Tech: Spirit Telecom maintains revenue momentum through crisis, investors approve
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Internet service provider Spirit Telecom (ASX:ST1) became the latest small-cap stock to bounce off recent lows, after a trading update which showed its performance through the coronavirus chaos was better than expected.
Spirit said April revenues came in at $4m in a “very challenging macro environment”, comprised of $2.3m in recurring revenue and $1.7m in project revenue.
The company said total revenues from January to April were up 146 per cent from the same period in 2019. Recurring revenues made up $8.6m of that amount (up 60 per cent).
Investors sent Spirit shares almost 20 per cent higher in morning trade to 18.5c. That’s up from crisis lows of 13c but off from the 12-month high of 26c.
Managing director Sol Lukatsky said the sales result was made in response to customer demand for a bundled package that included high-speed internet and IT services.
The company also flagged the May launch of its NBN Enterprise Ethernet package, to be cross-sold through partnerships as well as direct customers.
Lukatsky said the NBN package would open up sales channels to an additional 500,000 business locations, which “we can sell into with our internet and IT services bundles”.
The company said its $6.9m acquisition of Trident Technology, completed in February, had also provided a useful gateway into essential services sectors including schools and aged care, which helped to smooth out cashflows in what was typically a quieter sales period during the June quarter.
After completing a $9.2m share placement to sophisticated investors at 11c per share in April, the company says it now has $14.8m of dry powder for potential acquisitions, comprised of cash and access to a $10.9m Commonwealth Bank debt facility.
Shares in security-tech platform Ava Risk Group (ASX:AVA) climbed by almost 10 per cent, after the company signed a deal with an unnamed central bank to provide its services in connection with “the secure transportation of banknotes”. Ava said the deal was expected to generate annual revenue of around $2.1m.
Ava also flagged new service agreements with three commercial banks and another central bank. Following this morning’s gain, shares in Ava have bounced back to above their pre-crisis highs to 19.5c.
And data management platform Mach7 Technologies (ASX:M7T) also rose strongly, after announcing that it’s received a software licensing order from the Hospital Authority Hong Kong (HAHK) valued at $4.8m.
The new agreement is in connection with a $HK81 million (~$15m) deal signed with the HAHK in October 2018. To-date, M7T has received purchase orders from the agreement totalling $HK41m. The agreement gives HAHK access to M7T’s enterprise imaging platform, which provides simple data consolidation services for use in clinical operations.
Shares in M7T rose by 11.3 per cent to 64 cents. The stock is still trading below its pre-crisis high of 90 cents.