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.

A man holds his hands out and shrugs.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »