Uniti (ASX:UWL) share price tumbles 10% despite revenue surging 98%

Here's what's dragging the Uniti share price lower today.

Sad investor watching the financial stock market crash on his laptop computer.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Uniti share price is plunging on Tuesday, hitting a low of $3.31 – representing a 10.8% fall
  • That's despite the company dropping its earnings for the 6 months ended 31 December 
  • Over the half year, the company's revenue and underlying EBITDA increased 98% and 140% respectively 

The Uniti Group Ltd (ASX: UWL) share price is plummeting after the release of the company's earnings for the first half of financial year 2022.

At the time of writing, the Uniti share price is $3.325, 10.38% lower than its previous close.

Uniti share price plunges despite record results  

The market is seemingly disappointed by the technology infrastructure constructor's performance over the first half. That's despite it posting a record result.

Additionally, in calendar year 2021, the company's underlying EBITDA grew by 30% to $135 million.

According to Uniti, that demonstrates "exceptional wholly organic growth" from its acquisitions of Opticomm and Velocity in 2020.

The largest indicator of growth, said Uniti, is its 'win rate' of new fibre-to-the-premises (FTTP) developments and strategic partnerships with apartment and housing developers.

It secured 115,000 new FTTP contracts in 2021, taking its contracted order book to 292,000.

However, the company's earnings growth from construction revenue was around $5 million lower than the second half of financial year 2021. The drop was due to delays caused by lockdowns in Eastern Australia.

That will see revenue from construction deferred to later periods.

Uniti's wholesale, enterprise, and infrastructure (WEI) digital infrastructure and technology business accounted for around 95% of its EBITDA before overheads last half.

Meanwhile, the company's telecommunications business unit grew its customer base and earnings. It contributed EBITDA of around $4 million.

What else happened in the half?

The company's EBITDA margins expanded to 64% of revenue in the first half.

It believes that leaves it in a strong position to fight against macroeconomic inflationary pressures.

It also paid $36.5 million off its borrowings last half, leaving it with $172 million of net debt.

Uniti also announced an upcoming on-market share buyback program.

What did management say?

Uniti managing director and CEO Michael Simmons commented on the company's first-half results, saying:

Our commitment to our shareholders is to build a strong, sustainable company. We are doing that by continuing to win in market, building best-in-class fibre access networks, and filling those networks with customers – 'Win, Build, Fill' remains our core strategy.

Well over 90% of our earnings are now generated from high margin, recurring, annuity revenues which are delivered predominantly on our owned super-fast FTTP networks, and this ratio will continue to expand as our contracted FTTP order book of nearly 300,000 premises deploys over the years ahead.

With integration and simplification largely completed in 2021, Uniti is now primed for continued organic growth in greenfields and adjacent property markets and inorganic growth through asset acquisitions aligned to our core infrastructure business.

What's next?

Uniti believes it is on track to meet its financial year 2022 consensus underlying EBITDA of $145 million, notwithstanding COVID-19's impact on construction.  

Additionally, its property developer partners are committed to maintaining and expanding their pipelines.

Particularly, as residential buyer demand and population growth are expected to return to pre-pandemic levels in financial year 2023 and will likely be driven higher by international migration.

Uniti share price snapshot

Today's fall puts the Uniti share price well and truly in the year-to-date red.

It is currently around 27% lower than it was at the start of the year. Though, it's still 70% higher than it was this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Uniti Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Earnings Results

ASX 200 stock jumps 10% on strong FY24 results

How did this KFC restaurant operator perform in FY 2024?

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock just slashed its final dividend by 23%

This retailer had a tough time during the 12 months. Here's how it performed.

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »