Cirrus Networks has revealed its 2021 financial year has been impacted by business disruptions from COVID-19 lockdowns and from skill shortages.
Ahead of its full results, the company said it expected to report revenue of $106 million for the 2021 financial year, up 11.7 percent year over year.
Cirrus said it was a new record for the company despite being negatively impacted by the COVID-19 pandemic, with the second half revenue of $52.5 million broadly consistent with the $53.8 million reported in the first half.
The company said business disruptions in Victoria due to the COVID-19 lockdowns had a materially negative effect on the company’s performance. The Western Australian business also “underperformed” as a result of the turnover of sales and operational staff, which Cirrus said could not readily be replaced due to a tighter labour market.
Cirrus also said a number of product and licensing deals expected to close in late Q4 2021 did not close by 30 June 2021, but will be counted to FY2022.
“The direct and indirect impacts of the COVID-19 pandemic could not be fully anticipated or planned for the half year. However, I am proud of how the team has performed despite the various impacts, which have included microchip shortages, limited access to talent and disruptions to hardware delivery leading to service projects also being delayed,” Cirrus Networks managing director Matt Sullivan said.
“That performance by the Team is exemplified by it winning and successfully transitioning our largest ever managed service contract in Canberra during the year, to very positive feedback from the client.
“While there was an initial hit to productivity and margins during the transition phase, this contract is now running very smoothly and we expect it to provide significant incremental margin improvement in FY22.”
Cirrus Networks’ combined services revenue (professional and managed) was $26.4 million, down from $29 million in FY2020 at a gross margin of 26.7 percent, and services’ contribution as a percentage of overall margin was 47 percent.
The company’s management said it was a disappointment, but said it would “maintain a strategic focus” on future growth through higher margin service contracts. Cirrus expected that a recent contract win with Geoscience Australia should bring service revenue and margin to move back in line with growth plans in FY22.
Looking ahead, Cirrus said it is optimistic about FY2022 due to a solid backorder and a strong pipeline of opportunities, including three delayed contracts from this year.
“The business has concluded FY21 with the largest recurring revenue run rate in its history, following the commencement of the Geoscience managed services contract in June, $7.7 million in cash, no debt and a very strong balance sheet,” the announcement read.