Acquisitions help Melbourne IT deliver 83 percent lift in half year profit

Melbourne IT has attributed acquisitions and organic growth for the 23 percent lift in revenue, 83 percent increase in net profit after tax, and 115 percent rise in earnings before interest, tax, depreciation, and amortisation (EBITDA) for the first half of the 2016 financial year.

In publishing its half year results, the company said revenue came in at AU$85 million, up from AU$69.2 million reported last half year; while net profit after tax increased to AU$2.2 million and EBITDA grew to AU$11.2 million.

Specifically, the company's Small Medium and Business (SMB) division saw statutory revenue decline by 2 percent to AU$52 million, which Melbourne IT said was due to its ability to increase sales revenue of its managed marketing solutions by 71 percent year on year, and domestic wholesale business revenue by 5 percent after three years of decline.

According to the company, the slight decline was unfavourably impacted by the sale of its International Domain Name Registration (IDNR) business for AU$7.8 million, but it was offset by its greater product offering due to Melbourne IT's acquisition of Uber Global.

Despite this, CEO Martin Mercer anticipates the top line growth experienced by the division will flow through to the bottom line late this financial year or early the following year.

Meanwhile, the company's Enterprise Services (ES) business saw revenue grow to AU$32.9 million, up 110 percent from AU$15.7 million recorded in 1H15. Melbourne IT said this significant growth was driven by its digital solutions strategy, which now contributes to 93 percent of total revenue.

During the half year, the company completed the transformation of its ES division by finalising the acquisition of data analytics firm Infoready, a deal the company has funded through cash received from the sale of its IDNR business.

Since the acquisition of Infoready, Melbourne IT said the company has contributed revenue of AU$7.3 million, net profit after tax of AU$0.7 million, and EBITDA of AU$1.01 million during the period.

"ES delivered very strong growth on the back of the contribution from the rapidly growing businesses in data analytics and mobile apps. This is expected to accelerate further in H2 and underpin an even stronger full year performance," Mercer said.

Looking ahead, Mercer reaffirmed its full year guidance, with annualised synergy savings of AU$8.5 million expected by the end of FY16. Statutory EBITDA for 2016 will be in the range of AU$26 million to AU$28 million, while underlying EBITDA will be in the range of AU$28 million to AU$30 million, the company added.