News – AU – Why MNF Group (ASX: MNF) Share Price Is Up 7% Today


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ASX 200 | A B C D E F G H I J L M N O P Q R S T U V W X

James Mickleboro | 23 February 2021, 10:10 am | More on: MNF

In morning trading, the MNF Group Ltd (ASX: MNF) share price has risen sharply following the release of the half-year results

At the time of writing, the leading voice communications software company has shares up 7% to $ 448

MNF continued its positive form in the first half of fiscal 2021, delivering strong recurring sales and earnings growth

In the six months to the 31st In December the company posted sales of USD 1121 million. While this was only slightly higher than the same period last year due to the decline in global roaming and audio conferencing use, recurring sales continued to rise

MNF achieved a 15% increase in recurring sales to $ 557 million for half this was due to the wholesale business, which saw strong growth in both global and national segments, supported by solid recurring revenue from direct business

This means that recurring income now accounts for 50% of total sales, up from 43% last year

Earnings before interest, taxes, depreciation and amortization (EBITDA) also grew solidly in the half-year MNF reported a 16% increase in EBITDA to $ 19 million, meaning it is on track to meet its FY 2021 guidance

Bottom line, the company posted a 30% increase in underlying net income after taxes (before amortization) to $ 8 million

This solid earnings growth enabled the MNF board of directors to resolve a fully franked interim dividend of 3.3 cents per share, an increase of 32% over last year’s interim dividend

Investors should take note of a few other key metrics that have also improved over the half-year (and appear to help propel MNF stock higher today)

This includes the number of phone numbers rising 24% to 5.1 million thanks to strong organic growth The addition of over 1 million new numbers is very positive as it has traditionally been a leading indicator of future recurring revenue

Another metric that caught our eye was Net Revenue Retention (NRR) The company announced that its NRR rate among its top 10 customers was 115%, meaning that the company not only keeps those customers but also spends more

René Sugo, CEO of MNF, commented, “I am pleased to report strong results across all key metrics, including record profitability, a 24% increase in phone numbers and a 15% growth in recurring revenue. Our growth strategy Laser focus on recurring revenue growth We were particularly pleased with the performance of our global wholesale business, where recurring revenue increased 55% Our top 10 customers are spending more money with us, which translates into our 115% net retention rate shows ”

The company announced that its expansion into Singapore is going well and technical tests are ongoing with three major global customers. MNF is aiming to get to market later this fiscal year

But management may not stop there. It was revealed that due diligence has been completed to assess the next Asia Pacific market to expand into. A number of milestones have been reached in the process, with six possible Target countries were shortlisted

It is also advised that the COVID headwinds it is facing from lower roaming revenue should only be temporary, and revenue growth on this side of the business is expected to rebound once international travel resumes be included

Currently, Mr. Sugo believes the company is on track to meet its fiscal 2021 EBITDA forecast of $ 40 million to $ 43 million

Commenting on his outlook, he said, “We are on track to achieve an EBITDA of $ 40 million to $ 43 million in FY 2021”

“Our strategic priorities are to gain market share, expand into the Asia-Pacific region, be a trusted partner and provide a high level of customer experience. We are very pleased with the progress in Singapore that our relationships with further solidifying our global customers and giving us the confidence to continue expanding into the Asia-Pacific region ”

“This milestone underscores the need for MNF services across the region and supports the steps we are taking to assess new markets in the region in order to grow and expand our presence. We are well positioned to address these strategic Implement initiatives and drive operational excellence at home in Australia and New Zealand, ”concluded Sugo

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James Mickleboro, Motley Fool contributor, has no position in any of the stocks mentioned The Motley Fool Australia owns and has recommended MNF Group Limited shares The Motley Fool has a disclosure policy This article provides general investment advice only (under AFSL 400691) Authorized by Bruce Jackson

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News – AU – Why the MNF Group (ASX: MNF) share price is up 7% today
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