How Aconex Ltd just quadrupled its full year profit

Aconex Ltd (ASX:ACX) shares will be on watch today after posting a 50% increase in sales. Is it time to buy this fantastic growth share?

| More on:

The shares of software-as-a-service company Aconex Ltd (ASX: ACX) will be on watch today after it announced its full year results. The leader of digital innovation in the construction industry certainly had a strong year to post total revenue of $123.4 million, up 50% year on year.

Revenue from the Australia-New Zealand market rose 35%, whilst international revenues jumped 61% thanks to a combination of acquisitions and strong organic growth. Whilst Aconex did receive a boost from favourable currency fluctuations, on a constant currency basis revenue still increased by 31% on last year.

A lot of the justification for investing in Aconex despite its shares trading on extreme multiples has been that as it scales, its profitability will increase. I believe these results have gone some way to proving this to be the case.

Earnings before interest, tax, depreciation, and amortisation grew an impressive 350% to $13.6 million. Even better though was the news that net profit after tax from core operations came in at $9.9 million, compared to a $2.5 million loss last year.

The company’s total cash and cash equivalents rose to $52.5 million, compared with $29.1 million in FY 2015. Net operating cash flows from core operations for FY 2016 were $9.2 million, compared with $6 million for FY 2015.

Overall I think this is a strong result and shareholders should be very happy with it. But how the market reacts could be a different story. A number of growth shares such as Domino’s Pizza Enterprises Ltd. (ASX: DMP) were punished during earnings season for not delivering above and beyond expectations.

Whether that happens to Aconex today we’ll soon find out, but if it does I think it could be viewed as a great buying opportunity for a long-term investment. This is after all a company with a very bright future ahead of it. Aconex has a market-leading position in a $10 trillion construction industry which is rapidly going digital. As far as I’m concerned its growth story is only just being written.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

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.

More on ⏸️ Investing