The Sovereign Cloud Holdings Ltd (ASX: SOV) share price is on the move today following the release of a first half investor presentation.
In morning trade, the infrastructure as a service (IaaS) company's shares are sinking 5% to 88 cents.
What is Sovereign Cloud?
Sovereign Cloud is an IaaS company supporting the secure and continuous delivery of information. It counts the Australian government, the Australian Defence Force (ADF), and Critical National Industry (CNI) communities as customers.
Through the AUCloud brand, the company's IaaS service provides customers with a highly secure, scalable, automated cloud solution, delivering an efficient and effective hosting environment for critical and sensitive applications and systems.
How did Sovereign Cloud perform in the first half?
While Sovereign Cloud has previously released its half year accounts, today's presentation includes extras such as its outlook.
In respect to its results, for the six months ended 31 December, the company reported a 267% increase in revenue to $1.1 million. This left it with a total contract value (TCV) of $2.1 million at the end of the half, which was almost triple its TCV at the end of June.
TCV is the total value of expected revenue from estimated consumption of IaaS secured through non-enforceable customer contracts.
And while the company reported a cash outflow of $3.1 million, which was consistent with the prior corresponding period, it retains a healthy balance sheet. At the end of the period, the company had a cash balance of $20.5 million.
Outlook
Management notes that its AUCloud brand has a major market opportunity to grow into in the future.
This includes a proposed $15 billion spend by the ADF relating to information and cyber security and over $13 billion being spent by the Federal Government on ICT services.
The company commented: "Our focus into each of the above segments is reaping results based on increasingly proven capability, accreditations and growing customer needs with a view to increasing AUCloud's appeal to the Australian Government and Defence and their supply chain providers."
While this is positive, it hasn't been enough to stop the Sovereign Cloud share price from sinking today. Though, it is worth noting that it is still 17% higher than its December IPO price of 75 cents.
