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen owns shares of Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Affirm Holdings, Inc., Amazon, and Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Amazon. 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 Adore Beauty Group Ltd (ASX: ABY) share price is climbing in lunchtime trade on Monday. This follows the release of the online beauty retailer’s full-year results for the FY21 financial year.

At the time of writing, shares in the beauty company are levitating at $5.01, up 4.2%.

Adore Beauty share price rises as revenue increases 48%

The Adore beauty share price is moving well into the green today after the company delivered record numbers for the 12 months ending 30 June 2021. Here are some of the key highlights:

• Record revenue of $179.3 million, up 48% year-over-year
• Record earnings before interest, tax, depreciation, and amortisation (EBITDA) of $7.6 million, up 53% from FY20
• Active customers increased 39% year-over-year to 818,000
• Gross profit margin of 33.1%, up 1.2% from the prior year
• $29 million in cash at the end of FY21

What happened in FY21 for Adore Beauty?

In a massive financial year for the company, Adore Beauty managed to exceed its guidance and deliver strong growth in its first full-year result being publically listed.

Record revenue, profit, and customers were achieved in FY21. According to the release, COVID-19 lockdowns provided a spike in new and returning customers. In fact, active customers rose 39% from FY20.

Although the focus shifted away from cosmetics with consumers staying at home more, skincare products experienced a boost.

Furthermore, the accelerated online market shift resulted in a record revenue result of $179.3 million — representing a 48% increase on the prior corresponding period. Not only did revenue from customers increase through acquiring more buyers but annual revenue per active customer also rose 7% — indicating customers spent more.

Moreover, Adore ticked various items off its to-do list. This included launching a native iOS and Android mobile app, launching a loyalty program, and increasing brand awareness via an expanded national TV campaign. These achievements could be considered as positive for the Adore Beauty share price today.

While Adore’s EBITDA surged to a record $7.6 million for the period, net profit after tax came out at $46,000. For comparison, NPAT for FY20 was $898,000.

What did management say?

Adore Beauty CEO Tennealle O’Shannessy commented on the record result, stating:

Adore Beauty has had an exceptional start to listed life, delivering record revenue and profitability in its first full-year result. Our record financial performance in FY21 highlights the strength of our underlying business and our market-leading position as the online destination of choice within a large $11 billion addressable market.

Adore Beauty continues to capitalise on the structural shift to online channels, rapidly adding new customers that are profitable within the first year. We are committed to delivering a personalised and customer-led beauty discovery and shopping experience, underpinned by ease, convenience, and authentic, trusted content.

What’s the outlook for Adore Beauty?

Looking ahead, the Adore Beauty management has highlighted it continues to benefit from the ongoing structural shift due to COVID-19. In addition, year-to-date revenue in FY22 is up 26% on the prior corresponding period.

While the continued impact of lockdowns has provided a tailwind, it also adds uncertainty to operations. As a result, the company has not provided guidance on this basis. At the same time, EBITDA margins are expected to be between 2% and 4% as the company continues to reinvest for growth.

Adore Beauty share price snapshot

Investors might read today’s results and expect the Adore Beauty share price to have performed well over the past year.

Instead, shares in the online beauty retailer have dropped nearly 28% in the last 12 months. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has climbed 23.6%.

The post Adore Beauty (ASX:ABY) share price climbs on record result appeared first on The Motley Fool Australia.

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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 recommended Adore Beauty Group Limited. 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 Liberty Financial Group Ltd (ASX: LFG) share price is in the green following the release of the non-bank lender’s earnings for financial year 2021 (FY21).

Right now, the Liberty share price is $7.16, 2.14% higher than its previous close.

Liberty share price jumps on 37.6% boost to profit

Here’s how the ASX newbie performed during FY21:

• $853.1 million of revenue, 0.1% more than that of FY20
• Profit after tax of $185.4 million, 37.6% higher than the previous financial year
• 24 cent unfranked final dividend

Liberty’s income benefited from a 4.5% increase in average financial assets which was more than offset by a reduction in interest income yield from 5.6% to 5.1%. Its profit after tax included $32.5 million of IPO-related expenses.

Over FY21, the company’s portfolio of financial assets increased to $12.3 billion following $4.1 billion of originations.

Liberty’s fee, commission, and other income increased 13.5% to $231 million.

The company’s expenses fell 8% to $640.7 million in FY21.

Impairment of financial assets decreased from $32.5 million in FY20 to $400,000 in FY21.

The company ended the period with $603 million of cash.

What happened in FY21 for Liberty?

Perhaps the most exciting news from Liberty in FY21 was its ASX debut.

The company’s prospectus’ offered potential investors the opportunity to buy into Liberty for $6 per share. That left Liberty with an expected market capitalisation of $1.82 billion.

Liberty’s Initial Public Offering (IPO) occurred around midday on 15 December 2020. The Liberty share price finished its first session trading at $7. That represents a 16% gain on the offer price.

The company’s share price was also boosted when Liberty reported its half year results in February.

What did management say?

Liberty’s CEO, James Boyle, commented on the results boosting the company’s share price today, saying:

We achieved our objective of continuing to help more people get and stay financial with Liberty.

Liberty’s business partners and customers have shown tremendous resilience during the pandemic.  

The current Australia wide lockdown and speed of vaccination rollout is causing continued short-term economic uncertainty impacting customer sentiment. However, all things equal, we remain confident of generating further value for Security holders in FY22.

Liberty’s chief financial officer, Peter Riedel, added:

LFG’s capital and liquidity position remains in a strong position to continue supporting our customers and business partners. LFG established eight new funding vehicles in FY21 raising $4.9 billion in the new liquidity.

What’s next for Liberty?

Here’s what market watchers interested in the Liberty share price might want to keep an eye on in FY22:

Liberty plans to increase its profitability through improving its customers’ experiences, choices, and its risk adjusted returns.

It will do so by speeding up its approvals process using its proprietary technology, focusing on quickly and helpfully answering customers’ queries, and providing customers and business partners with access to their information online.

To improve its customer’s choices, the lender will be increasing the ways it can fulfil its financial needs and creating options for those who are normally excluded from its offerings.

Finally, Liberty will improve its risk adjusted returns by simplifying, speeding up, and reducing the effort involved in its applications, working proactively in cooperation with customers if things don’t go to plan, and being responsible with costs, and fair with customers.

Liberty share price snapshot

The Liberty share price has remained relatively steady since it listed on the ASX. Its highest price so far was $8.35, while its lowest was $6.60.

Right now, the company’s share price is 2.2% higher than its first close but 5.1% lower than it was at the start of 2021.

The company has a market capitalisation of around $2.17 billion, with approximately 303 million shares outstanding.

The post Liberty (ASX:LFG) share price gains on FY21 earnings 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. 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 Fortescue Metals Group Limited (ASX: FMG) share price is racing higher in early afternoon trade.

This follows the company’s release of its full-year results for the 2021 financial year.

At the time of writing, Fortescue shares are swapping hands for $21.21 apiece, up 6.05%. In comparison, the S&P/ASX 200 Index (ASX: XJO) is sitting at 7,479 points, down 0.12%.

How did Fortescue perform in FY21?

Investors are scrambling to buy Fortescue shares after the company achieved another year of record growth.

The world’s fourth-largest iron ore miner reported an outstanding operating performance, driven by record annual shipments, higher realised prices and low-cost production.

Over the 12-month period, Fortescue delivered 182.2 million tonnes of iron ore, a 2% increase compared to FY20. Coupled with the average price of US$135 per dry metric tonne, this translated to a bumper revenue for the company.

Fortescue recognised the expansion of sales channels including increased sales through its China-based trading company, FMG Trading Shanghai. In addition, the continued strength in Chinese steel production supported the benchmark iron ore price.

In total, Fortescue collected US$22.3 billion in revenue, up 74% on the prior corresponding term.

Furthermore, its industry-leading C1 cost position of US$13.93 per wet metric tonne helped drive the company’s bottom line. Net profit after tax came to US$10.3 billion, soaring 117% from this time last year.

Fortescue advised it had US$7.9 billion of liquidity at the end of June 2021. This comprised US$6.9 billion in cash on hand and a US$1 billion undrawn revolving credit facility.

Total debt stood around US$4.2 billion, inclusive of US$810 million of leases. The gross gearing ratio (total debt divided by the book value of equity) came to 19%. This indicates a good measure of a company’s financial leverage.

Fortescue share price snapshot

Over the last 12 months, Fortescue shares have travelled in circles reflecting mediocre gains of just 10% for investors. This can be attributed to the spot price of iron ore, which rose strongly during the year, before falling in recent months.

Fortescue commands a market capitalisation of roughly $64.1 billion, making it the eighth largest company on the ASX.

The post Fortescue (ASX:FMG) share price jumps 6% on surging revenue appeared first on The Motley Fool Australia.

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• The Fortescue (ASX:FMG) dividend has doubled to record levels
• Fortescue (ASX:FMG) share price on watch following 117% NPAT increase
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• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Aaron Teboneras 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 Invictus Energy Ltd (ASX: IVZ) share price started today’s session strongly in the green.

Shares in the oil and gas explorer opened 7% higher at 15 cents after releasing an update to the market earlier today.

Let’s take a look at what Invictus announced.

Invictus shares lift on Cabora Bassa update

Investors have pushed the Invictus Energy share price higher today after the company released an update on its Cabora Bassa Project.

The update informs Invictus shareholders that seismic data acquisition will commence in the first week of September.

The company noted that, in preparation, 400km of line has been cleared ahead of the commencement of data acquisition.

In addition, Invictus highlights that the latest generation STRYDE wireless nodes will be used.

This technology will allow the company to double the seismic data coverage.

The update also informs investors that the seismic data processing contract has been awarded to Canadian-based firm Earth Signal Processing Ltd.

Managing Director Scott Macmillan commented on the news driving the Invictus share price:

The Company is pleased to be commencing the seismic data acquisition in the coming days and the preparation for this campaign has gone well and all the equipment and personnel heading to the field. We are extremely pleased with the performance of Polaris and the local field crew who have completed 400km line clearing ahead the data acquisition which will ensure that the campaign is completed seamlessly.

The company’s management also noted that preparation for its opening drilling campaign is progressing well. As a result, Invictus is on track to select a rig and service providers towards the end of this quarter.

Invictus share price snapshot

Invictus Energy is an independent oil and gas exploration company focused on high impact energy resources in sub-Saharan Africa.

The company’s portfolio consists of 250,000 acres within the Cabora Bassa Basin in Zimbabwe.

The Invictus share price has had a stellar year thus far, storming ~170% since the start of 2021.

Shares in the oil and gas explorer bolted to record highs earlier this year and have tapered off since then.

At the time of writing, the Invictus share price is flat for the day. Shares in the company were trading more than 7% higher earlier, after hitting an intra-day high of 15 cents.

The post Here’s why the Invictus (ASX:IVZ) share price opened 7% higher this morning appeared first on The Motley Fool Australia.

More reading

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• Tesserent (ASX:TNT) share price fails to fly despite 230% revenue growth in FY21
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Motley Fool contributor Nikhil Gangaram 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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At lunch on Monday, the S&P/ASX 200 Index (ASX: XJO) has been bouncing around but remains in positive territory. The benchmark index is currently up 0.15% to 7,498.5 points.

Here’s what is happening on the ASX 200 today:

Fortescue share price jumps on full year results

The Fortescue Metals Group Limited (ASX: FMG) share price is charging higher today after the release of a strong full year result and the announcement of a huge dividend. For the 12 months ended 30 June, the iron ore giant reported a 117% increase in net profit after tax to US$10.3 billion. This was a touch ahead of the consensus estimate of US$10.2 billion. This allowed the Fortescue Board to declare a fully franked final dividend of $2.11 per share. This doubled its full year dividend to $3.58 per share.

Altium shares sink following results release

The Altium Limited (ASX: ALU) share price has tumbled lower today following the release of its full year results. Investors have been selling the electronic design software provider’s shares despite it achieving its full year revenue guidance with a 1% lift to US$191.1 million. In fact, not even an upgraded outlook for FY 2022 could keep its shares from falling. Management has upgraded its revenue expectations to 16% to 20% growth for the year ahead.

PointsBet misses out on Arizona licence

The PointsBet Holdings Ltd (ASX: PBH) share price is under pressure on Monday. This follows news that PointsBet and its partner Cliff Castle Casino Hotel have missed out on a sports betting license in the US state of Arizona. The Arizona Department of Gaming has not provided any further information as to why it was not selected. Management advised that whilst disappointed with the news, it continues to assess market access opportunities in the state.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Monday has been the InvoCare Limited (ASX: IVC) share price with an 8% gain. This follows a strong half year update this morning. The worst performer on the ASX 200 has been the Altium share price with an 11% decline following its results release.

The post ASX 200 midday update: Fortescue result and dividend impress, Altium sinks 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 shares of and has recommended Altium and Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Altium. The Motley Fool Australia has recommended InvoCare Limited and Pointsbet 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 Booktopia Group Ltd (ASX: BKG) share price is sliding into the red in lunchtime trade on Monday as the online book retailer reported its FY21 earnings.

Let’s investigate further.

Booktopia share price slides 7% despite strong revenue and earnings growth in FY21

Booktopia outlined several investment highlights in its report, including:

• Revenue growth of 35% year on year to $223.9m million, up from $165.7 million
• Underlying EBITDA (adjusted for IPO costs) up 125% from the year prior to $13.6m
• A record 8.2 million units shipped, up from 6.5 million in FY20
• Sales in the first two months (July and August) of new financial year, tracking above the same period in FY21
• Completion of three (Brio Books, Zookal and Welbeck) strategic partnerships.

What happened in FY21 for Booktopia?

Recall that Booktopia completed its initial public offering (IPO) and listed on the ASX in December 2020, successfully raising $43.1 million.

In a potential positive for the Booktopia share price, the company grew its revenue by 35% in FY21, from $166 million to $224 million. The company explained it had achieved a compound annual growth rate (CAGR) in revenue of 26% since 2018.

This result carried through to EBITDA growth of 125% from the year prior, which also came in 45% above the prospectus forecast.

Booktopia’s revenue and earnings growth was underscored by a 27% increase in “total units shipped” which totalled 8.2 million units in FY21.

As a result, the “annual spend per customer” increased by around 14% to $126.85. Average order value also managed to creep up to $71.07 from $65.08, an increase of 9% from FY20.

From its FY21 results, the company “smashed” its prospectus forecasts, as customers “continue to splurge on books”.

Finally, the company invested over $20 million in the “automation of its 14,000 square metre distribution centre” in Sydney. This effectively doubles the company’s shipping capacity from “60,000 books across 145,000 different titles per day”.

What did management say?

Speaking on the company’s first results since listing on the ASX back in December, Booktopia CEO Tony Nash said:

Our prospectus set some very ambitious targets for our first year as a listed company and I am very happy to report we have been able to eclipse those expectations. Our focus has now shifted to executing our multi-pronged growth strategy that will see us ramp up our market penetration, expand our reach within the book industry and lock-in new, earnings accretive partnerships and acquisitions.

Touching on the growth vision for the company, Nash added:

Bolt-on opportunities, whether through acquisition or partnership, provide a clear path to supercharging our growth over the next few years and if we see an opportunity that provides the right benefits, at the right price, we will pursue it.

What’s next for Booktopia?

According the company, FY22 has already “started strongly” with revenue “tracking ahead” of results the same time last year.

Booktopia expects to continue benefitting from “strong tailwinds”, such as the dynamics around online shopping due to “structural and demographic shifts”.

The company believes COVID-19 will continue to “accelerate these trends” which is another potential tailwind to the Booktopia share price.

Moreover, the company believes there will be an “increase in discretionary spending” domestically due to travel restrictions imposed through the ongoing pandemic.

The Booktopia share price has had a choppy year to date, posting a return of 7.7% since January 1. This result has lagged the S&P/ASX 200 index (ASX: XJO)’s gain of around 14% over this same time.

At the time of writing, Booktopia shares had clawed back some ground and are now trading for $2.82 each, down 5.69% on their previous closing price.

The post Booktopia (ASX:BKG) share price sinks 7% despite 125% EBITDA growth 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. has recommended Booktopia Group Limited. 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 Tesserent Ltd (ASX: TNT) share price is struggling to catch a bid on Monday after the company released its preliminary FY21 results.

At the time of writing, shares in the cyber security company are trading flat at 27 cents .

Tesserent share price flat despite bumper FY21 performance

The Tesserent share price is off to a wobbly start on Monday despite marking significant growth and a pathway towards profitability in FY21. Key highlights include:

• Turnover surging 371% to $96.7 million
• Revenue lifting 233% to $67.3 million
• Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of $9.6 million (FY20: $2.8 million loss)
• Normalised net profit after tax of $4.9 million (FY20: $5.1 million loss).

What happened to Tesserent in FY21?

FY21 marked a year of significant growth for the cyber security company.

Tesserent successfully executed its strategy to strengthen its core Cyber 360 capabilities and acquire complementary businesses to expand product and service offerings to key clients and sectors.

During the year, Tesserent acquired and integrated six companies including:

• Seer Security on 31 July 2020
• Airloom Holdings on 2 September 2020
• Ludus Information Security on 11 September 2020
• iQ3 on 11 November 2020
• Lateral Security Services (New Zealand) on 12 February 2021
• Secure Logic on 28 April 2021.

Tesserent achieved all set financial objectives in FY21 including a turnaround to achieve quarter-on-quarter EBITDA growth from a quarterly loss-making position in the prior year and a turnover run rate of $150 million.

Contrary to its positive FY21 performance, the Tesserent share price is down 22.8% year-to-date and flat for the past 12 months.

Management commentary

In a letter to shareholders, Tesserent chair Geoff Lord wrote:

FY21 saw the group achieve exceptional growth – both organically through its execution of the Cyber 360 go-to-market strategy and through successful completion and integration of six acquisitions – with the acquired businesses adding public and private sector consulting services, managed services, specialised product expertise, plus cloud, defend and detect services to the Tesserent offering.

Pleasingly, the FY22 year has started off well for the group with the business delivering above budget performance and a number of wins that will provide a foundation for continued strong organic growth during the current year.

What’s next for Tesserent

It’s been a challenging past 12 months for the Tesserent share price.

Management said that it would continue to focus on creating shareholder value by “building on Tesserent’s position as Australia’s #1 ASX-listed cybersecurity provider”.

Tesserent highlighted a number of “important goals” over the new financial year, centred around acquisitions, the expansion of proprietary intellectual property and driving market share in key sectors.

Lord said the acquisition of Loop Secure would be completed in September. “There are also a number of potential acquisitions currently in review which if completed, will further add to the inorganic earnings growth and deepen the Cyber 360 model,” he said.

In addition, the company pointed at international expansion opportunities with a focus on Australia’s key five eyes allies, consisting of the United States, United Kingdom, New Zealand and Canada.

The post Tesserent (ASX:TNT) share price fails to fly despite 230% revenue growth in FY21 appeared first on The Motley Fool Australia.

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• Why the Tesserent (ASX:TNT) share price is surging 7% higher today

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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