Core earnings in Q3 came in at $3.2m – a 33pc gain from Q1 and Q2 combined.

Quarterly results from internet services platform WebCentral (ASX:WCG) this morning show the company is building momentum in the wake of last year’s strategic acquisition by 5G Networks (ASX:5GN).

Q3 revenues of $14.1m flowed through to core earnings of $3.2m – a sharp lift in profits which represented a gain of more than 30 per cent from the December half-year combined.

The result was driven by a focus on tighter cost management from the new management team, including a material decline in rental costs.

Along with strong free cash flow generation of more than $1m per month, the business is expected to generate more rent savings in the months ahead as excess capacity is reduced at its Melbourne headquarters.

Room for growth

The data confirms that 5GN’s management team has executed on its stated goal to stabilise WCG’s core operations post-acquisition.

WCG is continuing the process of bringing its entire customer service team onshore, with a staff of 25 that’s increasing to 50 before the end of FY21.

The company will also introduce a 24/7 tech support platform by May 21 and has already increased its customer satisfaction rate to more than 80% across its email, phone and chat services.

With higher profits and free cash flow, the WCG platform also has a stronger runway for growth that leverages the respective strengths of both companies.

WCG adds a client base of more than 330,000 customers to 5GN’s distribution network, for whom it carries out various services such as domain management, website development and hosting, and digital marketing.

Looking ahead, 5GN will look to leverage those digital marketing channels to grow additional organic sales for its market leading high-speed data transmission network.

Utilising the inherent strengths of 5GN’s model, WebCentral also flagged the continued improvement of its IT systems to allow for additional products and services on the platform, as well as the development of AI technology to further support the customer experience.

This article was developed in collaboration with WebCentral, 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.

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