The Smartpay Holdings Ltd (ASX: SMP) share price is falling today after the company announced its half-year results for FY21. During early morning trade, the Smartpay share price fell as low as 55 cents. However, its shares have since recovered to 62 cents, at the time of writing, down 10.14%.
Let's take a look at how Smartpay performed for the first six months of its new financial year.
What's driving the Smartpay share price lower?
The Smartpay share price hasn't fared well today as the company reported a mixed result for the first half of FY21.
For the period ending 30 September, the company achieved record levels of lead generation and sales conversion in its Australian segment. This translated to total group revenue of $14.5 million, an increase of 8% over the prior year.
Most pleasingly for Smartpay is that it saw September as its strongest month in revenue since the COVID-19 pandemic began. In Australia alone, $6.3 million was realised, representing a 67% increase on the the first half of FY19. Based on current calculation, the annualised run-rate return equates to over $19 million thus far. This is double that of the $9.5 million attained for the entire FY20 year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $3.6 million, reflecting a 6% decline. The drop was attributed to COVID-19 having a $500,000 impact on the business and a significant spend on marketing and sales activities.
Smartpay revealed an after-tax net loss of $9.2 million, mostly comprising a $7.7 million adjustment of its existing convertible notes.
Furthermore, net debt excluding the convertible notes, was mostly paid off through its capital raise conducted in June. In total, net debt stood at $4.8 million, a sizable drop from the $19.4 million recorded at the beginning of April.
Management commentary
Smartpay chair, Mr. Gregor Barclay, and CEO, Mr. Marty Pomeroy, commented on the group's results for the first half of FY21, saying:
We are extremely pleased with the overall performance of the business in the first half of the financial year in what was a very challenging period for our customers and our team.
Both our Australian and New Zealand operations showed strong resilience to the effects of the national lockdowns through the first quarter of the financial year and this was in large part due to the effectiveness of our management team and the agility and adaptability of our people.
Whilst many of our customers experienced a downturn in trading in the first quarter, most have returned to pre COVID-19 levels as trading restrictions have eased across both countries.
FY21 outlook
No guidance was provided for the remainder of the FY21 year, however, management stated it expects to generate record revenue. Despite the disruption COVID-19 has caused the business, it is well capitalised and continues to recover to normal levels.
About the Smartpay share price
The Smartpay share price has performed well over the past 12 months. Shareholders who bought into the company this time last year would be sitting on gains of more than 138%. The Smartpay share price reached an all-time high of 82 cents in February, before the onset of the COVID-19 sell-off. On the other side of the spectrum, the company's shares hit a low of 22 cents in March.
Smartpay has a market capitalisation of around $147 million and a price-to-earnings (P/E) ratio of around 90.
