With earnings season done and dusted, we take a look back at three of the best performers in what was an overall mixed period for the ASX. We’ve also included one quality company which has had a challenging time post-release and may provide an opportunity for investors should things turn around.
The Gold Medal - Altium Ltd
Electronic design software platform provider Altium Ltd (ASX: ALU) released an incredibly strong set of results which sent the share price soaring.
The company added a quarter of its market capitalisation in just one session following a 19% year-on-year (YoY) increase in revenue to US$263 million which flowed through to a profit before income tax of $87.7 million–an increase of 29% from the prior year.
Altium also announced a number of lofty targets for the 2026 financial year which undoubtedly excited its shareholders.
The above goals are incredibly ambitious and require significant growth going forward. Shareholders are in for a great ride if the company can pull it off.
Silver Medal - Aussie Broadband Ltd
TAMIM-held Australian telecommunications and technology company (ASX: ABB) had a strong result that continued its 2023 share price recovery.
Since the results announcement, the share price has increased over 30% at the time of writing. The company’s revenues grew by 23.1% to $788 million and Earnings Before Interest Tax & Depreciation (EBITDA) increased 52.1% to $89.6 million. The higher EBITDA margin was largely fuelled by continued investment in the fibre network and a focus on more profitable services, which led to an increased gross margin of 35.4% (up 2.1 percentage points YoY).
Co-founder & Managing Director Phillip Britt commented:
“These results underscore the value of our offer in the Australian market and the steps we are taking towards becoming a leading force in the communications and technology sector, powered by our focus on customer experience, technical expertise, infrastructure ownership and grassroots values”.
The Aussie management team also provided bullish FY24 guidance on the back of their strong result.
Under the future pipeline and market conditions the company expects EBITDA to be in the range of $100 million to $110 million, an increase of 12%-23% compared to FY23.
Bronze Medal - Audinate Group Ltd
Audiovisual network solutions provider Audinate Group Ltd (ASX: AD8) takes the final position on the podium.
US dollar revenue increased 40% to $46.7 million, driving a net profit before tax of AU $1.4 million compared with a loss of $4.4 million in the prior period. This was despite a decline in the gross margin to 72.1% from 74.7% in the prior year due to a shift in the sales product mix. Audinate’s cash flow position also improved on the prior year. While still a negative $4.3 million it was a significant improvement on the $11.7 million outflow in FY22. Notably, Audinate demonstrated positive free cash flow of $2.5 million in the second half of 2023.
Following the results the company has seen its share price reach a new 52 week high of $14.67, compared to just above $10 prior to the release.
Despite the improved cash flow performance, the company went into a trading halt just over two weeks after the release to raise capital at $13 per share. The proceeds from the equity raise will be utilised to continue strategic investment to drive organic growth, enhance and accelerate video growth and to explore a pipeline of identified bolt-on M&A opportunities.
Controversially, CEO and co-founder Aidan Williams sold shares received as part of vesting performance rights just 10 days prior to the capital raise announcement.
While these were some excellent results for the business, its chances of claiming a higher place on the podium were impacted by the capital raise and share sale.
The Not So Good - Resmed Inc
Resmed Inc (ASX: RMD) has had a tumultuous month following the announcement of its full year results.
The world leader in sleep apnea treatment released solid numbers, including revenue growth of 18% to US $4.2 billion and net income up over 15% to US $897 million. The one disappointment in the income statement was the gross margin, which came in below analyst estimates and dropped 80 basis points to 55.8% compared to the prior year.
The real concern on investors’ minds, however, appears to be the ‘wonder drug’ Ozempic. Novo Nordisk’s Ozempic is believed to reduce the risk of major cardiovascular events such as strokes or heart attacks, and mortality among adults with type 2 diabetes and established heart disease.
For those new to Ozempic, the drug mimics a naturally occurring hormone in your brain telling you that you’re full. How is this relevant to Resmed? Sleep apnea has long been linked with obesity, so cure obesity and remove the need for Resmed? Not all sleep apnea is caused by obesity and it is still very early days for Ozempic.
Perhaps these fears are overblown, and with Resmed shares trading at 52 week lows and down close to 35% since the results release, this could be an incredible opportunity to take a closer look at a discounted Resmed.
Disclaimer: Aussie Broadband Ltd (ASX: ABB) and Resmed Inc (ASX: RMD) are currently held in TAMIM Portfolios.
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TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.