Shares of billing and customer care software company Hansen Technologies Limited (ASX: HSN) have tumbled nearly 5% today, despite it reporting a 54.4% increase in net profit after tax (NPAT).
But before investors get too worried about the result, it is important to note that the shares have gained more than 70% over the past year, so there was always a good chance of investors taking some profits today.
Some of the main highlights from the result included:
- Operating revenue increased by 40% to $148.9 million
- EBITDA increased by 45% to $45.4 million
- EBITDA margin increased from 29.4% to 30.6%
- NPAT increased by 54.4% to $26.1 million
- Earnings per share (EPS) increased by 42.7% to 14.7 cents
- Final dividend of 4 cents per share including a 1 cent per share special dividend, bringing the full year dividend to 7 cents per share
Overall, it was a pretty impressive result and one that maintained Hansen's growth trajectory, as highlighted by the charts below.
Pleasingly for investors, the company's acquisition of TeleBilling exceeded expectations and provided a $24.6 million increase in revenues for FY16. Organic growth was also strong and this added an additional $10.2 million in revenues. Currency tailwinds helped to boost revenues by $7.9 million.
Hansen generated free cash flow of $25.3 million over the year and this allowed the company to pay off $10 million in debt, leaving the company virtually debt free.
Outlook
In line with previous results, Hansen is once again forecasting for another year of growth in FY17, albeit at slightly lower rates.
Organic billing revenue is expected to grow at 4%-8% and the company expects a more typical contribution from TeleBilling following a backlog of work in FY16.
Based on these factors, the company expects to generate revenue in the range of $165 million to $175 million and, if achieved, this would represent growth of 10.8% to 17.5% on FY16. Hansen is also targeting an EBITDA margin between 25%-30%, which is slightly below the 30.5% achieved in FY16.
Valuation
At $4.30 per share, Hansen trades on a trailing price-to-earnings ratio of 29x and offers a trailing dividend yield of 1.6%.
Foolish takeaway
Hansen's shares certainly appear expensive on face value but I think this is justified when you consider its growth prospects, track record and the industry dynamics. The company operates in a market with significant barriers to entry and also enjoys extremely strong customer loyalty.
While I probably wouldn't rush out to buy the shares today, a significant pullback from current levels would certainly present an attractive buying opportunity.
