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5G Networks share price rises 15% on record quarterly result

The share price of 5G Networks Ltd (ASX: 5GN) is up 15.57% to $0.96 at the time of writing following today’s release of its quarterly activities report and 4C.

Record operating cash flow for 5G Networks

5G Networks is a telecommunications carrier that operates across Australia. It provides data networks, data centre and cloud services, and managed services in the business-to-business market.

For the quarter ended 31 December 2019, 5G Networks achieved a record $2.0 million of operating cash flow. The record result was attributed to the migration of customers to high margin annuity services and synergy implementation. Year-to-date operating cash flow of $3.3 million was up 58% over the prior corresponding period. 

Quarterly cash receipts were $14.6 million and half year cash receipts totalled $28.1 million, a 19% increase over the prior corresponding period. Moreover, the company booked $4.6 million of new and re-signed revenue for the half. At quarter end, 5G Networks had a cash balance of $2.8 million and an additional $2.2 million in available debt to fund acquisitions. 

Other highlights from the quarter include the successful launch of the company’s indirect channel for faster penetration into new markets. Of particular note was the signing of Servers Australia as the first indirect channel partner, which was announced last week.

The agreement enables 5G Networks to provide capacity across its city-based data centres for an initial 2-year term with a minimum spend of $750,000. Servers Australia is one of Australia’s largest hosting partners and the signed agreement offers the opportunity to resell the 5G Networks cloud solution in conjunction with high-speed fibre networking. 

Foolish takeaway

5G Networks has pursued an aggressive acquisition strategy that has rewarded shareholders with a 76% gain over the last year. It has also resulted in a lot of volatility, with the stock swinging between $0.47 and $1.72 during the period. The company is worth monitoring for small-cap investors as it continues to gain traction in a growing market. 

Other small-caps of note for investors to monitor include Alcidion Group Ltd (ASX: ALC), Audinate Group Ltd (ASX: AD8) and Mach7 Technologies Ltd (ASX: M7T)

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Motley Fool contributor Tim Katavic has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Alcidion Group Ltd, AUDINATEGL FPO, and MACH7 FPO. The Motley Fool Australia has recommended Alcidion Group Ltd and AUDINATEGL FPO. 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.