The Hansen Technologies Limited (ASX: HSN) share price is rising after the company gave an update and upgraded its profit guidance.
Hansen Technologies is a global provider of software and services to the energy, water and communication industries. It has over 550 customers in more than 80 countries. Hansen helps them create, sell and deliver new products and services, manage and analyse customer data, and control revenue management and customer support processes.
Hansen’s exciting news
The company, which serves the energy, water and communication industries, has announced a master agreement with Telefonica Germany to licence via prepaid subscription for Hansen’s cloud native communications product suite to support Telefonica’s operations within Germany.
Hensen said that the agreement is for a fixed initial term of five years, with associated revenue of approximately $25 million.
Management comments
Andrew Hansen, CEO of Hansen, said: “We are delighted and very proud to be engaged with Telefonica. This agreement is testament to and a ringing endorsement of the Hansen Communication Suite and Hansen’s ability to continually evolve as a valued partner to our customers.”
Increased Hansen guidance
Hansen said that due to this strategically significant customer win, it was upgrading its FY21 guidance. Revenue is now expected to be in a range of $306 million to $316 million, or in constant currency terms it’s expected to be between $316 million to $326 million.
The underlying EBITDA margin (EBITDA explained) is expected to come in a range of 37% to 39%.
The FY21 EBITDA margin is higher than its long term expected EBITDA margin of 32% to 35% because of direct result of all licence revenue worth around $21 million being recognised in the second half of FY21 as required by accounting rules.
Summary thoughts
New contract wins are always a good sign for a business like Hansen, particularly such a large win like this one.
The Hansen share price has been very volatile over the last five years, even though the nature of its contracts provide pretty consistent cashflow from customers.
With the company essentially at its all-time high, I wouldn’t be in a rush to buy today but if it keeps winning contracts then it could continue to rise.
