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Damstra share price soars 10% on strong Q2 revenue growth

Phil Harpur
ASX shares soaring higher

The Damstra Holdings Ltd (ASX: DTC) share price is flying this morning and is up 10.42% after the company released its second quarter update for FY20. 

Damstra provides both hardware and software workplace management solutions, designed to reduce the risks associated with workplace health, safety and regulatory compliance. Damstra shares are currently trading for $1.06 at the time of writing.

Financials tracking ahead of prospectus guidance

Damstra’s update revealed that its run-rate financial performance is currently tracking in excess of FY20 prospectus forecasts for both revenue and pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA).

Total revenue for the first half of FY20 is $10.2 million, up 44% compared to the prior period. This growth rate is higher than Damstra’s prospectus forecast growth rate of 39.4% for FY20.

Pro-forma EBITDA for 1H FY20 is expected to be approximately $2.6 million. In comparison, the prospectus forecast for the full year FY20 is $4.3 million.

During the 2nd quarter of FY20 cash receipts were $4.6 million, with a closing cash balance of $12 million. On an underlying basis, operating cash flow for 1H FY20 was $3 million.

Strong domestic and international progress

During the quarter, Damstra continued to execute its growth strategy both domestically and internationally, reporting that international market revenue was 23% of total revenue in 1H 20.

Damstra also achieved solid progress in relation to its Newmont rollout, with new sites being brought online during the quarter. Newmont sites are currently operational in Australia, North America, Suriname, Ghana and Peru, with over 14,000 Newmont users now on the Damstra platform.

Key client wins

Damstra continues to gain new clients as it rolls out its products. Key wins include IMG, which supplies skilled tradespeople to undertake shutdowns and capital projects in New Zealand. IMG has implemented Damstra solutions in 6 locations.

There was continued growth in the mining sector with the signing of Australian-based Metro Mining, and growth in new clients deploying Damstra’s eLearning solution, such as Newcastle Permanent Building Society.

Damstra also demonstrated further development of its channel partner strategy, with its offering expected to be launched during 3Q FY20.

Acquisitions and investment in research and development

Damstra reported that its acquisition of Scenario, completed on 20 December 2019, was proceeding well, and the company expects an increased revenue contribution from Scenario from FY21 onwards.

Damstra continues to invest in research and development to drive further growth. Research and development headcount increased by 60% over the 12 months to December 2019, and now stands at 40 full-time equivalent employees.

Damstra’s 1H FY20 results are expected to be released to the ASX on Thursday 27 February 2020.

The post Damstra share price soars 10% on strong Q2 revenue growth appeared first on Motley Fool Australia.

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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Damstra Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020