Why the Damstra (ASX:DTC) share price is climbing higher today

The Damstra Holdings Ltd (ASX:DTC) share price is climbing higher on Monday morning following the release of its Q1 update…

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The Damstra Holdings Ltd (ASX: DTC) share price has started the week in a positive fashion.

In morning trade the integrated workplace management solutions provider’s shares are up 1.5% to $2.15.

Why is the Damstra share price pushing higher?

Investors have been buying Damstra’s shares on Monday following the release of its first quarter update which revealed record revenue, cash receipts, and operating cash flow.

According to the release, for the three months ended 30 September, Damstra reported revenue of $5.2 million, up 34% on the prior corresponding period.

The company’s cash receipts grew even quicker and were up 61% on the prior corresponding period to $7.1 million.

Operating cash flow came in at $2.4 million for the three months. This was up 25% on the prior corresponding period and left the company with a cash balance of $9.6 million. This cash balance includes the costs associated with the Vault Intelligence transaction.

Key metrics improving.

It wasn’t just its financials that improved during the first quarter of FY 2021. Damstra reported improvements in its users, client numbers, and gross margin.

User numbers now stand at 418,000, client numbers have hit 326, and its gross margin has widened to 72%.

What were the drivers of its growth?

Management notes that in its core construction vertical, user numbers increased to ~68,000 from ~62,000 at end of FY 2020. This has been driven by new project rollouts, mobilisation of workforce for large infrastructure projects, and return to work on workers with COVID restrictions lifting.

And while NBN users plateaued during the quarter, it believes the vertical has a positive outlook given the recent Federal Government announcement of fibre to the home deployment.

Elsewhere, Velpic user number were up by 12% for the quarter from 17,000 to 19,000 users, showing continued uptake of online learning solutions.

Finally, a range of client orders have been received for its next generation of fever detection facial recognition solution. The solution will be deployed in various industries across Australia and North America.

Damstra’s CEO, Christian Damstra, commented: “We have started FY21 strongly and successfully completed the Vault transaction. We see this as a year of continued evolution with our business having increasing size, scale and product innovation to accelerate international growth.”

“From an investor perspective, this is important as we believe we have significantly reduced our overall risk profile while increasing our organisational capability. We now have a presence in South East Asia and will continue to add significant resources in North America,” he added.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings Ltd. 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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