The Damstra Holdings Ltd (ASX: DTC) share price is rocketing 12.2% higher so far today after the market reacted very favourably to the ASX tech share's 1H20 results.
This marks the company's first results after its October 2019 initial public offering on the ASX.
Damstra is an Australian-based provider of workplace management solutions with operation in Australia, New Zealand, the United States, the United Kingdom and a global operations centre in the Philippines.
Strong revenue and earnings growth
For the first half of FY20, Damstra delivered a significant 44% increase in revenue to $10.1 million. With this, revenue is now tracking ahead of prospectus forecast FY20 revenue growth of 39%, driven by new contract wins and cross-selling product suites to its existing client base.
The company recorded earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.6 million. This was up more than 3.7 times from the $0.7 million it had achieved in the prior corresponding period (pcp).
Damstra also demonstrated strong operating leverage, with a 10.6% increase in gross margin from 58.2% in FY19 to 68.8% for 1H20. In addition, pro forma EBITDA margin for 1H20 was 25.2%, up meaningfully on its original prospectus forecast for FY20 of 20.3%.
The company has seen strong international revenue growth during the period. In particular, Damstra noted that excellent progress has so far been made in its Newmont Corp rollout. Newmont Corp now accounts for a very sizeable total revenue contribution of over 25%, up from 13% in FY19.
Damstra has no debt and a cash balance of $12 million as at 31 December 2019. The company's operating expenses of $7.7 million, however, was up from the $6.9 million in the first half of FY19. This was due to significant increases in sales and marketing capability as well as research and development.
FY20 outlook
Damstra noted that continued organic revenue growth and margin expansion is driving an expected full-year EBITDA it believes will exceed the prospectus forecast of $4.3 million.
Commenting on Damstra's strategy moving forward, Chief Executive Officer Mr. Christian Damstra said:
"We have entered 2020 with great energy and excitement among our team. We recognise there is still much to be done to deliver on our vision and, in many respects, we are early in our journey."
"Among the immediate opportunities are greater usage of our platform solutions among clients, expanding on our channel partner strategy and exploiting our data by providing real-time and predictive insights about a workplace to help to improve efficiency and reduce the risk of compliance breaches or workplace injury," he added.
