Bulletproof plummets AU$2.1m into the red for FY17

While fighting a NZ$3 million lawsuit in New Zealand, the Australian cloud services provider has reported an EBIT loss of AU$2.1 million for the 2017 financial year.

For the 12 months ended June 30, 2017, Australian cloud services provider Bulletproof has reported an earnings before interest and taxation (EBIT) loss of AU$2.1 million, marginally recovering from its AU$2.7 million first-half EBIT loss.

The company also reported an underlying net loss after tax of AU$0.2 million, which led to a statutory net loss after tax of AU$6.1 million once AU$6 million in one-off items, such as restructing costs and goodwill impairments, were taken into account.

Commenting on the company's financial performance, CEO Anthony Woodward said Bulletproof continued to face the headwinds and challenges that carried forward from the second half of the 2016 financial year.

"We have now made significant changes to the business operations and profitability, resulting in a strong second half that reflected the impact of these changes," Woodward said in a statement on Wednesday.

Revenue for the year improved by 4 percent over FY16, totalling AU$49.2 million.

Recurring revenue growth of 6.5 percent year on year to AU$39.5 million was impacted by significant churn in Public Cloud, the company said.

The largest impacted area of revenue was Professional Services, which the company attributed to the "significant slowdown" in activity from a couple of major clients during the first half of FY17.

During the year, Bulletproof spent AU$1.3 million on restructuring activities, which included culling its workforce by 30 people. The company told shareholders the investment is expected to deliver ongoing savings in the future.

In May, the company received a new CFO in Paula Kensington, inked a partnership with Accenture to deliver joint initiatives, and established a AU$5 million debt facility in June with Moneytech to improve its working capital position.

Bulletproof scored a handful of major client project wins, including Victoria's Department of Environment, Land, Water and Planning; Simplot; and Mirvac during the 12-month period. It also retained existing customers such as Qantas, Australian Treasury, CrownBet, Network Ten, and UBank.

In January last year, the company announced its intention to acquire the business assets of New Zealand-based Cloud House for NZ$1 million upfront, with a further NZ$4.2 million in cash and scrip to be paid upon meeting performance targets by June 30, 2017.

The agreement was amended in June 2016 to allow earn-out payments to the founders in December 2016, June 2017, and December 2017. However, based on "business performance hurdles", including revenue and profit performance, the first payment was not made by Bulletproof.

As a result, Cloud House founders lodged a NZ$3.88 million claim against Bulletproof in the New Zealand High Court.

According to Bulletproof, the claim alleges that Bulletproof's management and business decisions after the acquisition resulted in Cloud House not achieving the earn-out to which it claims to be entitled.

The claim also alleges that Cloud House was misled by Bulletproof on the company's capabilities, customer base, and access to managed services.

Bulletproof is disputing the allegations and lodged its defence earlier this month.

Lawsuit aside, Bulletproof's New Zealand business delivered NZ$3 million in revenue for the 2017 financial year.

Bulletproof, founded in 2000, listed on the Australian Securities Exchange after performing a reverse takeover of Western Australian-based mining company Spencer Resources in early 2014.

For the 2016 financial year, Bulletproof reported AU$900,000 in EBIT, on revenue of AU$47.2 million.

Looking forward to 2018, the company is expecting to report a profit, with its restructuring activities to be completed by the end of Q1.

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