Melbourne IT revenue up, bracing for soft second half

Following the acquisition of NetRegistry, Melbourne IT's revenue and underlying EBITDA have experienced double-digit growth.
Written by Chris Duckett, Contributor

The purchase of NetRegistry earlier this year by Melbourne IT has been cited as underpinning a 16 percent jump in revenue during the first half of the 2014 financial year for Australia's largest domain name registrar.

Overall, the company posted AU$59.6 million in revenue compared to AU$51.3 million over the same period last year, with earnings before interest, tax, depreciation, and amortisation (EBITDA) down from AU$3.7 million to AU$3.6 million. Melbourne IT's legacy business grew revenue by 1 percent to AU$50.9 million, with its enterprise services division growing by 9 percent, while the SMB solution division experienced a 1 percent drop in revenue.

Before transaction costs relating to the NetRegistry purchase, the company said its EBITDA was AU$4.9 million for the half, up 32 percent on the first half of 2013. No further transaction costs are expected to be incurred — profit was also hit by a AU$8.59 million decision to move to a single technology platform.

"While the first-half performance is encouraging, we anticipate some softening in revenue in the second half in our SMB solutions division," the company said in its filing. "Partially offsetting this is the continuing acceleration in our enterprise services division and the savings from disciplined cost management."

For the full year, Melbourne IT expects its profit to come in at the bottom of its guidance. The company said that as it integrates NetRegistry into its business, the amount of savings possible has increased.

"We can see our way clear to achieving up to 50 percent more savings than originally forecast, with the majority of this upside being realised in 2016."

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