Aussie Broadband H1FY25 Results: Business & Enterprise Growth Shines
Aussie Broadband (ABB) has released its interim results for the first half of the 2025 financial year, showcasing a period of steady growth and strategic expansion. While the residential NBN business continues its upward trajectory, the real story lies in the impressive growth of the business and enterprise segments.
Metric | Result | Significance |
---|---|---|
Overall Revenue | $588m (+7%) | Steady growth |
EBIT | 37% increase | Significant improvement |
NBN Market Share | 7.8% (target 10%) | Shows Aussie's growing market presence |
Residential Revenue | $327m (+15%) | Core business remains strong |
Residential Gross Margin | 31% (slight increase) | Marginal improvement in profitability |
Business Segment Revenue | $54m (+13%) | Rapid growth in business segment |
Business Segment Customer Growth | ~50% over 2 years | Strong customer acquisition |
Enterprise & Government Revenue | $47m (+13%) | Expansion into higher-margin segments |
NPATA | $22m (+35%) | Substantial increase in adjusted profit |
Dividend | 4cps (incl. 2.4cps special) | Returns to shareholders |
Capital Expenditure | Increased to $75-80m | Higher investment for future growth |
Strategic Focus | Shift beyond reselling | Investments in infrastructure and cloud |
Key Financial Highlights:
- Revenue Growth:
- Total revenue increased by 7% to $588 million.
- Residential revenue rose by 15% to $327 million.
- Business revenue grew by 13% to $54 million.
- Enterprise and government revenue also increased by 13% to $47 million.
- Wholesale revenue decreased by 22% to $56 million.
- Profitability:
- EBITDA climbed by 16% to $62 million.
- NPATA (Net Profit After Tax, adjusted for acquired intangibles) surged by 35% to $21 million.
- NPAT(Net Profit After Tax) rose 6% to $12 million.
- Dividends:
- The company paid a total dividend of 4 cents per share (cps), including a special dividend of 2.4 cps.
- Capital Expenditure:
- Capital expenditure guidance increased from $55-60 million to $75-80 million.
Business Segment Performance: A Driving Force
- Business Segment Growth:
- Revenue in the business segment, serving small and medium enterprises, saw a 13% increase.
- Customer numbers have grown by approximately 50% over the past two years.
- This segment's growth is significant as customers tend to adopt multiple products, suggesting potential for accelerated revenue growth in the future.
- Although the gross margins shrunk marginally to 43%, the large customer growth is very positive.
- Enterprise and Government Segment:
- This segment, targeting larger customers and utilizing Aussie Broadband's own fiber network, also experienced a 13% revenue increase.
- Gross margins in this segment decreased to 49%.
- This is a key area of growth as it means that ABB is moving away from being solely reliant on the NBN network.
- Residential NBN Business:
- While the residential business saw a respectable 15% revenue growth, the focus is clearly shifting towards the higher-margin business and enterprise segments.
- The NBN market share is planned to grow to 10% from the current 7.8%.
- Gross margins in this segment increased marginally to 31%.
Financial Outcomes and Key Considerations:
- EBIT Growth:
- The 37% increase in EBIT and improved group margins reflect the success of Aussie Broadband's strategy to expand its higher-margin business and enterprise segments.
- The expected full year EBIT of 90 million dollars, and resulting EBIT multiple of less than 9, shows that the company is currently undervalued.
- Operating Cash Flow:
- The weak operating cash flow, attributed to working capital requirements, is a point of concern that investors should monitor in future reports.
- Capital Expenditure Increase:
- The increased capital expenditure guidance indicates Aussie Broadband's commitment to investing in its infrastructure, including fiber network expansion, new IP addresses, and internal cloud capabilities.
- This investment is crucial for the company's long-term growth and its ambition to become more than just an NBN reseller.
Strategic Direction and Future Outlook:
- Investor Day:
- Aussie Broadband will host an investor day next month, where further details of its strategic direction will be unveiled. This event will provide valuable insights into the company's future plans.
- Beyond Reselling:
- The investments in fiber and cloud capabilities suggest that Aussie Broadband is actively working to diversify its services and move beyond its core NBN reselling business.
Conclusion:
Aussie Broadband's H1FY25 results highlight a company strategically positioned for growth, particularly in its business and enterprise segments. While the residential NBN business remains a stable foundation, the focus on higher-margin services and infrastructure investments indicates a clear vision for the future.
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