The Vocus Group Ltd (ASX: VOC) share price is on course to finish the day with a solid gain.
In late afternoon trade, the telco's shares are up 2% to $5.10. This follows the release of its half year results this morning.
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How did Vocus perform in the first half?
For the six months ended 31 December, Vocus reported a 2% increase in recurring revenue to $896 million.
This was driven by an 11% increase in Vocus Network Services revenue to $340.2 million and a 4% lift in New Zealand revenue to $195.8 million. This offset a 6% decline in Retail revenue to $360 million.
And thanks to its good costs control, underlying operating earnings grew 1% to $192.7 million.
However, due to higher depreciation and amortisation, Vocus wasn't able to grow its bottom line. It reported an 11% decline in underlying net profit after tax to $45.4 million.
How does this compare to expectations?
According to a note out of Goldman Sachs, Vocus beat on the top line by 1% but missed on the bottom line by 6%.
Goldman commented: "Compositionally the result was strong, with the key Network Services segment revenues +5% vs. GSe (but higher costs resulted in an inline EBITDA), while non-VNS were -1% vs. GSe with better cost driving an in-line EBITDA."
Guidance upgraded
Offsetting the earnings miss and giving the Vocus share price a boost today was its guidance for FY 2021.
Management advised that it now expects Vocus Network Services recurring revenue growth of 8% for the full year. This is an increase from 5% previously.
In light of this, the company has narrowed its underlying Vocus Network Services EBITDA growth guidance range to 10% to 12%. Previously, its guidance range was 8% to 12%.
Overall, management believes it is well-placed to achieve its group underlying EBITDA guidance of $382 million to $397 million. This will be up 6% to 10.1% from FY 2020's underlying EBITDA of $360.5 million.
Finally, the company also revealed that its FY 2021 capex guidance has increased to $185 million to $200 million. Previously it was $160 million to $180 million. However, this will be be funded by customers.
