Growing digital transformation services demand, and strong growth in the NSW and Auckland markets have helped to push Empired’s (ASX:EPD) earnings growth for the year beyond 100 per cent.
The publicly-listed IT services company revealed its preliminary unaudited annual results on 9 August, telling shareholders that its pre-tax earnings (EBITDA) rose by 105 per cent, year-on-year, for the 12-month period, to $15.4 million.
This result was off the back of revenues which saw only a slight, five per cent rise on the previous year, totalling $168 million.
This was constrained due to a decline in low-margin product re-sale and soft activity in the US.
“The US returned to growth in Q4 and we expect this growth to continue based on sales activity and pipeline,” the company told shareholders.
Meanwhile, overall sales growth surged to 10 per cent from FY16, representing a key indicator to forward revenue.
Empired put much of its earnings increase down to strong demand for digital transformation services, including data analytics, modern applications and cloud, and burgeoning business in key growth regions in Australia and New Zealand.
According to the company, NSW sales rose by 32 per cent, while Auckland surged by 67 per cent.
However, the company’s depreciation and amortisation during the year will include a one-off non-cash charge of $1 million, due to its Wellington office move and a write-off of legacy assets.
“This result cements a successful recovery year, putting the challenges of FY16 clearly behind us and sets a foundation for growth in FY18 and beyond,” Empired managing director, Russell Baskerville, told shareholders. “Underpinning year-on-year growth is our recurring revenue base as well as growing revenue from multi-year contracts.
“The ramp up of our delivery centre in Bengaluru, significant operating leverage and a more efficient, lower cost operating model is expected to continue to deliver margin expansion over the medium term.
“The proliferation of digital business models heavily reliant on data analytics, modern applications and mobile devices is ever present and underpins an exciting growth opportunity for Empired for many years to come,” he said.
The latest results come after a trying time for Empired, with the magnitude-7.8 earthquake that rocked New Zealand on 14 November last year hitting the company’s pre-tax earnings to the tune of $400,000 during the first half of the 2017 financial year.