On Cloud 9: Nexion scores its best quarter ever as monthly recurring revenue doubles
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Nexion has made an extremely strong start to FY22, with its best ever quarterly revenue since inception.
After a strong start in the first quarter of FY22, hybrid cloud provider Nexion Group (ASX:NNG) has continued its excellent form into Q2.
The fast emerging company delivered an unaudited revenue of $1.87m for Q2, a 50% jump in revenue compared to the last quarter.
This figure also includes a 91% increase in its monthly recurring revenue, a metric seen by Nexion as the key foundation to its long term success.
During the quarter, the company also placed a strong focus on improving gross profit margins, and reducing its cash consumption.
This resulted in a margin increase of 44% compared to 21% for the previous financial year, as it continues the quarterly up-trend.
Q2 was the best single quarter of revenue ever for Nexion since inception five years ago, with gross profit margin also at its highest level since listing last year.
The quarter saw Nexion report its first full quarter of revenue following the successful integration of the Blue Sky Telecom acquisition.
The acquisition has resulted in a well over 90% increase in the company’s recurring revenue base.
Blue Sky’s team and technology is now fully integrated into Nexion Networks, with all cost rationalisation objectives achieved.
Cost elimination will continue to be a key focus of the Blue Sky integration during the first half, and the company has exceeded expectations with gross margins showing significant improvement for the combined group since the merger.
Nexion says these efficiencies, plus the addition of two new high-margin recurring revenue streams (satellite and voice), is set bring Nexion closer to EBITDA positive later in the financial year.
The merger with Blue Sky also saw the assimilation of the companies’ technical teams, including the integration of highly valued satellite communications skills.
With the combined technical teams now on board, the Group’s executive team is preparing for Nexion’s next phase of expansion on the back of growing customer demand and new opportunities with its global technology partners.
It has indeed been an accelerating arc of growth for Nexion over the last five years since inception, and particularly since listing last year.
The company has hit on every metric it said it would in the prospectus, and some analysts even predict a breakeven result in FY22,which would be an extraordinary achievement.
The company believes that as enterprises shift to the consumption of technology as a service, the demand for Nexion’s Hybrid Cloud solutions will only continue to grow.
Its partnerships with global giants, from IBM to Ajit Gupta’s Aryaka, have helped it to establish a strong foothold with enterprise customers worldwide.
A capital raise of $2.75 million through a share placement in November is expected to fund Nexion’s next growth opportunities and working capital .
This will be subject to approval at a shareholder meeting to be held on 4 February 2022.
This article was developed in collaboration with Nexion, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.