Vortiv stays on the acquisition trail after booking record Q4 revenues
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Special Report: Revenues climbed to $3.6m in the June quarter, with underlying earnings of $500,000 – an annualised gain of 117 per cent.
Tech services company Vortiv (ASX:VOR) has capped off a strong FY20 with record Q4 revenue growth, as it eyes further opportunities in the lucrative cybersecurity sector.
The result is a by-product of its growth-by-acquisition strategy, following the integration of cybersecurity platform Decipher Works cloud security service provider CloudTen.
Vortiv flagged revenues of between $2.9m and $3.2m in the September quarter, which it says will lay the groundwork for annual revenue growth of between 20-30 per cent in FY21.
Speaking with Stockhead following the result, Vortiv chief executive Jeff Lai said the company’s path to profitability was driven by the strength and nature of its client base, which is largely comprised of large government departments and financial institutions.
“When it comes to the service requirements for those type of clients, they’ve got more complex requirements compared to smaller companies,” Lai said.
“We’re well entrenched with our customer base because our clients value the highly specialised expertise that we bring to solve their complex requirements.
“Secondly, because we’ve served them for a long time, we’ve built up an advanced knowledge base of those relevant client systems, so it’s harder to displace us.”
Vortiv’s strong performance in FY20 has seen its share price climb from March lows near six cents to more than 20 cents.
While September quarter revenues are expected to be slightly lower than June, Lai said it still sets the company up well for another record year of topline growth.
“In September there’s usually a degree of seasonality. June is always a good quarter for us, that’s because it’s the end of the financial year and a lot of govt and commercial clients are trying to spend out their budget,” Lai said.
“There’s some extra revenue we typically capture in June, so September will come down slightly before it tracks higher and on a year to year basis this September quarter still gives us a good platform for growth.”
Looking ahead, having proved out a successful acquisition strategy the company remains on the lookout for new bolt-on targets.
Lai said Vortiv’s acquisitions scope will be firmly focused on the Australian market, particularly companies in the cybersecurity space with a profitable business model.
“For us the key metric is profitability, because that’s how acquisitions become value accretive to our shareholders,” he said.
“So, we measure the value of companies based on an EBIT multiple, as opposed to a revenue multiple.”
This article was developed in collaboration with Vortiv, 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.