Infomedia's share price tanks 7% as profit almost halves

The Infomedia share price is lower today after net profit almost halved in FY22.

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Key points

  • The Infomedia share price is falling today after mixed results from the company for FY22
  • Earnings were down, mostly due to higher expenses
  • Its guidance for FY23 is positive and it expects to reduce its costs moving forward

The Infomedia Limited (ASX: IFM) share price is down 7.53% after the company announced its full-year results for FY22.

Shares in the automotive software company are trading for $1.33 at the time of writing. Earlier, they fetched an intraday low price of $1.24.

Let's go over the highlights of the report.

What did Infomedia report?

  • Partially franked final dividend of 3 cents per share
  • Revenue up 23% year over year (yoy) to $120.13 million
  • Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) up 8% yoy to $50.02 million
  • Net profit after tax (NPAT) down 48% yoy to $8.2 million.

The company's NPAT shank primarily due to inflation of its expenses, with line items such as employees' benefits almost doubling from $27.45 million in FY21 to $54.49 million in FY22. Other items, such as depreciation and amortisation (D&A), grew significantly from $22.94 million to $31.65 million.

A side effect of Infomedia's revenue surge is that its annual recurring revenue (ARR) grew to $119.3 million during the reporting period. This figure is up 4% yoy. This also impacted its cash generation ability and free cash flow grew to 79% yoy.

The company will trade ex-dividend from 2 September. Its recently announced dividend has a value of 3 cents per share and is franked at 14%. The dividend has a record date of 5 September and will be paid on 22 September.

What else happened in FY22?

On a regional basis, the Americas operating segment performed the strongest in FY22. Revenues surged 59%, primarily attributable to the growth in its Infodrive product.

The company reported a strong balance sheet with no debt, cash of $69 million, and net assets valued at $147 million.

The company's revenues are also well-diversified as they are spread across its Microcat, Superservice, Infodrive, and SimplePart services, with each contributing consistent amounts yoy.

What's next?

Guidance was given for FY23, with a positive spin. Infomedia notes that its ARR momentum growth is strong and that it has a robust total addressable market from its product portfolio. Due to these factors, revenue for next year is tracked to fall in the range of $131 million to $139 million.

Its Infodrive and SimplePart services are expected to contribute significantly to this revenue figure, as their growth is expected to be in the double digits next year.

Other initiatives throughout the year will improve the company's internal efficiency by reducing costs and raising underlying cash EBITDA.

Infomedia share price snapshot

The Infomedia share price is down 12.6% year to date. It's doing better than the S&P/ASX 200 Index (ASX: XJO) over the same period, down 6.2%.

The company's market capitalisation is about $539.25 million from today's latest price action.

Motley Fool contributor Matthew Farley 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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