The Etherstack PLC (ASX: ESK) share price is on the move today following two early morning announcements.
At the time of writing, the communications wireless technology company's shares are fetching for 55.5 cents, up 11%.
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What's driving the Etherstack share price higher?
Investors are buying Etherstack shares after the company announced a follow-on order, as well as a positive trading update.
In its first release, Etherstack advised that its subsidiary, Auria Wireless has entered into a contract with communications provider, RCS Telecommunications.
Under the deal, Auria's P25 digital radio network technology will be supplied to an undisclosed major mining company. Auria stated that the iron ore customer is active in the Pilbara region of North-West Western Australia.
The contract is a follow-on order of an initial network deployment that was carried out last year to the client.
Etherstack expects the agreement to generate revenues of around $600,000, with most of the funds received in the current financial year. Once the contract is fulfilled, the company anticipates recurring support revenues will follow.
Etherstack CEO, David Deacon commented:
While the revenues from this win are modest, this is an important win for Etherstack in demonstrating the suitability of our products and technologies for this sector beyond our traditional public safety and electric utility markets. It is clear that the end client values Australian designed and manufactured solutions, as well as access to technical engineering expertise within the country.
Trading update
In further news boosting Etherstack shares, the company reported strong trading conditions for the first-half of the 2021 financial year.
For the period ending 31 December 2020, Etherstack highlighted a revenue uplift when compared against 2020 earnings. Key customer and development projects are on track, including the Australian Defence contract, and business development activities related to Samsung.
Management believes that further revenues may be achieved in the first-half from its network delivery and technology licensing deals.
Notwithstanding, Etherstack expects revenue for the H1 FY21 period to be in the range of US$3.1 million to US$3.6 million. This represents an increase of between 30% to 50% over the prior corresponding period.
Mr Deacon touched on Etherstack's outlook, adding:
The Company continues to deliver upon our business plan making significant progress in all major business units which will in turn drive long term growth and profitability for the Company and its shareholders. We expect FY2021 to continue to strengthen as new deals are closed.
The Etherstack share price has accelerated over 300% in the past 12 months, however, year-to-date performance is down 10%.
