Aconex Ltd beats guidance: Is it a buy?

Aconex Ltd (ASX:ACX) is a niche software provider that the market is betting has significant growth ahead of it.

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Credit: Tom Gores

What: For a company boasting a market capitalisation of $670 million, construction industry software solution provider Aconex Ltd (ASX: ACX) sure has flown under the radar of many investors since its initial public offering (IPO) in December 2014.

It hasn’t flown under the radar of all investors however; Aconex’s share price has enjoyed a 120% rally since first trading on the ASX!

So What: Aconex might now start to garner more attention from the wider market thanks to the release of its inaugural full year results as a listed company, particularly given those results beat both prospectus forecasts and updated guidance.

Here are the key stats:

  • Revenue up 24% to $82.4 million
  • Australia and New Zealand revenues up 15%
  • International revenues up 33%
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) from core operations of $3 million
  • Net profit after tax (NPAT) a loss of $2.5 million
  • Cash and cash equivalents amounted to $29.1 million reflecting positive cash flow from operations and proceeds from the IPO

Now What: Management noted that Aconex’s global market penetration continued to expand including with leading industry players such as Lend Lease Group (ASX: LLC) and Cimic Group Ltd (ASX: CIM) and via winning new customers in the Americas and the Middle East.

Guidance provided for the first half of 2016 is for total revenue of between $51m and $53m, EBITDA from core operations of between $5.5m and $6.5m and NPAT from core operations of between $2.5m and $3.5m.

The half-year guidance suggests the 2016 full year results will show significant growth year-on-year, which is good for shareholders as Aconex’s shares appear to have significant growth expectations already priced in.

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Motley Fool contributor Tim McArthur 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.

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