The Damstra Holdings Ltd (ASX: DTC) share price has started the week on a high.
In morning trade the integrated workplace management solutions provider’s shares are up 4% to $1.78.
Why is the Damstra share price racing higher?
Investors have been buying the company’s shares this morning following the release of a presentation ahead of its virtual annual general meeting.
At the event, Damstra’s Executive Chairman, Johannes Risseeuw, spoke about the company’s strong performance in FY 2020.
As a reminder, in FY 2020, the company delivered a 47% increase in revenue to $23.5 million. This was underpinned by strong demand from existing customers and an increase in customer numbers from 129 to 279.
Mr Risseeuw was particularly pleased that 90.7% of its revenue is now recurring, with churn levels under 0.5%. He believes this “demonstrates the high quality of our revenue, the importance of our solutions to deliver a safe working environment and the commitment of our customer base.”
Pleasingly, the company has started FY 2021 strongly and the chairman appears confident on its prospects.
He commented: “We have entered FY21 with great energy and excitement and presently integrating the Vault transaction which is ahead of our internal planning. We see this as a year of continued evolution with our business having size, scale and increasing product innovation effort to accelerate domestic and international growth. From an investor perspective, this is important as we believe we have reduced our overall risk profile while increasing our organisational capability.”
FY 2021 guidance.
Management has reaffirmed its guidance for FY 2021 and continues to expect revenue of $33 million to $35 million. This represents year on year growth of 60% to 70% and includes the benefits of the Vault acquisition.
In respect to earnings, the company is forecasting earnings before interest, tax, depreciation and amortisation (EBITDA) of $5 million to $7 million. This compares to underlying EBITDA of $4.8 million.
Management notes that its underlying EBITDA margin will soften to 15% to 20% in FY 2021 from 23.4% last year. This is due to the Vault acquisition. It explained that its margins will be impacted due to transaction costs and Vault previously operating as an EBITDA negative business. However, it stressed that Vault will not change its financial business model.