Here’s why the Damstra (ASX:DTC) share price is gaining 13% today

The fourth quarter was a productive 3 months for Damstra.

| More on:
rising asx share price represented by woman flying through the air

Image source: Getty Images

Damstra Holdings Ltd (ASX: DTC) shares are soaring after the company released its latest quarterly activity report and results. Right now, the Damstra share price is trading at 90 cents – 13.21% higher than yesterday’s closing price.

In its results, the software-as-a-service provider noted record cash receipts and a record earnings before interest, tax, depreciation, and amortisation (EBITDA) margin.

Let’s take a closer look at the company’s latest results.

The quarter that’s been

Investors are driving the Damstra share price higher after the company reported cash receipts totalling $10 million and $9.1 million in revenue over the quarter ended 30 June 2021. Both figures are record-breaking for Damstra.

The company’s annual recurring revenue reached $35 million over the quarter – 65% more than the prior corresponding quarter.

Damstra’s EBITDA margin for the quarter was 30%, another record figure.

The period also saw Damstra gain a new $20 million debt facility, 55 new clients, and 74% more active users.

The company is seeing strong uptake of its highest priced product, Damstra Digital Forms. It’s also trialling its satellite offering, which allows remote workers communication coverage.

Additionally, Damstra has partnered with Amazon Web Services and its global mining team. The partnership helped it to build Damstra’s Enterprise Protection Platform.

Finally, the company signed a multi-year contract extension with NBN Co Limited. Damstra expects the deal will bring in around $7 million.

Commentary from management

CEO Christian Damstra commented on the news driving the company’s share price today, saying:

In [the fourth quarter] we continued to see material increases in users across all of our product modules and delivered increased value to our customers through constant product innovation. We remain in productive contractual negotiations with several potentially material clients in the United Kingdom and North America… each with more than 10,000 users and look forward to providing updates on the outcomes of these negotiations during the next quarter…

Looking ahead, we are close to finalising a number of material commercial opportunities that are expected to underpin our accelerated growth, including some international contracts we expected to sign this quarter which we now hope to sign in [financial year 2022].

Damstra share price snapshot

The Damstra share price has been having a rough trot on the ASX lately.

Right now, it’s around 42% lower than it was at the start of 2021. It has also fallen by more than 49% over the past 12 months.

The company has a market capitalisation of around $144 million, with approximately 186 million shares outstanding.

Should you invest $1,000 in Damstra right now?

Before you consider Damstra, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Damstra wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon and Damstra Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Damstra Holdings Ltd. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares