Why the Hansen Technologies Limited share price is tumbling today

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.

Source: Company Presentation

Source: Company Presentation

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.


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.


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.

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Motley Fool contributor Christopher Georges has no position in any stocks mentioned. The Motley Fool Australia owns shares of Hansen Technologies. 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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