The Rhipe Ltd (ASX: RHP) share price has jumped 8.59% to $1.96 after its first quarter FY21 market update today. Here are the key highlights from its update.
First quarter market update
The cloud channel group experienced solid Q1 revenue growth, up 16% to $14.7 million on the prior corresponding period. Despite COVID-19 pandemic-related challenges across Rhipe’s main market in the Asia Pacific region, it continued to deliver solid revenue growth driven by continued growth in the Microsoft public cloud products including Office365 and Azure. In addition, it continues to see strong growth in its solutions and services business.
Rhipe’s operating profit increased 40% to $4.2 million due to solid revenue growth alongside strong cost management. Its operating profit including Japan is $3.9 million, up 39%.
It maintains a strong balance sheet with $53.8 million cash as at 30 September 2020. This follows the payment of $3.2 million in dividends and $4.25 million in acquisition costs. Its cash position is significant given its market capitalisation of just $300 million.
Japan joint venture
In late 2019, Rhipe announced a joint venture (JV) with Japan Business Systems Inc (JBS) to establish Rhipe Japan. JBS would provide local personnel, office space, local market knowledge and support the operational launch. While Rhipe will be responsible for all other aspects including its appointment as Microsoft Indirect Cloud Solutions Provider, which was granted at the end of October 2019.
The Group’s Microsoft Office 365 seats at 30 September 2020 were in excess of 680,000 including more than 6,000 seats in Japan, up 50,000 since 30 June 2020. The business will continue to invest in its Japan JV.
In September, Rhipe acquired New Zealand-based IT services provider, Parallo. The initial purchase price for Parallo was NZ$4.25 million plus additional performance related payouts. Parallo delivered earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$650,000 in the 12 months prior to acquisition and Rhipe aims to leverage both the cost and revenue synergies from its acquisition.
In the Q1 business update, Rhipe noted its continued investment into Parallo and support for its expansion into the Australian market.