Grab your earmuffs because the Whispir Ltd (ASX: WSP) half-year (HY21) announcement is filled with some exciting results. But the share price dropped, so have the results fallen on deaf ears?
Whispir is a Software-as-a-Service (‘SaaS’) provider that specialises in the development and provision of communications management systems via a cloud-based platform. It installs applications into existing workflow solutions to automate business-critical communications across mobile, email, voice, social and the web.
Put simply, Whispir’s main focus is to optimise communications between people and organisations at scale.
Strong customer and revenue growth
The above headline is often music to investors’ ears and Whispir has the figures to support it.
Whispir brought on 77 new customers during the half, a jump of 38.9% relative to the prior corresponding period, HY20 (PCP). This contributed to a surge of 29.2% in annualised recurring revenue (ARR) and 27.3% in reported revenue compared to the PCP. So, what’s the difference between ARR and reported revenue?
ARR is used to measure revenue earned on an annual basis, which is useful for subscription-based businesses. It appears existing customers were the key driver of growth in revenue.
Whispir’s Australia and New Zealand operations exceeded management’s expectations, as revenue increased by 30.2% over the PCP. The company notes enterprise customers are spending more money on its tools to solve more of their communication challenges.
Whispir seems to be reaping rewards from its push into Asia. Revenue generated in Asia increased by 24.4% over the PCP.
As for North America, revenue fell by 15.7% over the PCP. However, the company says it is well-positioned to execute its growth strategy in North America with new senior leadership and more staff.
Costs remain soft
Whispir managed to maintain operating expenses despite the big jump in revenue and new customers. Operating expenses fell slightly from $17.38 million in HY20 to $17.36 million in HY21.
The stellar revenue surge, combined with solid cost management, resulted in improvements to Whispir’s bottom line. Whispir posted a 61.6% improvement on its EBITDA relative to the PCP, albeit still negative at -$1.82 million.
Management excited about the 5-year product roadmap and Asia growth
Whispir’s CEO and Co-Founder, Jeromy Wells seems focused on delivering better products, commenting, “In line with our five-year product roadmap, we continue to add new features and functionality to improve user experience. Enhanced platform functionality with AI-inferred insights will enable us to better serve our existing customers with additional data driving more valuable, higher-margin products and supporting our transition to becoming a communications intelligence company. In addition, our more extensive product offering will provide new opportunities to acquire customers across our three key regions.”
Jeromy Wells also highlighted the growth potential in Asia, saying, “Asia provides a large and diverse market opportunity for the business. While we are seeing strong growth from our existing customers, we are winning new customers throughout the region and are partnering with system integrators such as Deloitte and Accenture to support digital transformation projects.”
Is it a whisper or shout?
There is a lot to bang on and get excited about, especially when existing customers fork out more money to buy additional products. This is often a strong sign of a high-quality product that produces customer loyalty.
What’s more, it seems Whispir is managing its costs reasonably well whilst penetrating new markets in Asia and North America. Another cost investors should be wary of is research and development, especially with the focus on a five-year product roadmap.
If Whispir continues to produce high-quality products and attract further growth overseas, I think this could be a sound long-term investment.
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