Cirrus Networks will report lower-than-expected revenues despite having ‘record’ earnings in the 2019 financial year due to delayed contracts.
In a market update issued to shareholders, the company said it expects to post $88 million in revenue for FY19, up 15.7 percent from $76 million in the previous year. Cirrus was expecting to rake in more than $100 million.
Revenue was dragged down by product sales. Delays to some “significant” contracts in the fourth quarter didn't help matters either. Some $9 million in contracts were eventually signed after 1 July.
Cirrus posted $1.8 million in earnings before interest, taxes, depreciation, and amortisation (EBITDA), up 311 percent from $437,000 in FY18, on the back of growth in its services business. Overall services revenue grew 36 percent from FY2018, with managed services posting 91 percent growth.
“As an Australian SME, Cirrus is proud to deliver a record earnings result to shareholders,” Cirrus managing director Matt Sullivan said.
“Whilst the lower than expected revenue highlights the unpredictable nature of product sales it vindicates our strategic direction away from product and into the more profitable and more predictable services.
“The ongoing success in growing services revenue and margin positions the company well to deliver on earnings growth expectations going forward.”
Looking ahead, Cirrus expects a strong FY20 with the $9 million in contracts already closed in July, as well as $3 million in new services contracts with government clients. The company expects to see revenue break the $100 million mark in FY20 with higher margin contracts.