The RPMGlobal Holdings Ltd (ASX: RUL) share price is slipping this morning following the release of the company's financial year 2021 (FY21) earnings.
Right now, the RPMGlobal share price is $1.875, 4.09% lower than it was at yesterday's close
RPMGlobal share price slumps on $5.5 million loss
Here are the mining industry consultant, technology, and development solutions company's earnings for FY21:
- A 685.7% greater loss than that of FY20. The company ended the period down $5.5 million
- Net revenue down 2.8% to $66.9 million
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $5.2 million, a 30% increase on that of FY20
- Total annual recurring software revenue of $38.7 million
As you can see, RPMGlobal didn't have a great year. However, it clarified that its $66.9 million of net revenue didn't include $43.9 million worth of software licenses sold during the financial year, but that the attributable revenue will be reported over the next 3 to 5 years.
RPMGlobal received $3.7 million from various government COVID subsidies around the world during FY21. It also paid $2.2 million to acquire Revolution and IMAFS.
Revenue from RPMGlobal's GeoGAS business decreased by 2% to $4.1 million in FY21. Following the end of the period, RPMGlobal devested GeoGAS stating GeoGAS' coal focus contrasted with RPMGlobal's work toward sustainability.
RPMGlobal ended FY21 with $44.6 million of cash in the bank and no debt.
What happened in FY21 for RPMGlobal?
COVID-19 hit RPMGlobal hard, and its share price is feeling it today.
The company's business was impacted greatly as mining companies reduced their project load to focus on protecting themselves from COVID-19 and associated restrictions.
RPMGlobal used the downtime to evolve its product suite. Over the past 12 months, it began offering cloud solutions. Right now, 3 customers are using RPMGlobal's new Haulage as a Service (HaaS) cloud solution.
Additionally, all the company's customers' transaction volumes are increasing as they move to cloud services across other operations.
Adoption of RPMGlobal's XECUTE also increased in FY21. 12 more miners committed to the product over the period.
RPMGlobal extended XECUTE's functionality with the release of its new module, Staged Stockpiles, during the financial year just been.
Since the start of FY21, RPMGlobal has signed 39 new customers onto new product contracts. The company expects that, over time, these customers will buy additional products from its suite.
RPMGlobal also acquired IMAFS Inc in October 2020, and Revolution Mining Software in July 2020.
What did management say?
RPMGlobal's chair, Stephen Baldwin, commented on the results driving the company's share price downwards today, saying he hopes FY22 will be a better year for the business:
Financial Year 2021 was a year dominated by COVID. All of our operations around the world were affected… I am pleased to report that even under such trying conditions the business continued to grow…
While international travel restrictions continue to impact our advisory business, we have seen a lift in demand for our metals and new [environmental, social, and governance (ESG)] divisions. There is significant activity in the mining industry currently and as such we expect a better year from our advisory business in FY2022 than it achieved in FY2021…
At a time when other software vendors to the mining industry were reducing their software investments, due to the impacts of COVID, RPM once again increased its investment with the acquisitions of Revolution Mining Software Inc in July 2020 and IMAFS Inc in November 2020.
What's next for RPMGlobal?
Here's what RPMGlobal expects could drive its share price in FY22:
The company stated that, while many forecast the FY22 market will be mostly positive, it's wary that commodity prices are expected to remain flat. Additionally, it expects the price of iron ore will drop as Brazil ramps up its production and China develops more iron ore projects of its own.
However, it expects precious metals' prices to remain strong. That may see precious metals miners investing in both grass root project development and organic growth through mergers and acquisitions.
Additionally, RPMGlobal believes its focus on ESG will see demand for its services boost. Its currently working to build out its ESG advisory team and incorporate ESG support into its product suite.
To support future ESG movements, RPMGlobal acquired Nitro Solutions, an Australian ESG mining advisory business, in July 2021.
RPMGlobal invested $13.2 million on its software products during FY21 and is now aiming to release 4 new products during FY22. These include Pit-to-Port, AMT Mobile, Multi-Period Scheduling Optimiser, and Gas Drainage. It will also release support for hydrogen vehicles and continue moving its software to the cloud.
RPMGlobal share price snapshot
The RPMGlobal share price is currently 45% higher than it was at the start of 2021. It is also 47% higher than it was this time last year.
Over FY21, RPMGlobal's market capitalisation increased by $172.8 million to reach $408.4 million. Right now, it's around $430 million.
