The MNF Group Ltd (ASX: MNF) share price rose by 12.5% today after revealing its FY19 result.
MNF Group is a telecommunications company operating in the local and global Voice over Internet Protocol (VoIP) market. Basically, it enables its customers to do things like connect dozens of unique phone lines to one office building with ease. It also has operations outside of VoIP (e.g. mobile plans).
FY19 Report Sends MNF Share Price Higher
The telecommunications and technology company reported that its revenue declined by 2% to $215.6 million. However, the number of phone numbers on the network rose by 18% to 3.8 million.
But the gross profit grew by 20% to $82.5 million thanks to the gross profit margin increased from 31% to 38% over the year.
Management were pleased to reveal that recurring revenue increased by 89% to $73.6 million and recurring gross profit rose by 60% to $49.4 million. Around 34% of revenue is now recurring as the transition to a recurring model continues, which has higher profit margins and is sticky in nature.
MNF’s EBITDA (click here to learn what EBITDA means) rose by 11% to $27.2 million and reported net profit after tax (NPAT) fell 4% to $11.4 million.
Excluding amortisation and acquisition costs (which refers to the In-A-Box acquisition), underlying net profit increased by 13% to $15.9 million.
Statutory operating cash flow went from a negative $16.3 million in FY18 to a positive $5.5 million in FY19. This helped free cash flow improve from a negative $26.8 million to a negative $10.1 million.
MNF Dividend
The MNF Board decided to cut the full year dividend by 27% to 6.1 cents per share reflecting the investing it is doing in Singapore and other areas of the business.
Is The MNF Share Price A Buy?
One of the main reasons for the share price increase was due to reaffirming the FY20 guidance.
FY20 EBITDA is now expected to be in a range of $33 million to $36 million, the mid point guidance suggests growth of 27% compared to FY19, and net profit guidance is for a range of $13.5 million to $15.5 million – the mid point would suggest an increase of 27%.
MNF is now valued at between 20.5 times to 23.5 times FY20 estimated earnings. This seems like a reasonable price if the recurring revenue & profit keeps going up at such a fast rate with higher levels of profitability. MNF, and the growth shares in the free report below, could be worth watching and looking at.
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