Rhipe share price dives 13% as FY20 results fail to impress

The Rhipe share price went in freefall today after failing to impress investors with its FY20 results. Here we take a look at the details.

| More on:
Falling asx share price represented by man in chinos falling suspended in mid-air

Image source: Getty Images

The Rhipe Ltd (ASX: RHP) share price went into freefall today, down 13.4% to $1.87 by the market’s close. From the opening bell, investors began to run for the hills after digesting the release of the company’s FY20 results. At midday, the Rhipe share price stabilised and hasn’t moved much since.

What moved the Rhipe share price?

For the financial year ending 30 June, Rhipe reported a 15% lift in net revenue to $55.8 million compared to the prior corresponding period. Net profit after tax was $5 million, down from $6.2 million in FY19.

However, when adjusted for the company’s investment in Japan and its provision of doubtful debt, that figure increased to $6.9 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $11.6 million, an increase of 16%.

Rhipe’s operating profit stood at $15 million, a jump of 17% excluding its joint venture with Japan Business Systems Inc.

A possible catalyst for the plunge in the Rhipe share price was that its earnings per share fell 23% to 3.49 cents, from 4.53 cents.

Cash on hand was $60.9 million, almost double the $35 million recorded the prior corresponding period. However, Rhipe completed a $32.5 million capital raise in April this year.

The company declared a fully franked dividend of 2 cents per share to be payable on 24 September.


The cloud channel business reported a slowdown in travel, marketing and headcount related costs during the challenging economic environment caused by the coronavirus pandemic.

Furthermore, Rhipe witnessed an increase in its customers asking for extended payment terms and customers being unable to pay their bills. As a result, Rhipe has increased its provision for doubtful debts to cover the expected increase in business failures in FY21.

Rhipe’s Dynamics365 consulting practice saw a dramatic decline in project workload. While the Dynamics365 pipeline has improved, the business underperformed to target in FY20.

Thus, management is focusing on carefully controlling costs during the pandemic.

FY21 outlook

Management advised it expects its public cloud business to continue to be the growth engine for the company, despite the economic challenges ahead.

The company said it will prudently invest in its licensing sales and solutions division whilst seeking new growth revenue markets. Rhipe will be using its operating profit to fund its expansion.

About the Rhipe share price

The Rhipe share price has recovered somewhat since its March low of $1.16, up 61% to date. However, the Rhipe share price is trading 10% lower since the beginning of the year.

Wondering where you should 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 over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Aaron Teboneras 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.

More on Share Market News