The IPH Ltd (ASX: IPH) share price is up 3.2% in morning trade already to $8.84 per share (at the time of writing), after the company reported a 31% surge in full-year net profit this morning.
What did IPH report this morning?
The Aussie intellectual property (IP) law group has become the latest stock in the S&P/ASX 200 (INDEXASX: XJO) index to report strong earnings in August 2019, boosting net profit after tax (NPAT) to $53.1 million in FY19.
IPH increased full-year revenue by 15% on the prior corresponding period (pcp) to $259.5 million while earnings before interest, tax, depreciation and amortisation (EBITDA) rose 23% to $85.9 million.
IPH's biggest revenue and EBITDA drivers were the company's Australia and New Zealand IP and Asia IP business segments.
Diluted earnings per share surged 29% higher to 26.7 cents per share (cps) while on an underlying basis, NPAT and EBITDA both surged 21% higher for the year.
In terms of cash flow, net cash flow surged to $11.9 million (up from $2.2 million in FY18) as free cash climbed 33.6% to $56.4 million.
The statutory results have been skewed slightly by the company's recent Xenith IP Group Ltd (ASX: XIP) acquisition, given they include the interim dividend from its Xenith investment and gain on disposal of its Practice Insight business.
The company provided an update on its Xenith acquisition, with the Scheme of Arrangement successfully implemented on 15 August and now 100% owned and part of the IPH Group.
Management also outlined its strategic priorities for FY20, with the successful Xenith integration top of the list and maintaining market share in the region another key focus.
Foolish takeaway
While the headline results appear strong for IPH, the significant Xenith investment has made year-on-year comparisons more difficult in FY19.
Overall, its hard to argue that a 31% surge in net profit is anything but positive for investors, but given the IPH share price is currently trading at 41x earnings, significant growth is built into its current valuation.
