NEXTDC Limited

Strong Customer Growth in 1H FY19: NEXTDC Limited (ASX: NXT) is into technology domain, engaged in the development & operation of independent data centres in Australia. 


Summary of Financial Information (Source: Company Reports)

The revenue of the company was up by 17% to $90.8 million in 1HFY19 as compared to $77.5 million in 1H18, driven by higher contracted utilizations and increase in interconnections. During the first half of FY19, interconnection grew by 34% to 9,982 over the prior corresponding period, representing ~7.7% of the total recurring revenue. The statutory net loss after tax for Nextdc stood at $3.1 million as compared to 1HFY18 net profit of $8.4 million, primarily impacted by a significant rise in finance costs. 

On the business performance front, the contracted utilisation was up by 11.1MW or 28% to 50.4 MW as compared to 39.2MW in 31 December 2017. The customers of NEXTDC grew by 25% to 1,090 compared to 875 in 31 December 2017. The interconnections grew by 34% to 9,982 compared to 7,456 as of 31 December 2018.

NEXTDC acquired the underlying B1 data centre property for a total cost of $24 million. The acquisitions are in line with the long-term strategy of the company to own the underlying properties for its data centre operations, which resulted in approximately $15 million of annualized rent savings and have strengthened the balance sheet through the addition of further tangible assets.

What to Expect: The property acquisitions will result in lower interest and distribution income in the second half of 2019. Based on the performance of the first half of 2019, the company expects its revenue to be in the range of $180 million to $184 million, the underlying EBITDA to be in the range of $83 million to $87 million and the capital expenditure to be between $430 million and $470 million.

Stock Recommendation: The stock has yielded a return of 6.58% over the past one month. Considering the robust business strategy of NEXTDC, coupled with fundamental factors including growth in customers, strategic acquisitions, expected growth in demand for data centre services augur well for the future growth of the company. Further, the expectation of lower interest and distribution income in the second half of 2019 due to property acquisitions provides the business with competitive opportunities, going forward. Hence, based on the aforesaid fundamental parameters, we continue to maintain our “Buy” recommendation on the stock at the current market price of $6.46(up 2.215% on May 16, 2019).
 

LiveTiles Limited

ARR Triples Over Last Twelve Months: LiveTiles Limited (ASX: LVT) is into information technology and deals with the sale and development of business software in Australia and overseas. Recently, the company has launched partnerships with complementary SaaS companies to expand customer opportunities and accelerate growth. It has centralised data security arrangements with Nucleus Cyber to ensure compliance with regulatory and corporate policies and protect against breaches to mitigate risk. Moreover, it has technology alliances with Starmind. Hendrix provides the most simple and efficient way for professionals to automatically summarize, organize and recall meeting notes. Search365 provides with sophisticated, AI-powered enterprise search including a target market of large enterprises. Zegami targets the consumer/retail education market and works on structured and unstructured visual data.

The company reported a robust set of top-line numbers for 1HFY19 with revenue of ~$5.67 million in 1HFY19 against ~$1.90 million in 1HFY18, representing a significant rise of 198% on PCP basis. However, the growth in revenue did not aid the profitability and the company reported a loss of $22,769,721 in 1HFY19 vs. a loss of $5,921,020, an increase of 285%, primarily driven by higher operating expenses.


Annualized Recurring Revenue (Source: Company Reports)

The ARR has more than tripled over the last twelve months to add $23 million. It is one of the fastest-growing SaaS companies globally. LVT completed the acquisition of Wizdom, Europe’s leading ‘plug and play’, Microsoft aligned digital workplace software business, in Feb 2019.

The company reported a healthy rise in customer numbers, growing by 153 on a year-on-year (up 34%) to reach 598 paying customers as at 31 December 2018.Of these, 39 customers contribute at least $100,000 (termed as large customers), up from 14 as at 31 December 2017. The Average ARR per customer was up 145% on YoY basis continuing its robust growth since past one year.

Guidance For ARR: The company has revised its guidance and as per the new guidance, LiveTiles’ objective is to organically grow ARR to at least $100 million by 30 June 2021.

LVT’s share price exhibited significant volatility with a yield of 17.39% over the past three months to a negative return of 30.77% over the past one month. The company has completed the acquisition of Wizdom, and the ARR has been showing robust growth since the past twelve months. Hence, considering the above factors and current trading level, we give a “Speculative Buy” on the stock at the current market price of $ 0.435 (up 7.407% on May 16, 2019).
 

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.