Melbourne-based software company Whispir [ASX:WSP] has revealed widening earnings before EBITDA (interest tax, depreciation, and amortization) losses of $8.8 million as COVID-related revenue becomes a thing of the past and other partnerships conclude.
But the tech corporation refuses to accept defeat, insisting FY2023 will move towards an EBITDA-positive era, expecting revenue for the full year to the range of $58–62 million.
Interestingly, WSP’s share price was trending up more than 4.5% in the share charts early on Friday, mere hours after releasing its half-year report.
WSP is still down 78% in the past year and is well under the market average by 81%.
Source: tradingview.com
Whispir’s earnings plummet for 1H 2023
For the first half of FY23, the software group reported total revenue had decreased by $10.6 million to $28.75 million compared to the same time the year before.
WSP said this was due to the decline of COVID vaccine sales, which went down in all three major state-based health affiliates, taking overall sales down 30%. In Australia and New Zealand, Whispir said revenues fell in the last period by $11.23 million in relation to concluding COVID business.
Not counting the COVID segment, revenue in ANZ was majorly flat — profit was hampered by other macroeconomic conditions, such as increased inflation, which affected customer expansion plans.
On the other hand, Whispir noted sales picked up in Asia, especially with additional channel partnerships adding to an already expanding network of its existing sales pipeline. Sales revenue in Asia was up 26% at the same time last year, by $819,000.
In North America, Whispir noted revenue again fell 23% with $247,000 as the group lost two of its major customers in the half year.
WSP reported gross margins of 58.6%, a slight improvement on the previous period’s 58.4%, as the revenue mix changed, and the company focused on productivity improvements. The company is also exploring networks in large scaled economies in developing regions.
Having said that, the negative slide in revenue still impacted gross profit, reducing it by 26.8% to $16.85 million.
To further complicate matters, inflation boosted operating expenses with an increase of 2.2% to $30.6 million, a result underpinned by redundancy expenses and restructuring costs. Sales and marketing expenses also increased by 2.7%, and R&D went up by 27.6%.
Due to the plummeting profits in the half year, the software company has chalked up a 140% loss in EBITDA, totalling $8.8 million (down from $6.93 million). Including tax, the group’s losses widened to $13.7 million.
The group closed the half year with $9.4 million in cash, which was down from $26 million in June. However, it should still be noted that WSP does not hold any debt.
The company anticipates revenue from $58–62 million for the full year and positive EBITDA for the second half of FY23. WSP believes itself to be on track for positive cash flow as the second half progresses.
Whispir expects partnerships in Singapore and the Philippines to drive an increase in customers, with ‘numerous’ signings expected in the second half.
Callum Newman’s five bargain stocks 2023
2022 was a year fraught with more and more challenges, and we’re not quite out of the woods yet.
With many of the effects of the pandemic still lingering, we were handed an influx of new challenges — inflation, the war, continually rising rates, floods…all affecting households and businesses alike.
Many companies, big and small, have had to lay off workers and slim-down business strategies to weather the inflation-shaped storm.
The silver lining is that it’s in times like these that some real ASX stock bargains can emerge — if you know where to look.
Our small caps expert Callum Newman has done the hard work for you.
He’s found five of what he calls ‘the best stocks to own in Australia’ right now.
And the best part is, right now, they don’t even cost that much.
Click here to discover Callum’s top five Aussie bargain stocks.
Regards,
Mahlia Stewart,
For Money Morning
