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The Treasury Wine Estates Ltd (ASX: TWE) share price is up 12% at the time of writing.

Yesterday, the global wine business delivered its FY21 half-year result to investors, which showed a heavy profit decline. However, management also said they were more confident about a recovery in some aspects of the business.

Brokers have had their say about the company’s result and medium-term prospects.

If you didn’t catch the report yesterday, here are some of the main numbers:

Highlights of Treasury Wine Estates’ FY21 half-year result

The company said that its earnings before interest, tax, SGARA and material items (EBITS) fell by 23% to $284.1 million and the EBITS margin declined by 3.8 percentage points to 20.1%.

Underlying net profit after tax (NPAT) declined 24% to $175.3 million and underlying earnings per share (EPS) fell 24% to 24.3 cents.

Statutory NPAT declined 43% to $120.9 million and statutory EPS declined 43% to 16.8 cents.

On the positive side of things, Treasury Wine Estates said that retail and e-commerce channels continue to perform at elevated levels across all key markets, reflecting a shift in consumer behaviour towards in-home consumption of well-known and trusted brands.

However, there continues to be disruption to sales channels for higher margin luxury wine and reduced shipments to China because of the Chinese investigations and rules introduced relating to anti-dumping.

Despite the decline in profit, Treasury Wine Estates was still able to reduce net debt by $403.7 million and the board declared a fully franked dividend of 15 cents per share.

Re-organisation

TWE is going to implement a new divisional operating model, aiming at maximising the benefits of a separate focus across brands, rather than regions. Those three new divisions will be: Penfolds, Treasury premium brands and Treasury Americas.

The company also said that it has progressed on key initiatives to deliver a future state premium wine business in the US, including the planned exit of a significant portion of the commercial brand portfolio. Treasury Wine Estates also said it’s going to explore the divestment and exit of other non-priority brands, operating assets and leases as it focuses on growing its premium brand portfolio to drive growth in the region.

Growing management confidence about re-allocating products

The company has been working on a response to the Chinese measures. TWE has increasing confidence about its plans for re-allocating its Penfolds Bins and Icon range from China to other markets.

It’s expecting to continue to engage with its customer and consumer base, with modest benefits to commence towards the end of FY21.

Broker thoughts on TWE

Morgans said that the report was better than it had expected thanks to the domestic market and Asia. The broker also pointed to an improving balance sheet and good cashflow. It said it would buy TWE shares if the share price were to significantly decline. It increased its price target to just over $11.

However, Citi wasn’t really convinced. It was impressed by the Asia result considering the China difficulties, but first half conditions are expected to continue in the second half. Citi still considers TWE shares as a sell, with a price target of $8.60.

More reading

• ASX 200 up 0.2%: ANZ and CSL impress, Fortescue declares huge interim dividend
• Why CSL, Domino’s, IPH, & Treasury Wine shares are storming higher
• Why the Treasury Wine (ASX:TWE) share price is falling
• Leading brokers name 3 ASX shares to sell today
• Why ARB, Domain, Redbubble, & Treasury Wine shares are sinking today

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) has bounced back from a soft start and is pushing higher. At the time of writing, the benchmark index is up 0.1% to 6,890.2 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are trading lower:

Bellevue Gold Ltd (ASX: BGL)

The Bellevue Gold share price has crashed 17% to 80.2 cents. This follows the release of the gold-focused mineral exploration company’s stage 1 feasibility study. That study reveals that the Bellevue Gold Project is on track to become a top 25 Australian gold mine with a production profile of 160kozpa in the first 5 years and life of mine production of 151kozpa. It appears as though some investors were expecting an even stronger study.

Coles Group Ltd (ASX: COL)

The Coles share price has fallen 4% to $16.50. This may have been driven by a broker note out of Credit Suisse this morning. Following the release of its half year results, it believes Coles is losing market share and could continue to do so in the second half. In light of this, it has downgraded Coles’ shares to a neutral rating and cut the price target on them to $19.04.

NRW Holdings Limited (ASX: NWH)

The NRW share price has sunk 17% to $2.34 following its half year results release. For the six months ended 31 December, the contractor reported a 44% increase in revenue to $1,168 million and a 28% lift in EBITDA to $132.8 million. However, despite this strong growth, on the bottom line the company posted a 17% decline in net profit to $29 million. This was driven largely by a significant increase in depreciation.

Perpetual Limited (ASX: PPT)

The Perpetual share price is down 7% to $31.24. This follows the release of the fund manager’s half year results. Perpetual reported a 10% increase in operating revenue to $280.6 million but an 11% decline in underlying profit after tax to $52.6 million. This led to a 20% reduction in its interim dividend to 84 cents per share.

More reading

• ASX 200 up 0.2%: ANZ and CSL impress, Fortescue declares huge interim dividend
• Why the Coles (ASX:COL) share price is sinking 6% today
• Why Coles, Netwealth, Pro Medicus, & Zip shares are sinking
• ASX 200 down 0.5%: Domino’s delivers, Westpac impresses, Coles sinks
• Coles (ASX:COL) share price on watch following half year update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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Crown Resorts Ltd (ASX: CWN) shares opened higher today despite the casino operator reporting a significant earnings hit in its FY21 half-year results (1H FY21). Soon after open, the Crown share price quickly lost ground, only to recover again to its current level of $9.80, up 1.14% for the day so far.

Here’s a summary of how Crown has been performing.

Crown share price resilient despite revenue falls

The Crown share price is holding its own today regardless of the company reporting a 62.1% drop in statutory revenue to $581 million for the reporting period. 

Operating cash flow also tumbled from $419.1 million in 1H FY20 to $72.3 million in 1H FY21.

Earnings before interest, tax, depreciation and amortisation (EBITDA) took a massive 99% hit, coming in at $4.4 million. This compares to $446 million in EBITDA reported for the prior corresponding period.

These heavy reductions in revenue and earnings are mainly attributed to Crown Melbourne having remained closed for much of the first half due to trading restrictions associated with coronavirus.

As a result, the Crown board determined not to declare an interim dividend on ordinary shares.

CFO comments

Commenting on the impact of COVID-19 across various Crown Resort sites, chief financial officer Alan McGregor said:

Crown’s first half results reflect the severe impact on operations from the COVID-19 pandemic. In particular, Crown Melbourne was closed for most of the half.

Crown Perth re-opened with restrictions towards the end of June 2020 and has traded above expectations despite ongoing COVID-19 restrictions, and limited marketing and promotional activity… 

Crown Melbourne has progressively recommenced operations from November, albeit with only limited initial access to the property. Since the easing of restrictions on 9 December, results had shown improvement but continued to be impacted by ongoing limitations on capacity…

Crown Sydney opened in a restricted capacity in late December and, while gaming operations are yet to commence, the non-gaming elements have seen encouraging property visitation.

Crown share price snapshot

The Crown Resorts share price has fallen by around 17% over the past year. Crown shares fell as low as $6 during March 2020 before surging more than 60% to their current levels. The company has been regularly making news regarding the New South Wales Independent Liquor and Gaming Authority’s inquiry into its suitability to hold a gaming license. 

Based on the current Crown Resorts share price, the company has a market capitalisation of $6.6 billion with 677.2 million shares outstanding.

More reading

• Why investors are watching the Crown (ASX: CWN) share price
• Crown (ASX:CWN) loses its CEO as fallout continues
• ASX 200 falls, Melbourne lockdown bites, Baby Bunting drops
• ASX 200 down 0.3%: Crown CEO hasn’t resigned, Mirvac update, Nearmap remains halted
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts 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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At lunch on Thursday the S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. The benchmark index is currently up 0.2% to 6,897.6 points.

Here’s what is happening on the market today:

ANZ Q1 update impresses

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is charging higher after releasing its first quarter update. For the three months ended 31 December, the banking giant reported unaudited cash earnings from continuing operations of $1,810 million. This was a 54% jump on the average of the last two quarters of FY 2020. The bank also revealed a COVID-19 collective provision release of $173 million. This represents ~10% of the $1,700 million set aside during FY 2020.

CSL half year results

The CSL Limited (ASX: CSL) share price is pushing higher today after investors responded positively to its half year results. CSL posted a 16.9% increase in revenue to US$5,739 million and a 45% jump in reported net profit after tax to US$1,810 million. This was driven by growth in its core immunoglobulin portfolio, the successful transition to its own distribution model in China, strong growth HAEGARDA sales, and exceptionally strong demand for influenza vaccines. Management retained its full year profit guidance for FY 2021.

Fortescue declares huge dividend

The Fortescue Metals Group Limited (ASX: FMG) share price is rising today after declaring a huge interim dividend with its half year results. For the six months ended 31 December, Fortescue delivered a 44% increase in revenue to US$9,335 million and a 66% lift in net profit after tax to US$4,084 million. This led to the Fortescue board announcing a fully franked A$1.47 per share interim dividend, which is up 93.4% on the prior corresponding period.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Thursday has been the Treasury Wine Estates Ltd (ASX: TWE) share price with a 12.5% gain. This morning the wine company revealed plans to implement a new divisional operating model that will see it operate under three new internal divisions: Penfolds, Treasury Premium Brands, and Treasury Americas. The worst performer has been the NRW Holdings Limited (ASX: NWH) share price with a 17% decline. This follows its half year results release this morning.

More reading

• Oz Minerals (ASX:OZL) share price hits 13-year high as profit jumps 30%
• Why CSL, Domino’s, IPH, & Treasury Wine shares are storming higher
• ANZ (ASX:ANZ) share price rises, Q1 profit surges 54%
• CSL (ASX:CSL) share price pops on increased dividend
• The Seven Group (ASX:SVW) share price is slipping today despite dividend bonus

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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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 IPH Ltd (ASX: IPH) share price is charging higher today, up 8% in late morning trade.

The share price gains come following the release of the intellectual property services provider’s results for the financial year ending 31 December (H1 FY21).

Financial results for H1 FY21

In this morning’s ASX release, IPH reported it had managed a strong half-year, despite headwinds from a stronger Aussie dollar and the market disruptions caused by COVID-19.

The company reported statutory net profit after tax (NPAT) of $26.8 million. That was down 1.5% from the $27.2 million reported in the prior corresponding period(PCP). Diluted earnings per share (EPS) also slipped to 12.4 cents from 12.9 cents in H1 FY20. IPH said an increase in non-cash amortisation of intangible assets had impacted the statutory results. This was directly related to its Xenith IP acquisition

Underlying NPAT increased 3% to $37.6 million while underlying earnings before income, tax, depreciation, and amortisation (EBITDA) grew 2% to $61.7 million.

Operating cash flow increased by 39% year-on-year.

The company also bumped its interim dividend up by 4% from the prior corresponding half year. Resulting in 14 cents per share (cps), 50% franked.

Commenting on the results IPH CEO, Andrew Blattman said:

Our Asian IP business continues to perform well. While revenue was down slightly on the prior period, we continued to generate margin accretive earnings from leveraging our extensive network across the region, including a 39% increase in client patent and trade mark referrals from acquired companies (AJ Park and former Xenith businesses)…

Our business in China and Hong Kong SAR performed well in the half with excellent filing growth of 18% and 23% respectively. In Singapore, IPH Group maintained its number one patent market share of 23.2% for the calendar year ended 31 December 2020.

IPH also remains the market leader in Australia. It reported a combined group patent market share of 36.8% for the half-year. This is said to include Baldwins on a proforma basis and excludes innovation patents.

Share price snapshot

The IPH share price has yet to recover from the hit it took in 2020. This was due to the wider COVID-driven market selloff that occurred last year. Over the past 12 months, shares are down 33%. That compares to a 3% loss on the All Ordinaries Index (ASX: XAO).

With today’s intraday gains factored in, the IPH share price is up 1% so far in 2021.

More reading

• Why CSL, Domino’s, IPH, & Treasury Wine shares are storming higher

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends IPH Ltd. The Motley Fool Australia has recommended IPH 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 Iress Ltd (ASX: IRE) share price is rising this morning after releasing its 2020 full-year results (FY20). At the time of writing the financial software company’s shares are 6.5% higher at $10.44.

What’s moving the Iress share price?

Steady sustainable returns for shareholders

The results for FY20 were ahead of the company’s reinstated guidance as a result of solid momentum in the fourth quarter.

In the results announced this morning, Iress reported a 6.6% lift in operational revenue to $542.6 million for the year. Recurring revenue was responsible for 90% of this, growing 8% from the previous year.

Looking at profits, the company’s net profit after tax (NPAT) fell 9% to $59.1 million. This flowed onto a 15% decrease in earnings per share (EPS) for shareholders, at 32.3 cents.

In the Chair and CEO’s letter, it was pointed out that although Iress experienced growth during the year, the company remains impacted in locations still hampered by COVID-19. As stated in the letter, “While our significant growth opportunity remains intact, project timing and new business development have been delayed with revenue growth deferred.”

Throughout the year the company completed 3 acquisitions: BC Gateways, O&M Systems, and OneVue. Following this, Iress raised $175 million in equity raising to strengthen the balance sheet and prepare for future opportunities. Aided by stronger cash conversions, the company increased cash assets to $63.141 million from $33.386 million.

Outlook for the year ahead

Iress is guiding for an NPAT of $63 million in FY21, representing a 6.6% increase on the current result.

Management expects low single-digit growth in Australian financial advice and super revenue. In the medium-term, the company sees opportunities for this business with the risk of seasonal movements.

The company will continue to focus on its Iress Cloud for client and Iress benefit rollout momentum. In addition, management is seeking to maintain high-quality recurring revenue to continue to deliver growth and higher margins.

Iress chair succession

Announced alongside today’s results, the current chair Tony D’Aloisio will step as director and chair of the Iress board. Further, D’Aloisio will take this action at the end of the AGM on 6 May. D’Aloisio’s tenure on the board began in 2012, and he assumed the role of chair in 2014. Commenting on the news, D’Aloisio said: 

I am a firm believer in Board and chair renewal and after more than eight years as a director and the past six years as chair, this is the right time both for me and for Iress to step down. Being director and chair of Iress has been a privilege and I am confident that Iress will continue to adapt and grow in the years ahead.

D’Aloisio will be replaced by Roger Sharp, who was added as a non-executive director effective as of today. 

More reading

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• Got money to invest? Here are 3 ASX shares to buy
• Got money to invest? Here are 3 ASX shares to buy

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has recommended IRESS 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 OZ Minerals Limited (ASX: OZL) share price outperformed this morning after it posted a 30% increase in net profit.

The Oz Minerals share price jumped 0.6% to a 13-year high of $21.75 when the S&P/ASX 200 Index (Index:^AXJO) struggled at breakeven at the time of writing.

The copper miner’s gains stand in contrast to the mining sector, which is trading in the red. The Sandfire Resources Ltd (ASX: SFR) share price lost 0.8% to $5.25 while the BHP Group Ltd (ASX: BHP) share price shed 0.5% to $48.35.

Oz Mineral’s reports higher profits and sales

Oz Minerals reported a $48.7 million increase in its FY20 underlying net profit to $212.6 million as group revenue improved 21.2% to $1.34 billion. The miner’s financial year is the same as the calendar year.

The miner’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) also jumped by 31.1% to $606.3 million.

Gold to take more credit than copper

It wasn’t so much copper that allowed management to deliver the improved result. It was gold.

Gold is a by-product of copper mining and is sold to recoup costs. The net Australian-dollar gold price rose by 20% during the year compared to an 11% increase in the copper price.

What’s more, Oz Minerals managed to sell more gold in 2020 than the year before, but the same can’t be said about copper.

“Copper sales were lower following the depletion of high-grade copper ore stockpiles and the prioritisation of processing high-grade gold stockpiles at Prominent Hill,” said the miner in its ASX statement.

“However, this was partially offset by the first year of production at Carrapateen.”

Copper could outdo gold in 2021

No doubt, it’s the gold credits that helped Oz Minerals achieve an enviable 45% operating margin and lifted operating cash flows by 8% to $550 million.

But copper may soon be playing catchup at a time when gold’s bull run seemed to have stalled. The analysts at Citigroup are forecasting copper to hit US$10,000 a tonne in 2021-22 as the world decarbonises.

The rise of electric vehicles and renewable energy sources require a lot of copper, according to the broker. Under its “bull case” scenario, copper could even hit US$12,000 a tonne compared to its current price of around US$8,400 a tonne.

Oz Minerals’ outlook

“2021 will be a year where OZ Minerals will move into our next phase of growth with major growth catalysts at all of our assets,” said the miner’s chief executive Andrew Cole.

“The focus will be on safe operational delivery, on starting early works on the Carrapateena block cave following Board approval, advancing the project studies at Prominent Hill, Carrapateena and West Musgrave, and developing out the Carajás Hub strategy in Brazil. 

We’ll also be continuing our exploration activities where possible.”

More reading

• The Seven Group (ASX:SVW) share price is slipping today despite dividend bonus
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 dips, EML soars after reporting, Appen sinks
• 2 high-yielding ASX 200 shares
• Why the BHP (ASX:BHP) share price just blasted into record territory

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and OZ Minerals Limited. Connect with me on Twitter @brenlau.

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 late morning trade the S&P/ASX 200 Index (ASX: XJO) has fought back from an early decline and is pushing higher. The benchmark index is currently up 0.2% to 6,898.8 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are storming higher:

CSL Limited (ASX: CSL)

The CSL share price is up 2.5% to $288.50 following the release of its half year results. For the six months ended 31 December, CSL reported a 16.9% increase in revenue to US$5,739 million and a 45% jump in reported net profit after tax to US$1,810 million. This was driven by growth in its core immunoglobulin portfolio, the successful transition to its own distribution model in China, strong growth HAEGARDA sales, and exceptionally strong demand for influenza vaccines.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price is up a further 5.5% to $110.73. Investors have been buying the pizza chain operator’s shares after brokers responded positively to its half year results. Analysts at Goldman Sachs retained their conviction buy rating and lifted their price target to $112.60. Whereas analysts at Macquarie have held firm with their outperform rating and increased their price target to $120.00.

IPH Ltd (ASX: IPH)

The IPH share price has jumped 8% to $6.61. The catalyst for this was the release of the intellectual property services provider’s half year results. IPH reported a 3% increase in underlying net profit after tax to $37.6 million. This was despite facing notable currency headwinds during the half. This led to a 14 cents per share interim dividend being declared, up 4% year on year.

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine share price has surged 12% higher to $11.38 following the release of its half year results. For the six months ended 31 December, the wine company reported a 23% decline in EBITS to $284.1 million. The company also revealed plans to implement a new divisional operating model. This aims to maximise the benefits of a separate focus across its brand portfolios, rather than regions. From FY 2022, the company will operate under three new internal divisions: Penfolds, Treasury Premium Brands, and Treasury Americas.

More reading

• CSL (ASX:CSL) share price pops on increased dividend
• Leading broker tips Domino’s (ASX:DMP) share price to go even higher
• CSL (ASX:CSL) share price on watch after 45% jump in half year profit
• 5 things to watch on the ASX 200 on Thursday
• 3 fantastic ASX shares to buy for strong returns

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends IPH Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia has recommended IPH 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 Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price is rising after the big four bank announced a substantial rise in the FY21 first quarter profit.

ANZ told investors that it achieved strong performance in volatile trading conditions which highlighted its disciplined execution of its strategy as well as maintaining a simpler and well balanced portfolio of businesses.

First quarter profit numbers

The major ASX bank reported that it generated statutory profit after tax of $1.62 billion. ANZ also made cash profit from continuing operations of $1.81 billion, up 54% compared to the quarterly average from the second half of FY20.

ANZ reported that its underlying net interest margin (NIM) improved by 3 basis points compared to the second half of FY20 to 1.60%. The NIM was helped by the mix of assets and deposits, deposit and asset pricing, and wholesale funding.

The combination of higher volume growth and higher margins drove revenue up 4% for the quarter when excluding the impact of the markets business.

ANZ said that its common equity tier 1 (CET1) capital ratio improved from 11.3% at 30 September 2020 to 11.7% at 31 December 2020.

Loan book

ANZ said that its credit quality was improving. The total provision result for the three months to 31 December 2020 showed a net release of $150 million. This comprised an individually assessed provision charge of $23 million and a collective provision release of $173 million. The collective provision release is equivalent to around 10% of the $1.7 billion set aside during FY20.

ANZ said that the collective provision release was prudent when balancing the improvement in the economic outlook at the end of the December quarter with the level of ongoing uncertainty.

At 31 December 2020, the credit provision balance of $4.8 billion had additional reserves of $1.4 billion compared to the pre-COVID-19 levels at 30 September 2019.

ANZ said that approximately 1% of home loan customers in Australia and New Zealand have been transferred to hardship. In Australia, 84% of deferred home loans have rolled off with 98% returning to repayment.

The bank said that the number of active housing account deferrals is 15,000, representing $6 billion of loans. The number of business accounts still in deferral is 2,500 representing $1 billion of loans.

Management’s thoughts on the outlook

ANZ CEO Shayne Elliot was quoted, saying:

ANZ is well positioned heading into the remainder of 2021 with good momentum in our core activities. The done to simplify and de-risk the business over the past five years set us up well and we have the capital, liquidity and operational capacity to continue to support our customers and the broader economy through what remains a volatile period.

Initial reaction for the ANZ share price

The market’s reaction has been positive to the result, with the ANZ share price currently up more than 2%.

Analysts have also been having their say. The Australian Financial Review quoted Evans and Partners analyst Matthew Wilson:

ANZ trades at a 7 per cent price-to-book discount to Westpac, yet it is in far superior shape with external focus and much less required self-help.

More reading

• ANZ (ASX:ANZ) share price on watch after $1.8 billion Q1 cash profit
• 5 things to watch on the ASX 200 on Thursday
• Westpac (ASX:WBC) share price on watch as it delivers $2bn quarterly profit result
• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• 2 high quality ASX dividend shares with generous yields

Motley Fool contributor Tristan Harrison 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 Douugh Ltd (ASX: DOU) share price is plummeting despite the release of a positive update on its first 3 months of trading. In the first hour of trade, the financial wellness app provider’s shares are down more than 9% to 25 cents.

Below, we take a look at what Douugh released to the ASX market.

What did Douugh announce?

According to this morning’s release, Douugh reported robust growth for its first 3 months of operation. However, investors seem unpleased with the company’s latest report, sending the Douugh share price down.

In its announcement, the company advised customer and transactional numbers have surged since its market launch on 17 November 2020.

In particular, customer numbers soared to 8,001, reflecting a compounded monthly growth rate (CMGR) of 364% (month-over-month since November 17). This translated to a total of US$804,297 deposits received. This was an increase of 93% on the CMGR.

In addition, card spend also rose to US$281,512, a jump of 92% on the CMGR.

Douugh further noted that as marketing and onboarding channels are further optimised, it expects customer acquisition run rates to flourish.

For the end of Q2 FY21, the company recorded a cash balance of $16.02 million in the bank. The funds will be proactively used to drive customer growth through a number of measures. They include prioritised product development based on customer feedback, the use of artificial intelligence (AI) from its Autopilot feature, and increase marketing programs.

Douugh also mentioned that its financial wellness app has been downloaded 29,034 times on Apple’s iOS platform.

Management commentary

Douugh founder and CEO, Andy Taylor, touched on the company’s progress, saying:

Whilst it’s early days, we are delighted with our initial traction and the achievement of first revenues. We have been focused on testing and optimising digital media acquisition channels as well as refining our onboarding process.

We have developed a robust and fully automated fraud scoring matrix, and work has begun on the development of the Android App, which we plan to launch in Q4FY21.

…As we increase acquisition spend, our focus continues to be on increasing the sign-up conversion rate and lowering the overall CAC. We will introduce our own integrated Member-get-Member program – providing a monetary incentive to Douugh users for inviting people to sign up to the platform – coupled with the onboarding of Affiliate marketing partners (including social media and YouTube influencers) to expand our distribution channels.

About the Douugh share price

The Dough share price has gained more than 730% since its listing of 3 cents in early October last year. The company’s shares hit an all-time high of 49 cents in November.

Based on the current share price, Douugh has a market capitalisation of roughly $173 million.

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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.

The post Douugh (ASX:DOU) share price plummets 9% today despite strong start appeared first on The Motley Fool Australia.

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