FY17 Results: Cirrus Networks Continues to Deliver on Growth Strategy Underpinned by Strong Revenue Growth


Revenue up 176% on prior year at $53.9 million (FY16: $19.5 million)
Record annuity revenue up 74% on prior year at $2.5million (FY16: $1.06 million) with associated margin up 147%
Fourth consecutive reporting period of revenue growth
Results demonstrate success of Cirrus’ growth focused strategic plan, which included the successful acquisition of NGage
In FY18 Cirrus will look to continue growth of top line revenue while focusing on margin and NPAT growth

Cirrus Networks Holdings Limited (“Cirrus” or the “Company”) (ASX: CNW) is pleased to announce its FY17 results which demonstrate another strong year for the Company and highlights the continued and significant growth prospects of the Company.

Strong and Continued Growth in FY17

The 2017 full year delivered revenue of $53.9 million, up 176% on the prior year. Annuity-based managed service revenue for the year was $2.5 million, up 74% on the prior year with annuity margin up 147% on prior year. This represents the fourth consecutive reporting period of revenue growth and the fourth consecutive period of improved underlying financial performance.

These strong results are a testament to the strategic success of the Company’s geographic and customer diversification.Whilst the Western Australian business continues to be the largest contributor, the Company is seeing significant contributions from new geographies in growing market share and becoming a provider of choice in major market sectors including resources, financials, education, health, government and not for profit community services. NGage Technology Group (“NGage”) generated in excess of $15 million of revenue for the Company since it was acquired in April 2017.

Speaking about the FY17 results, Cirrus Managing Director Matt Sullivan said:

“This is a very pleasing result and continues the success we are having delivering on our strategic plan. To continue our strong revenue growth from the prior reporting periods while integrating the acquisition of NGage Technology Group and continuing to position our new location in Canberra, is an excellent achievement. The delivery of continued revenue growth, improving underlying financial performance and maintaining operating cash while investing for future growth provides us with great confidence as we move into the next phase of the business.

None of this would be possible without high quality staff, loyal customers, innovative solution based offerings and strong vendor and supplier partnerships. It is through this combination the business continues to build a foundation to deliver value to shareholders.”

The net profit for the consolidated entity after providing for income tax amounted to $401k. During the period the consolidated entity incurred a number of one-off and non-cash expenses including:

costs associated with establishing the new Canberra location including the onboarding of local sales and account management professionals and ongoing support of $1,136k;
non cash expensing of share based options $231k; and
Due diligence costs associated with the acquisition of NGage $104k.

It also received a one-off R&D tax offset refund of $1,189k. After adjusting for these one-off transactions and non-cash expenses the entity had an underlying net profit of $751k (30 June 2016 : $1,630k Loss).

The entity continues to be debt free and was operating cash neutral for the year leaving $5.7m in Net Assets at 30 June 2017, including $3.95m in cash.

Emphasis on Continued Top Line Revenue Growth in FY18 with Strong Focus on Margin and NPAT Growth

In FY18 Cirrus will continue to look for opportunities to grow top line revenue and will have an increased focus on margin and NPAT growth. This will be achieved through a significant focus on annuity contracts, professional services growth and further leveraging Cirrus’ buying power in Melbourne with the Company’s tier 1 vendors. Proforma annualized revenue for FY17 is $75m with the expectation of continued growth into FY18.

Commenting on the year ahead Managing Director, Matt Sullivan, stated:

“FY18 will again be an important year in Cirrus’ transformation and growth and we expect to deliver continued significant revenue growth, with a particular focus on improving revenue mix and margins. We will continue to assess strategic geographic and competency based acquisitions. With an energized executive team, strong debt free balance sheet and ongoing investment in growth initiatives, Cirrus is well placed to continue to capitalize on opportunities to drive shareholder value.”

For further comment and information
Mr Matt Sullivan                             Mr Matt Green
Managing Director                          Chief Financial Officer

Tel: (08) 6180 4222

About Cirrus:

Cirrus Networks Holdings Limited (ASX: CNW) is an innovative IT solutions provider who works with businesses to understand their technological needs and implement world leading solutions that are both cost effective and provide long term operational gain. The diverse reach of Cirrus means the company is able to provide a wide range of solutions including:

• Data Centre and Cloud;
• Convergence;
• Storage;
• Data management (including big data);
• Network design and optimisation;
• Business continuity;
• End user computing;
• Unified communications and IP Telephony;
• High quality IT Service Management, Consulting and Project Management services.

Excellent service and an innovative, holistic approach has seen Cirrus quickly grow an extensive base of blue chip clients across industry sectors. The rapid expansion of Cirrus awarded the company second place for the fastest growing “Rising Star” technology company as well as second place at Deloitte Australia’s Technology Fast 50 Awards.

The Cirrus offering was strengthened further in 2015 with the acquisition of Perth-based IT Solutions Provider, L7 Solutions. Since then, an assertive national expansion strategy has enabled Cirrus to establish a robust Eastern states presence with the formation of an office in Canberra and the recent acquisition of Melbourne based IT Provider, NGage Technology Group.