The share price of growing mobile commerce company Mobile Embrace Ltd (ASX: MBE) took a 7% dive today despite the release of strong preliminary full year results.

Highlights included:

  • Revenue of $60.6 million, up 83% year on year from $33.01 million.
  • EBITDA of $9.5 million, up 86% from $5 million in FY 2015.
  • Net profit after tax of $4.9 million, up 63% year on year from $3 million.
  • Basic earnings per share of 1.26 cents, up 57% year on year from 0.8 cents.
  • Cash balance of $18 million.

So what?

I believe this is a great result from Mobile Embrace and was impressed to see it beat the upgraded earnings guidance it provided to the market back in May. The company finished the year with a bang thanks to a very strong fourth quarter which accounted for almost a third of its full year revenue.

The great result has been fuelled by the company establishing four new international territories for direct carrier billing. Direct carrier billing allows consumers to purchase products or services online and have the costs charged automatically to their phone bills.

As well as this Mobile Embrace has also established four additional international territories for its mobile marketing. This expanded its operational infrastructure whilst increasing overall profitability according to management.

Now what?

This is now five consecutive years of revenue and EBITDA growth. Thanks to a number of recently announced deals expanding its presence into Pakistan, Norway, and the United Kingdom, I believe Mobile Embrace is positioned to make it a sixth year of growth.

The deal with Telenor Pakistan is one that really caught my eye. Pakistan has over 133 million mobile subscribers, but only around 1.5 million credit card users. This could prove to be one of a number of lucrative markets for the company to operate in.

Much like fellow tech shares XERO FPO NZX (ASX: XRO) and Appen Ltd (ASX: APX), Mobile Embrace has a highly scalable business that requires low capital expenditures and provides strong free cash flow potential. These certainly are great traits in my opinion.

Based on these results its shares are now changing hands at a little under 28x full year earnings. Considering its strong growth prospects and robust balance sheet I believe today’s sell off has created a great entry point for a long-term investment.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.