Cirrus Networks profits dive despite managed services growth

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Cirrus Networks profits dive despite managed services growth

Managed services provider Cirrus Networks has announced its underlying profits were eroded by one-off costs, but also reported strong managed services growth.

In its ANZ announcement released today (pdf), the company posted a net loss after tax of $244,000 in the six months ended 31 December 2019, compared to a net profit of $135,000 in the previous year.

The loss came despite growth in revenues and underlying profit after tax, with one-off costs related to amortisation and depreciation, net interest expenses and non-cash option expenses.

Speaking to CRN, Cirrus managing director Matt Sullivan explains that net profit after tax can involve "various accounting adjustments" and is more accurately judged on EBITDA. Cirrus' EBITDA is up 47.6 percent to $864,000 from $585,000.

Revenue for the period grew five percent to $47.8 million from $45.7 million in 2018, buoyed by 22 percent growth in managed services and a 3.5 percent increase in product sales revenue. Underlying profit after tax was up 22 percent to $926,000 from $758,800.

“The fifth consecutive year of H1 revenue growth is very pleasing and demonstrates that Cirrus remains on track to deliver on our strategic goal,” Sullivan said in the announcement.

“The growth in managed service revenue, coupled with a strong pipeline of qualified opportunities, good organic growth and a geographically diversified revenue base, provides confidence to deliver on our full year revenue expectations of [more than] $100 million.”

Cirrus expects to see H2 2020 “significantly up” from the previous year, citing “a strong orderbook” and “positive pipeline of opportunities”.

The company is also monitoring any potential consequences from the Novel Coronavirus outbreak on its operations, including any potential supply chain delays. Any potential negative impact has not been factored in the company’s guidance at this stage.

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