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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