The Infomedia Limited (ASX: IFM) share price is surging higher on Friday.
In afternoon trade, the automotive industry software provider's shares are up 11% to $1.31.
This follows the release of the company's half-year results, which impressed the market.
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Infomedia share price jumps on strong profit growth
- Total revenue up 6.7% to $62.9 million
- Recurring revenue up 9.8% to $62.3 million
- Exit annual recurring revenue (ARR) up 10.8% to $127.1 million
- Net profit after tax up 38.5% to $4.8 million
- Interim dividend cut by 15.4% to 2.2 cents per share
What happened during the half?
For the six months ended 31 December, Infomedia reported a 6.7% increase in revenue to $62.9 million. This reflects a solid jump in recurring revenue, which offset a decline in one-off revenue. This is in line with its strategy of shifting its focus to recurring revenue.
Thanks to management's work on cost reductions, the company's underlying costs grew just 3.5% during the half. This helped widen its profit margin and underpinned a 38.5% increase in net profit after tax to $4.8 million.
Despite this profit growth, the Infomedia board elected to cut its interim dividend by 15% to 2.2 cents. This will be 36% franked.
Management commentary
Infomedia's CEO, Jens Monsees, commented:
I am very happy with the progress our team has made in executing on our new strategy. We have significantly grown our sales pipeline in 1H23 and are excited by the opportunities generated. We have also made substantial progress in our operating excellence initiatives and in transitioning towards being a product-led business. I am pleased with the initial cost benefits we have realised and I am confident our new strategy will continue to deliver strong ARR growth.
Outlook
Management has reaffirmed its guidance for FY 2023.
It continues to expect total revenue of $127 million to $131 million and an exit ARR of $129 million to $132 million.
