The Motley Fool

Vortiv share price surges 30% higher on business update

The Vortiv Ltd (ASX: VOR) share price is flying higher today after the ASX micro-cap delivered a business update.

At the time of writing, Vortiv shares have surged 29.73% to 24 cents. This takes the company’s current market capitalisation to around $33 million.

About Vortiv

Vortiv is a technology-based company focused on cybersecurity and the cloud services sector. It owns Decipher Works, a cybersecurity company that provides consulting, support and managed services to financial institutions and large corporations. It also owns Cloudten Industries, a cloud and cloud security company that helps businesses migrate, secure and manage their infrastructure in the cloud.

Additionally, Vortiv holds a 24.89% interest in TSI India, a company that provides solutions in the payments, electronic surveillance and managed services spaces. TSI India owns and manages around 14,000 ATMs in India.

What did Vortiv announce?

This morning, Vortiv revealed it is on track to deliver another quarter of record growth. This has been driven by cybersecurity requirements of government and financial institutions. 

Revenue from the company’s cybersecurity arm in the June 2020 quarter is expected to land between $3.6 million to $3.8 million. Meanwhile, earnings before interest and tax is expected to be in the range of $0.5 million to $0.6 million.

Vortiv believes its focus on government and financial institutions proves to be sound as both sectors continue to invest significantly to enhance their cybersecurity technologies, particularly in light of recent cyber threats. These sectors represent 24% and 48%, respectively, of Vortiv’s revenue.

TSI India valuation

On top of the trading update for its cybersecurity business, Vortiv also revealed it has completed the carrying value review of its holding in TSI India for the financial year ending 31 March 2020.

According to today’s release, an independent valuation completed by a top 6 global accounting firm estimated Vortiv’s 24.89% stake to be worth between $5.5 million and $8.9 million. This compares to a valuation of $9.7 million in FY19.

The company has elected to adopt the lower end of the valuation estimate in its FY20 balance sheet given the current global conditions. 

TSI India FY20 results

Vortiv also revealed today that while TSI India’s FY20 financial results were adversely impacted by the upgrade of ATMs and COVID-19, its underlying EBITDA performance benefitted from operational efficiency.

As a result, TSI India achieved unaudited full-year results of $51.3 million revenue and underlying EBITDA of $2 million. While revenue decreased slightly by 2.1% compared to FY19, EBITDA grew 11.1% over the prior year.

Looking forward, TSI India expects to benefit from higher ATM up-time as well as lower maintenance and asset replacement costs. The business is, however, experiencing disruption due to COVID-19 lockdowns.

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 June 30th

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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...