Motley Fool Australia

Rhipe share price surges 6% after posting 181% profit increase

Shares to buy 2019

The Rhipe Ltd (ASX: RHP) share price has surged 6% in early trade on the ASX after the company reported a 181% increase in net profit after tax (NPAT) to $3.0 million.

The Results

Gross sales increased 22% year-on-year to $114.7 million while net revenue was up 21% to $21.5 million in a strong year for the IT company. Operating profit, representing reported EBITDA excluding FX movements, non-cash share-based expenses and one-off costs, increased a whopping 117% to $5.6 million, albeit off a low base.

Reported EBITDA for the subscription software company grew 66% on prior corresponding period (pcp) to $4.6 million which was ultimately the catalyst for the huge profit leap during the year. The company’s cash position also surged, up $5.9 million pcp to $23.2 million as the balance sheet continues to strengthen.

The company continues to see sales growth across Australia and New Zealand as its primary growth driver while the Asian segment saw sales increase 33% to $32 million.

On the product side, Microsoft O365 ARR Sales increased 84% pcp to $47.4 million in sales while Microsoft Azure Sales increased 180% pcp to $14.9 million.

The Rhipe share price hit a 52-week high on Friday to close out the week at $1.545 per share and has continued this momentum following this morning’s release.

The Information Technology sector continues to grow strongly, buoyed by a bullish start to the year for IT stocks within the S&P500 in the USA.

The Wrap

Rhipe’s continued growth is impressive and looks to be on the path to become the next Altium Limited (ASX: ALU) or Afterpay Touch Group Ltd (ASX: APT). I’m personally not a big fan of the IT sector at the moment but I think Rhipe looks like a good option for those looking to ride the next tech growth stock to the top.

Where to 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 more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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

*Returns as of February 15th 2021

Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Altium. 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 Scott Phillips.

Related Articles…