The Rhipe (ASX:RHP) share price slides despite strong sales growth

The Rhipe (ASX: RHP) share price is sliding today, down 3.6%. We look at the latest results for the cloud and technology solutions provider.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published February 16, 2021 12:13 pm AEDT

The Rhipe Ltd (ASX: RHP) share price is sliding in morning trade, down 3.61% to $1.74 at the time of writing.

This comes following the cloud and technology solutions provider released its results for the first half of the 2021 financial year (H1 FY21), and despite posting strong growth in sales.

A man holds his hands out and shrugs. — Image source: Getty Images

What financial results did Rhipe report?

In this morning's release, Rhipe reported group sales from its software products and services of $180 million. That's an increase of 18% from the $153 million reported in H1 FY20.

Sales from its software products increased by 17% to $171 million. The company credited growth in its sales of Microsoft Office365 and Azure. Asia is a strong growth market, with Rhipe's sales increasing 34% in the region year-on-year.

The half-year revenue increased by 15% to $30.5 million (up from $26.6 million).

Growth in the company's licensing revenue of $21.6 million slowed to 7% year-on-year. Rhipe pointed to changes in its software vendor incentives and the impact of COVID-19 on its business partners for the lower revenue growth.

Revenue from its services and support activities grew more strongly, up 40% on the previous corresponding half year, to $9 million.

Earnings before income, taxes, depreciation and amortisation (EBITDA) of $8.2 million was up 17% from H1 FY20. Profit after tax also increased by 17% to $3.8 million, up from $3.2 million.

As of 31 December, the company had cash of $57.5 million, having paid $3.2 million in dividends and $4.3 million for its Parallo acquisition.

Rhipe announced an interim dividend of 1.5 cents per share (cps), fully franked, to be paid in March.

Looking ahead, Rhipe forecasts strong financial results for the second half of the 2021 financial year. The company stated it intends to increase investments in several areas of its business. Rhipe is aiming for full-year operating profit of $17.5 million for FY21, approximately 27% more than it delivered in FY20.

Rhipe share price snapshot

The Rhipe share price has yet to recover from the hit it took during last year's viral selloff in February and March. Over the past 12 months, Rhipe's shares are down 29%. Year-to-date the share price is down 7% (with today's intraday losses factored in).

For comparison, the All Ordinaries Index (ASX: XAO) is up 3% so far in 2021.

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