Software communications corporation Symbio Holdings [ASX:SYM] was climbing in share value by more than 4%, even after posting a 34% decline in its profits for the half year.
The group posted $4.4 million in net profit, down on the same time the year before. Yet, in recurring revenue, the group improved 5% with the total of $57.2 million.
Symbio also said it would look at some ‘strategic’ opportunities in acquisitions that could help improve its market share.
SYM’s shares were trading at $1.90, having gained 12% in the past month, but still trading less than it was a year ago. The share price has dropped 67% in the last 12 months:
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Symbio’s lower earnings call for new opportunities
The communications tech group broadcast its half-year results for the period ending December 2022, with SYM stating a decline in net profit (after tax) had decreased 34% to the total of $4.4 million — down from the $6.7 million taken in the previous half.
Earnings before interest and tax, depreciation, and amortisation went down 33% to $11.6 million, whereas previously the group had earned $17.3 million.
However, there was some strength shown in Symbio’s recurring revenue, which had increased 5% to $57.2 million, up from the $54.4 million calculated for the first half of 2022. Having said that, the recurring gross margin was mostly flat at $32.1 million.
SYM’s earnings per share in the half had been minimal, earning 0.1 cents per share in the half, whereas in the first half, shareholders were doing much better with 5.3 cents a share.
The group announced an interim dividend of $1.70 per share, fully franked.
Symbio’s cash on hand at the end of the period was reported as $38.1 million, with no debt outstanding.
Having pulled through a relatively low half-year, recurring revenue showed some strength against top line metrics even as profit and EBITDA slipped. The group has therefore decided to reaffirm its original FY23 EBITDA guidance of $26 million to $30 million, which is largely unchanged since the group’s last posting in December.
Symbio’s CEO Rene Sugo spoke of cuts and caution exercised in the half year:
‘In response to the global economic slow-down that was felt particularly by the technology sector in which Symbio and a lot of its customers operate, we immediately reduced expenditure by implementing a hiring freeze and reducing discretionary spending in travel, sales, and marketing. We are also reducing our FY23 capex by $2 million by deferring selected product development and projects. The company is focussing on improving profitability and achieving additional operating efficiencies to return to EBITDA growth in FY24.’
Sugo remains optimistic its cloud software will prevail while hybrid working remains a global trend. He also commented the company plans to expand into ‘high-tech Asian markets’, to address growing market share and long-term growth.
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Regards,
Mahlia Stewart
For The Daily Reckoning
