Pexa share price jumps on 'strong' half-year result

This property technology company's shares are ending the week on a high.

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The Pexa Group Ltd (ASX: PXA) share price is having a strong finish to the week.

In late trade, the property technology company's shares are up 5.5% to $12.14.

This follows the release of the company's half-year results.

Pexa share price jumps on half-year results

  • Revenue up 16% to $163.3 million
  • Group operating EBITDA margin at 36%
  • Operating EBITDA up 12% to $58.8 million
  • Group net profit after tax before amortisation (NPATA) down 36% to $15 million
  • Net loss after tax of $4.6 million (from $4 million profit)

What happened during the half?

For the six months ended 31 December, Pexa reported a 16% increase in revenue to $163.3 million.

This reflects an 11% lift in Pexa exchange revenue to $149.6 million, an 80% jump in Digital Growth business revenue to $7.2 million, and a 261% increase in International business revenue to $6.5 million.

Operating EBITDA was up 12% to $58.8 million for the half. This was driven by a 17% jump in Pexa exchange EBITDA to $82.9 million, which was partially offset by operating losses from its other businesses.

Pexa's NPATA came in at $15 million for the half, down from $23.5 million a year earlier. Management advised that this reduction was primarily due to costs associated with the acquisition of Smoove, restructuring costs, and higher amortisation arising from investments.

Management commentary

Pexa's CEO, Glenn King, was pleased with the half. He said:

Across the Group, these results represent the discipline we have brought to executing our strategy. This includes improving the efficiency of our business through our Productivity Enhancement Program and beginning to embed our capital management framework.

We have made strong progress to ensure we are well placed to execute on our strategic objectives in the second half, but we still have more to do to realise our ambitions in Australia and overseas.

Pleasingly, PEXA Exchange continues to perform strongly and has maintained its leading market position, reflecting the resiliency of the platform. It delivered a good first-half result, benefiting from CPI-linked price increases, increased market volumes and penetration and a shift in activity towards higher-value transfers.

How does this compare to expectations?

Goldman Sachs described the result as "strong" and notes that its margins are tracking ahead of its FY 2024 guidance. The broker adds:

PXA reported 1H24 Sales/EBITDA/Adj. NPATA +16%/+12%/-8% vs. pcp to A$163mn/A$59mn/A$26mn, which were +2%/+8%/+15% vs. GSe and +5% vs. Visible Alpha Consensus Data EBITDA (A$56mn). FY24 guidance reiterated including group operating EBITDA margins (ex. Smoove) >35%.

Net debt/EBITDA increased to 2.5x (1H23 2.3x) with PXA flagging no current expectation of material acquisitions to come.

Outlook

Pexa has reaffirmed its previous guidance for FY 2024. It expects:

  • Group operating EBITDA margin of 35% or better
  • Exchange operating EBITDA margin of 50-55%
  • Net cash outflows of $70 million to $80 million for the International and Digital Growth businesses
  • Breakeven operating EBITDA for Digital Growth for the month of June 2024.

The Pexa share price is down approximately 2% over the last 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and PEXA Group. 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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