Brainchip Holdings Ltd (ASX: BRN) shares are sliding today after the company released its results for the FY21 half-year. In early trade, the Brainchip share price plunged by 5.66% to 50 cents before partially recovering to 51 cents at the time of writing. 

Let’s take a look at how the artificial intelligence (AI) developer has been performing.

What’s impacting the Brainchip share price?

The Brainchip share price is under pressure today after the highly-traded company posted a loss of $26.8 million – up an astounding 137% on the loss recorded in the prior corresponding period (pcp). While operating income was up on the pcp (from $75,500 to $121,000), expenses skyrocketed resulting in a 4,005% increase in non-cash losses.

Most of these new expenses can be attributed to the financing agreement Brainchip signed with LDA Capital.

In further news impacting the Brainchip share price, earnings per share (EPS) came in at a 1.76 cent loss, compared to a 0.95 cent loss in the pcp.

No dividend was paid for the FY21 half-year.

What’s happening to ASX tech shares in general?

ASX tech shares have taken a hammering this week, as bond yields increase. Some investors worry that tech companies may be over-leveraged and unable to pay back their debts at higher interest rates.

Some of the biggest losers today include Afterpay Ltd (ASX: APT), Kogan.com Ltd (ASX: KGN), and Nuix Ltd (ASX: NXL).

Words from the chair

Commenting on the company’s results, Brainchip chair Emmanuel Hernandez said:

Throughout the financial year of 2020 BrainChip demonstrated great success in advancing AI at the Edge and the commercialization (sic) of the Akida device and intellectual property…

In August 2020 we entered into an equity financing arrangement with LDA Capital… We are pleased with the success of the funding arrangement which has placed us in a strong cash position.

What does Brainchip do?

Brainchip is involved in the development of software and hardware-accelerated solutions for advanced AI and machine learning applications. The company maintains a primary focus on the development of its processor unit hardware product, Akida.

According to Brainchip, Akida is both scalable and flexible to address the requirements of edge devices. An edge device is any piece of hardware that controls data flow at the boundary between two networks, such as a router or a smartphone. Akida is designed to provide ultra-low power and fast AI edge network for vision, audio, olfactory and smart transducer applications. The edge AI market is forecast to exceed US$50 billion by 2025 and is the central focus of the company.

Brainchip has revenue channels in Australia, North America, Europe, the Middle East, and Asia.

Brainchip share price snapshot

While the Brainchip share price is trading lower today, it is still worth ten times what it was this time last year. Back then, Brainchip shares were selling at just half a cent each.

However, the company’s shares have fallen significantly from their September 2020 high of 76 cents.

More reading

• Vmoto (ASX:VMT) share price slips despite positive update
• Dubber (ASX:DUB) share price slides despite strong half year growth
• Openpay (ASX:OPY) share price tumbles 6% on increasing loss
• The Bubs (ASX:BUB) share price is rising today on solid results
• The Payright (ASX: PYR) share price tumbles after maiden results

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd and Nuix Pty 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 Vmoto Ltd (ASX: VMT) share price is in the red today despite the company announcing an expanded product offering.

At the time of writing, the electric-powered scooter manufacturer’s shares are down 2.1% to 46.5 cents after slipping 5% lower in the early afternoon.

Let’s take a closer look at what the company updated the market with.

New electric vehicle line-up

In today’s release, Vmoto advised that it has launched 3 new electric two-wheel vehicle models aimed towards the consumer market. These are the new TS model, the new TC model, and the CUmini model.

Vmoto unveiled all three models to the public on Tuesday this week at the 2021 Vmoto Soco World Premiere in Milan, Italy. The product launch event was attended by Jorge Lorenzo, a five times MotoGP world champion.

Vmoto highlighted that the rollout of the new electric scooter models demonstrated its commitment to becoming a leading global manufacturer. The adoption of battery-powered vehicles has surged in recent years, with European customers at the forefront of the change.

The launched models are available for order and will be distributed directly to customers through Vmoto’s existing distribution channels. The company ships to more than 50 countries across 4 continents: Europe, South America, Asia and Africa.

What did the managing director say?

Vmoto managing director Charles Chen welcomed the new additions to the Vmoto family. He said:

I am delighted to announce the launch of three new B2C models, which have been more than one year in the making. 2020 has been a landmark year for the company’s growth.

We continue to deliver excellent results operationally and commercially. We are confident that the release of these three new superior electrics two-wheel vehicle B2C products will ensure our growth continues during the next year and beyond.

Vmoto share price snapshot

The Vmoto share price has accelerated in the past 12 months, gaining more than 75% for investors. The company’s shares took a small but brief dip in March last year, hitting a low of 11 cents. Since then, its shares rebounded to move on an upwards growth trajectory.

Based on the current share price, Vmoto commands a market capitalisation of around $129 million.

More reading

• The Vmoto share price tumbles 9% despite some positive sales figures

Motley Fool contributor Aaron Teboneras 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 is trading lower on Friday following the release of its half year results.

At the time of writing, the cloud-based call recording and audio asset management company’s shares are down 3% to $1.72.

How did perform in the first half?

For the six months ended 31 December, Dubber reported revenue of $10.1 million and a loss after tax of $7.5 million.

This was a 61% increase and a 14% improvement, respectively, over the prior corresponding period. However, this result includes a $1.8 million research and development tax rebate received in December.

What else?

Also heading in the right direction was the company’s user numbers, recurring revenue, and cash balance.

At the end of FY 2020, the company had annualised recurring revenue (ARR) of approximately $16 million, 192,000 users, and $18 million cash at bank.

Fast forward to today, and the company has $28 million ARR, in excess of 300,000 users, and $42 million cash at bank.

This has been driven by sustained organic sales growth and a strategic acquisition process. Management notes that the latter is being strongly endorsed by shareholders, as evidenced by its recent $45 million capital raising.

Outlook

Looking ahead, management believes that the addition of key personnel has placed the company in a very strong position to accelerate against both its immediate and long-term strategy.

This is particularly the case given its recent acquisition of Speik. Commenting on the acquisition last month, Dubber’s CEO, Steve McGovern, said:

“Dubber’s acquisition of Speik is fundamentally accretive on all levels. Speik brings to Dubber a strong footprint in the leading UK-based mobile network provider, world-class technology resources, and a growing base of subscribers. The team at Speik have been pioneers in terms of network-based mobile recording together with O2. Their success with one major recording partner over seven years provides an insight into Dubber’s ambitions for our own 150 plus service provider partners, globally.”

“We believe that Dubber can substantially accelerate growth and adoption in that and other key UK-based relationships and use Speik’s PCI services to drive additional revenues into our service provider partners. As a part of Dubber, the Speik team is able to capitalise on opportunities, without restraint, using cloud technologies as well as expand product sets across the Dubber partner network. We welcome the team on the Dubber journey, as they effectively form the majority of our UK and European team through this acquisition.“

Despite today’s decline, the Dubber share price is still up 81% over the last 12 months.

More reading

• Why the Dubber (ASX:DUB) share price is surging 6% higher
• Here’s why the Dubber (ASX:DUB) share price is surging today

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 Dubber. 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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Openpay Group Ltd (ASX: OPY) shares are tumbling today after the company released its half-year results for FY21. At the time of writing, the Openpay share price is slumping 6.23% to $2.71.

Let’s take a look at how the buy now, pay later (BNPL) provider has been performing.

What’s impacting the Openpay share price?

The Openpay share price is taking a dive on Friday as the Afterpay Ltd (ASX: APT) competitor posted a loss of $25.7 million. This represents an increase of around 37% on the $16.1 million loss posted in the prior corresponding period (pcp). While Openpay’s revenues were up $5.4 million on the pcp, its expenses increased by $15 million.

The large increase in outgoings was driven by a $6.4 million change in the fair value of derivatives, a $4 million lift in employee-related expenses, a $2.8 million increase in receivables impairment expenses, and a $1.3 million increase in marketing and advertising expenses.

In a silver lining for the Openpay share price, the company’s earnings per share (EPS) loss was down from 0.37 cents in the pcp to 0.24 cents.

No dividends were declared for the half-year ended 31 December 2020.

Words from the CEO

Striking an optimistic tone, Openpay CEO Michael Eidel said:

H1 was a scene setter for Openpay. We announced a highly targeted and customised strategy to enter the US – one of the world’s biggest payments markets, leveraging deep industry experience and knowledge. Having built a strong Retail customer base in the UK, we are now preparing to bridge into Healthcare and Automotive – two verticals which have driven Openpay’s differentiation in Australia. Through our B2B product, OpyPro, we are positioned to tap into the multi-trillion-dollar enterprise payments market.

Current and future endeavours

As highlighted by the CEO, Openpay is attempting to differentiate itself from its competitors by focusing on the B2B sector. Having already signed a deal with Woolworths Group Ltd (ASX: WOW) for its OpyPro system (formerly Openpay for Business), the company is looking to further expand, particularly in the United Kingdom market.

Openpay has 1.4 million active plans (a 213% jump on the pcp) and approximately 2,700 active merchants (up 46% on the pcp).

Possible headwinds

While in its announcement, Openpay highlighted the fact it has “a strong mix of available cash and debt for a total funding runway of $173 million”, the auditor’s report was less upbeat.

In its review report, Price Waterhouse Coopers (PWC) gave the following note on the “material uncertainty related to the going concern”:

The Group incurred a net operating cash outflow of $37.2 million and a net loss of $25.5 million for the half-year ended 31 December 2020. The ability of the Group to continue as a going concern is dependent upon maintaining existing cash reserves and debt facilities and securing additional debt facilities and/or the issue of new shares.

PWC added:

These conditions…indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern.

Openpay share price snapshot

Over the past year, the Openpay share price has surged by more than 135%. However, looking at the last six months, Openpay shares have plunged by nearly 40%.

Based on the current Openpay share price, the company has a market capitalisation of around $250 million.

More reading

• Openpay (ASX:OPY) share price erases gains despite positive update
• Why the Openpay (ASX:OPY) share price is surging higher today
• Why is the Splitit (ASX:SPT) share price underperforming Afterpay and Zip?
• Why the Openpay (ASX:OPY) share price is up 17% and could go higher
• Why IOOF, Kogan, Openpay, & Woodside shares are dropping lower

The Motley Fool Australia owns shares of AFTERPAY T FPO and Woolworths 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 Bubs Australia Ltd (ASX: BUB) share price is lifting today as the company announced its half-year presentation and results.

Shares in the infant formula supplier are currently trading 4% higher at a price of 57.2 cents.

On what’s turning out to be a challenging day for the All Ordinaries Index (ASX: XAO), Bubs is outperforming the market so far.

What’s lifting the Bubs share price?

The Bubs share price is gaining today as the company reported its first-half results for the period ending 31 December 2020.

In its release, the company said it was “the fastest-growing infant formula manufacturer” across its rivals Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Chemist Warehouse. It has tripled market share and increased retail sales by 55% from the prior corresponding period (pcp).

Moreover, the company’s goat infant formula gross revenue to China also rose significantly during the half, up 36% on the pcp. This partly offset the disruption caused by the Daigou channel.

The group brought in $22.2 million of revenue in the first half, down 23% on the first half of FY20.

Gross margin decreased to a $1.5 million loss, primarily driven by a loss in bulk powder sales and a $3.1 million inventory provision.

Bubs maintains a solid balance sheet with $40.2 million in cash.

Management comments

Commenting on the results, Bubs CEO Kristy Carr said:

The external forces brought on by the COVID-19 pandemic led to extensive channel disruption and supply and demand volatility across our sector in 2020.

While not immune to these factors, Bubs’ strong foundations, organisational agility and resilient business model delivered solid turnaround momentum with quarter on quarter sales growth following the major COVID-19 driven disruption to the Diagou Channel.

Looking ahead

Management declined to give any detailed financial forecast due to uncertainty surrounding the pandemic. However, the company said it expected to see a modest half on half gross revenue growth in the second half of the financial year.

More reading

• Why AMP, Bubs, BWX, & Lynas shares are pushing higher
• Is the Woolworths (ASX:WOW) share price in the buy zone after its results?
• Why you should think long-term when investing
• Woolworths (ASX:WOW) to move forward with Endeavour demerger
• Maggie Beer (ASX:MBH) share price surges on 20% sales growth

Daniel Ewing owns shares of BUBS AUST FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST 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 Payright Ltd (ASX: PYR) share price has slid 10.50% lower after announcing its maiden HY21 results.

The company listed on the ASX on 23 December 2020 at an IPO offer price of $1.20 per share. Its shares have struggled to deliver value to early investors, having only touched break-even once on 16 February 2021.

What’s driving the Payright share price today?

The broader market is facing a heavy selloff today, with the S&P/ASX 200 Index (ASX: XJO) down 2.40% and S&P/ASX Information Technology Index (ASX: XIJ) down an even further 6.40%. 

This has resulted in buy now, pay later shares across the board being sold down. BNPL heavyweights Afterpay Ltd  (ASX: APT) and Zip Co Ltd (ASX: Z1P) are down a respective 11% and 6% at the time of writing. 

The heavy selling and weak sentiment across the board could be a factor pulling on the Payright share price beyond its results. 

HY21 result highlights 

Payright reported its Gross merchandise value (GMV) across Australia and New Zealand was up 84% to $20.6 million. Total customers also increased 25% to 42,300. This was attributed to the company’s growth in active merchants and more targeted direct marketing and brand campaigns. 

The company has seen a continued downtrend in arrears down from 3.96% in June 2020 to 2.77% in December 2020. The improvement in arrears and focus on collections efforts have been balanced with managing COVID impacted customer hardship.

Payright’s underlying losses relating to ‘business as usual’ credit defaults are also highlighted to be below the winder industry average. 

How is Payright different? 

Payright specialises in transactions between $1,000 and $20,000. Its current portfolio is a mix across retail, home improvement, health & beauty, photography, education and automotive. This is its key point-of-difference in the rapidly growing BNPL sector. 

The company believes there is a rapidly growing demand for a BNPL service on larger purchases with 55% of surveyed consumers wanting a BNPL option for purchases over $1,000. 

By focusing on more considered purchase items, Payright believes that it targets a lower risk customer demographic that have stronger credit scores representing very low default risk. 

To further accelerate the company’s growth, Payright reports it’s well progressed in the development of a number of significant and soon-to-be-deployed tech-related growth products and initiatives. 

More reading

• What on earth happened with the Payright (ASX:PYR) share price today?
• Payright (ASX:PYR) shares get speeding ticket after 32% surge

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T 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 Limeade Inc (ASX: LME) share price is having a rather wild day today (well, mildly wild).

At the time of writing, Limeade shares are flat at $1.50 apiece. But that’s a ways away from where the software solutions provider opened this morning at $1.56 a share (up 4% at the time). Just after open, the company dropped to the current share price, so it seems investors can’t quite make up their mind on the results of Limeade’s earnings report that was released this morning.

The report covers Limeade’s full 2020 financial year (which runs from January to December).

What did Limeade report this morning?

It was an unquestionably strong set of numbers that Limeade delivered today. The company reported revenues grew to US$56.6 million, up 19.3% from the US$47.4 million Limeade reported for 2019. Of that US$56.6 million, US$54.9 million came from recurring subscription revenue, a 20.8% rise over 2019.

Limeade also helpfully pointed out that between 2015 and 2020, revenues grew at a compounded annual growth rate (CAGR) of 24%.

Having said that, Limeade’s cost of revenue also rose 12.6%, from US$11.1 million in 2019 to US$12.5 million in 2020.

Total operating expenses also rose 11.4% to US$43.1 million, up from the US$38.7 million from 2019. The largest component of this rise in expenses was research and development costs, which rose 14.2% to $16.8 million. An increase in staff count (from 236 in 2019 to 271 in 2020) also didn’t help.

Even so, the company reported a gross profit of US$44.1 million, up 21.3% from 2019’s $36.4 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at US$1.2 million. That was a 160.3% improvement on 2019’s earnings loss of US$2.1 million. Gross margins were also up 1.3% to 77.9%.

On the net profits after tax (NPAT) metric, the company still recorded a net loss of US$0.3 million, but that was a 92.1% improvement on 2019’s NPAT loss of US$3.4 million.

The company’s cash position sits at US$31.5 million, with no net debt.

Looking forward to 2021

Limeade has given some pre-emptive guidance for the 2021 financial year as well today. The company tells us that it expects US$50-53 million in revenues for the year. It also expects to lose between $5-8 million in EBITDA and to lose US$7-10 million on the NPAT metric.

Here’s some of the commentary the company gave regarding this guidance:

COVID-19 slowed new customer growth in 2020 and therefore impacted revenue outlook when coupled with 2021 forecast churn… Growth in new 2021 customer acquisitions will continue to be seasonal, accelerating in H2 and contributing to revenue growth in 2022.

More reading

• Why Afterpay, Kogan, Orica, & Service Stream shares are crashing lower
• Orica (ASX:ORI) share price implodes 20% on updates
• Pacific Current (ASX:PAC) share price down despite FUM growth of 24%
• Orocobre (ASX:ORE) share price dives despite a recovery in lithium markets
• What’s with the Douugh (ASX:DOU) share price today?

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Limeade, Inc. 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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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a big decline. The benchmark index is currently down 2% to 6,699.4 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are sinking:

Afterpay Ltd (ASX: APT)

The Afterpay share price is down 9% to $122.49. This follows the completion of the payments company’s upsized convertible notes offering this morning. Afterpay raised a total of $1.5 billion from investors via the issue of convertible notes with a due date of 2026 and an initial conversion price of $194.82. In addition to this, the company revealed that its Co-CEOs have each sold ~$60 million worth of shares. The funds from its offering will be used to increase its interest in its US business and support its growth.

Kogan.com Ltd (ASX: KGN)

The Kogan share price has fallen 9% to $14.18. This follows significant weakness in the tech sector today and the release of its half year results. In respect to the latter, the ecommerce company reported a 97.4% increase in gross sales to $638.2 million and a 250.2% lift in adjusted net profit after tax to $36.5 million. This was driven by strong growth across its Exclusive Brands and Kogan Marketplace segments. This was underpinned by a 76.8% increase in Kogan active customers to 3 million.

Orica Ltd (ASX: ORI)

The Orica share price is down a massive 19% to $12.40. This morning the commercial explosives company warned that a number of factors were weighing on its performance and would hit its profits. One of those is trade tensions between Australia and China, which is impacting demand for its services in the higher margin thermal coal market. Management advised that these factors could impact its earnings by as much as $125 million.

Service Stream Limited (ASX: SSM)

The Service Stream share price has continued its decline and is down a further 11% to $1.19. Investors have been selling the essential network services company’s shares since the release of a disappointing half year result on Wednesday. After a difficult first half, management warned that its second half may not be any better. In light of this, it advised that the higher contribution that it expected in the second half is unlikely to materialise.

More reading

• Orica (ASX:ORI) share price implodes 20% on updates
• Growth outlook fails to save the Aristocrat share price today
• ASX 200 down 2.3%: Afterpay & Kogan sold off, Orica smashed, AMP pushes higher
• Will Wall Street’s overnight tumble send ASX 200 shares down today?
• Why the Afterpay (ASX:APT) share price is sinking 14% today

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 Kogan.com ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd and Service Stream 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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Orica Ltd (ASX: ORI) shares are crashing today following two updates from the explosives manufacturer. At the time of writing, the Orica share price has slumped 20.08% to $12.26. In earlier trade, Orica shares had fallen by as much as 27% before making a partial recovery.

Let’s take a look at what the company announced.

What’s driving the Orica share price lower?

The Orica share price is on the slide today after the company released an earnings update to the market this morning.

In the announcement, Orica informed investors that key factors have reduced its earnings before interest and tax (EBIT) for the first half of FY21.   

Firstly, Orica highlighted that trade tensions between Australia and China had hit demand in the company’s higher-margin Australian thermal coal market. As a result, Orica flagged that lower mining activity could cost the group between $70 million and $80 million.

The company noted that demand from affected mines was expected to fall by approximately 60,000 tonnes of ammonium nitrate compared with the prior corresponding period.

In addition, Orica highlighted the impact of COVID-19 on mining activity. The company noted that mining activity in South America, Europe and Africa was reduced due to disruptions by the pandemic.

Orica also cited foreign exchange factors as possibly hampering its earnings. According to the announcement, foreign exchange is expected to cost the company between $20 million and $25 million.

In other news dragging the Orica share price lower, the company also cited extra costs of $15 million to $20 million relating to arbitration costs at its Burrup plant.

Overall, Orica flagged that these factors could see its half-year earnings hit by up to $125 million.

Orica is expected to report its earnings in May.

New CEO

In addition to its earnings guidance, Orica also informed the market that a new managing director and CEO has been appointed.

After six years in the role, Orica announced that Alberto Calderon will step down as chief executive and managing director. The company noted that the role will be succeeded by Orica’s group executive and president of Australia Pacific Asia, Sanjeev Gandhi.

Orica noted that Mr Ghandi has been with the company since July 2020 after spending 26 years with German chemical company BASF.

Despite planning to leave earlier, Mr Calderon had stayed on with Orica to help steer it through the pandemic.

Foolish takeaway

Orica is one of the world’s leading suppliers of commercial explosives. Over the past year, the Orica share price has fallen by nearly 41% after being hammered in the March 2020 bear market. Orica shares are also trading more than 13% lower than this time five years ago.

Based on the current Orica share price, the company has a market capitalisation of around $6.1 billion.

More reading

• Why Afterpay, Kogan, Orica, & Service Stream shares are crashing lower
• ASX 200 down 2.3%: Afterpay & Kogan sold off, Orica smashed, AMP pushes higher

Motley Fool contributor Nikhil Gangaram 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 Pacific Current Group Ltd (ASX:PAC) share price is down 5% after announcing its FY21 half-year result.

Pacific is a business that invests in fund managers around the world.

Pacific Current FY21 half-year highlights

The business announced that its funds under management (FUM) was $112.8 billion, which was an increase of 23.9%, adjusting for the November sale of Seizert. The non-Australian dollar denominated FUM saw a 40% increase between June to December. Pacific Current reported widespread growth, led by its investment in GQG.

Management fees grew by 10% whilst operating expenses declined by 24%.

Underlying net profit after tax (NPAT) attributable to shareholders for the half-year was $11.6 million, down 13.4% compared to the prior corresponding period. Lower performance fees and the appreciation of the Australian dollar against the US dollar impacted the result. Had the exchange rate stayed the same, underlying net profit before tax would have been $0.9 million higher.

The profitability decline was driven by a decrease in performance fees from Carlisle Management and Victory Park Capital (VPC), as well as lower commission revenue.

It reported a statutory profit after tax of $11.6 million, compared to a loss of $8.9 million in the prior corresponding period. The reported loss last year was due to impairment expenses, primarily at Seizert (which has since been sold) and VPC.

The Pacific Current Chair Tony Robinson said:

PAC’s portfolio has weathered a difficult year in fine shape. While there was a decline in performance fees, I am encouraged by the growth in management fee revenues, particularly in a period where it has been difficult for boutiques to market to new clients.

Recent Pacific Current share price movements

Over the past year the Pacific Current share price is down by more than 10%. Over the last month it has fallen 11%. 

Pacific Current dividend

The board declared a $0.10 fully franked dividend per share. This dividend represents a 44% dividend payout ratio.

Its guidance for the full year dividend payout ratio remains 60% to 80% and the board expects the payout ratio to be no less than the prior year.

New investment

During the period it announced an agreement to purchase a stake in Astarte, a London-based investment manager focused on private markets real asset strategies.

Outlook

Pacific Current’s managing director, CEO and chief investment officer, Paul Greenwood said:

As you look at these results you will see that more of PAC’s earnings are coming from management fees, which are more repeatable than performance fees or commission revenues. This means that the organic profitability of the business continues to grow nicely, and we expect this to continue.

The reduction in performance fees was partially reflective of the market environment, but also a function of timing, where some performance fees are expected to be recognised in the second half as opposed to a year ago when they fell in to the first half.

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Motley Fool contributor Tristan Harrison owns shares of PACCURRENT 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.

The post Pacific Current (ASX:PAC) share price down despite FUM growth of 24% appeared first on The Motley Fool Australia.

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