What: Double-digit growth in revenue and earnings from the owner of leading online comparison site iSelect Ltd (ASX: ISU) has failed to inspire buyers today with the shares losing around 8% after the release of the company's full-year results.
So What: For the 12 months ending June 30 on a normalised basis revenue increased 15% to 157.2 million, earnings before interest and tax (EBIT) gained 10% to $25.1 million, net profit after tax and earnings per share both jumped 17% to $21.4 million and 8.2 cents respectively.
The solid growth was due to success in diversifying its business lines. These initiatives have included sales into the Energy sector, along with further market share gains across the health insurance sector.
Growth in new business has led to less reliance on the health vertical with health shrinking as a percentage of overall business from 70% to 59%. This was in part thanks to 77% revenue growth in the Energy business. The household utilities and financial segment (HUF) meanwhile experienced growth of 74% with margins expanding to 17%.
Positive metrics reported included sales lead conversions jumping 3.1% to 9.7% and sales units gaining 45%. A 10% unit sales increase in the health vertical was described by management as particularly pleasing.
iSelect's business continues to develop and expand with up-front revenue growing by 26%, but trail revenue declining by 15% over the period. The change in revenue mix also resulted in a revenue per sale decline of 17% to $457. It was also disappointing to see leads fall 1%.
Now What: Looking forward and management has provided guidance for an EBIT range between $26 million and $28 million, with the earnings significantly weighted towards the second half. Shareholders will be pleased to know that iSelect's board is considering a share buy-back for up to 5% of shares outstanding and also considering the payment of a fully franked dividend.
With the shares trading at $1.60 after falling 8% this morning the stock is trading on a trailing price-to-earnings ratio of 19.5 – investors were no doubt hoping for a stronger outlook statement from management to support the current multiple.
