The Rhipe Ltd (ASX: RHP) share price is trading flat this morning. This comes after the software company provided investors with a business update on its preliminary results for the first half of FY21.
In early morning trade, the Rhipe share price swapped hands for $2.01, up 1.5% but has since retreated to it opening price of $1.98. Let's take a look at the results.
What's driving the Rhipe share price higher?
In today's release, Rhipe highlighted that for the period ending 31 December, growth has been achieved across all key metrics.
Group revenue rose to $30.5 million, reflecting an increase of 15% over the prior corresponding period (pcp). The company attributed the positive result to its subscription software licencing of Microsoft public cloud products. In the last 6 months, Microsoft Office365 licensees jumped more than 90,000 seats to record a total of 720,000 seats.
As a result, gross profit also lifted to $27.7 million, representing a gain of 11% compared to this time last year.
Operating expenses moved slightly higher to $19 million, a marginal 3% increase over the pcp. Its licencing business achieved lower costs due to fewer employees, marketing, and travel-related outflows as a result of COVID-19. However, expenses rose from its rhipe solutions business as the company focused its efforts on investing for the future.
Group operating profit (gross profit minus operating expenses) came to $8.8 million, up 34% on H1 FY20. The overall result was complemented by strong growth in its licensing business, and management's strict cost control.
Earnings before interest, tax, depreciation and amortisation (EBITDA) grew to $7.7 million, an uplift of 10% over the comparable period.
Rhipe reported to have a cash balance of $57.5 million at the end of the first-half, after paying dividends to shareholders, and investing in the Parallo acquisition.
Outlook
Management noted that despite COVID-19 operating challenges, its large and diversified reseller base has proven resilient. It believes the robust performance will continue to run into the second-half, especially with future investments to drive business growth.
Consequently, the group is forecasting its full-year operating profit for FY21 to be $17.5 million. This would imply an 27% increase when compared to the prior year's result.
The company is scheduled to release its final half-year results for the 2021 financial year on 16 February.
