Envirosuite share price surges 14% following sales update

The Envirosuite share price has risen today following a positive sales update by the company. We take a closer look at the announcement.

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Envirosuite Ltd (ASX: EVS) has today provided the market with a sales update that has propelled its share price higher. The Envirosuite share price has gained 14.3% to reach 16 cents.

The company also recently completed the acquisition of AqMB Holdings for a total consideration of $1.35 million that sent the share price up 11%.

What Envirosuite does

Envirosuite is an environmental management technology company that provides services through its software-as-a-service (SaaS) platform. The Envirosuite platform offers environmental monitoring, management and investigative capabilities. It is incorporated into a number of diverse operations from waste water treatment to large scale construction, open cut mines and port operations.

The company hosts more than 500 customers worldwide. Envirosuite's clients include organisations in China, airports, and companies such as Rio Tinto Limited (ASX: RIO).

Sales update

This morning, the company released a sales update driving the Envirosuite share price strongly higher. Envirosuite reported robust sales and a strong pipeline despite the global impact of COVID-19.

Despite the downturn in economic conditions, the company was able to report sales orders totalling $14.5 million. This was for the period 1 March to 12 August following the completion of the company's acquisition of EMS Bruel & Kjaer. Breaking down these sales, there was $8 million from new business and $6.5 million in renewal contracts.

Furthermore, the current sales order pipeline exceeds $30 million. The target percentage of recurring revenues to total revenue is 70% and the company is currently tracking above this at around 75% across both existing revenues and the sales order pipeline.

Envirosuite CEO, Peter White, was pleased with the results and commented:

"The robust sales to date and the strong pipeline provide validation of Envirosuite's strategic acquisition of EMS. They also highlight the resilience of the Company's business model and the essential role Envirosuite plays for its customers that continues even in the pandemic."

What now for the Envirosuite share price?

Envirosuite has reaffirmed its positive earnings before interest, taxes, depreciation and amortisation (EBITDA) target to the end of Q3 FY21 and medium-term target of $100 million revenue thanks to high recurring revenues. If the company is able to deliver on these promises it is likely the Envirosuite share price will continue its strong current run.

Furthermore, the strong results announced today demonstrate the resilience of Envirosuite's business sourced from multiple industry sectors and economic regions. Despite today's rise, the Envirosuite share price is still down 27.3% in year-to-date trading. It has a current market capitalisation of around $164 million.

Motley Fool contributor Daniel Ewing 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.

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