- Shares in Spirit Telecom (ST1) are surging today after the company’s latest quarterly market update in which it highlighted some strong financial results
- Over the September quarter, Spirit pulled in $15.6 million in revenue — up 149 per cent on the same time last year and 30 per cent on the June quarter
- The revenue growth was underpinned by a string of acquisitions over the quarter
- The company has been working to become a one-stop-shop for the IT and telco needs of the small-to-medium business sector
- To reflect its business transformation, Spirit is changing its name to Spirit Technology Solutions, still under the ticker code ST1
- ST1 shares are up just over five per cent this afternoon, currently trading for 39 cents each
Shares in Spirit Telecom (ST1) are surging today after the company’s latest quarterly market update in which it highlighted some strong financial results.
The company had a busy first quarter of the new financial year. Since July, Spirit has bought four companies, signed a memorandum of understanding (MoU) with fellow ASX-listed Opticomm (OPC) on the NSW government $100 million GIG state tender, and raised $23.2 million through a placement and share purchase plan.
Revenue boost
The result of the hard work is a new quarter of record revenue for Spirit. Over the quarter, the company pulled in $15.6 million in revenue — a 149 increase on the same quarter last year and a 30 per cent increase on the June 2020 quarter.
In line with this, recurring revenue for the September quarter came in at $9.2 million, which is 78 per cent up on the same time last year. Solutions and Projects (S&P) revenue was up 507 per cent year-on-year at $6.2 million for the quarter.
On the back of all this, Spirit had a neat $30.1 million worth of cash and debt available at the end of September.
Spirit’s Managing Director, Sol Lukatsky, said this has all been part of the company’s work to fill a gap in Australia’s A$143 billion telco and IT services industry, where the big players are falling short.
“It’s about giving customers one point of contact, one monthly bill, access to all of the products they need to support their business in a digital world — and with great service,” Sol said at the company’s annual general meeting (AGM) today.
Supporting this focus on becoming a one-stop-shop for the telco and IT needs of the small-to-medium business world, Spirit’s business-to-business (B2B) total contract value (TCV) for the quarter came in at $8.4 million — up 124 per cent year-on-year and 159 per cent quarter-on-quarter.
Strategic acquisitions and future growth
A key driver of growth for Spirit has been a recent string of strategic buys, with 11 companies taken over since April 2019.
Sol said the latest acquisitions — VPD Group, Reliance, Beachhead, and Altitude IT — have grown the company’s geographic footprint and expanded its national network for reselling products through Spirit Solutions Partners.
Looking ahead, he said the company has over 70 new resellers signed with new mobile products to be launched in coming quarters — solidifying some important growth initiatives for the second and third quarters of FY21.
On top of this, Spirit said it has several acquisition targets under consideration and due diligence for some more upcoming buyouts.
Of course, a major catalyst for the company’s growth has been the Spirit X platform, which is the largest aggregator of B2B internet products in one online sales portal.
“The platform provides a channel for sales generation and organic growth and we saw an impact on revenue as soon as we launched in December last year,” Sol explained.
New Spirit, new name
Released in tandem with the company’s market update is a new identity for the company.
Spirit Telecom is set to change its name to Spirit Technology Solutions, still under the ticker code ST1.
According to Sol, the name change is designed to reflect the company’s expanded offering and the transformation of its business.
Shareholders seem impressed with today’s update and the name change. Shares in the company were up over 10 per cent in early action but have since pared back the win to 5.41 per cent. At 2:04 pm AEDT, ST1 shares are worth 39 cents each.