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Bulletproof to Post 67% Revenue Growth

Bulletproof to Post 67% Revenue Growth
Recurring revenue makes up close to 80% of total revenue, highlighting the resilience of Bulletproof’s income streams.
Jul 14, 2016 By Simon Herrmann Tags: BPF, Software, Cloud

Cloud-service provider Bulletproof Limited (ASX:BPF) released a trading update today, advising that the company expects to post total revenues of $47 million for the full year, a 67% increase on FY15.

Revenue growth is significantly above the average market revenue growth rate of 25-30%, which highlights the strength of Bulletproof’s operations. Underlying EBITDA is expected to be $4.6m -$4.7m, an improvement from last year’s $4.2m. The company announced a closing cash balance of $4.6m, a result of positive operating cashflow.

Results Positive but Profitability Slightly below Expectations

The company states that the result is “in line with market expectations”. Recurring revenue makes up close to 80% of total revenue, highlighting the resilience of Bulletproof’s income streams.

However, the company advised that profitability has not grown at the same pace due to a number of unexpected issues. Weaker than usual seasonal behaviour and delays with customer projects affected the profitability in the newly acquired New Zealand business. Revenue performance was relatively flat in this area, and profitability in the professional services engineering team declined due to lower utilisation levels.

Nevertheless, management remains positive for FY17 as a number of significant enterprise wins were secured, which will start to materialise over the upcoming 12-month period. The company expects “to see these revenues increase into FY17 as products gain appeal with customers and assist the company to deliver value more efficiently and help drive margins.”

Investment View

Wise-owl remains positive on Bulletproof’s outlook, despite a few issues during the second half of FY16. While profitability was slightly below expectations, we believe that the company is well set to deliver growth above the sector average. We are attracted to the high level of recurring revenues, which provides the company with a strong income base, while new contract wins and strategic acquisitions may offer additional upside.

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Simon Herrmann Author: Simon Herrmann Jul 14, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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