Whispir stock price soars on record earnings

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The Whispir Ltd (ASX: WSP) The stock price struggled higher on Wednesday amid the release of FY22 annual results.

As of this writing, the communications platform provider’s shares are 3.8% in the green at $1.24. However, the stock price hit a high of $1.27 earlier in the session.

Whispir stock price rebounds despite costly growth

  • Revenue up 48% over the prior corresponding period to a record $70.6 million
  • Annual recurring revenue (ARR) up 22% to $65.4 million
  • Gross margins slipped from 59.8% to 58.5%
  • EBITDA loss worsened to $10.6 million from $3.8 million
  • Net loss fell from $9.5 million to $19.5 million
  • Cash balance at the end of June 2022 of $26.08 million

As the bottom line deteriorated in FY22, the company took its revenue to the next level. Annual reports indicate that this substantial growth was mainly supported by operations in Australia and New Zealand (ANZ).

Specifically, the ANZ business reported a 56% improvement in revenue. Whispir pointed to its partnership with major healthcare providers throughout COVID-19 as a driver in part of this improvement.

Additionally, despite concerted efforts to reduce expenses in the third and fourth quarters, operating expenses outpaced revenue growth year-over-year. These increases were reportedly driven by increased spending on marketing, research and development, and administration.

However, given Whispir’s positive share price, it seems that investors are now focused on solid earnings growth.

What else happened in FY22?

In terms of key events in the year, Whispir landed several notable deals. For example, the company signed a 36-month contract with South Australia’s Department of Education, enabling 900 schools to use the platform for a variety of purposes, including internal communications.

In addition, an 8-year contract was entered into with a “significant” Australian government department in FY22.

Fortunately, while remaining a small part of the business, Whispir has grown its revenue in Asia and North America. Asia saw a marginal increase of 1%, while North America saw a jump of 38%.

What did management say?

Commenting on the result, Whispir CEO Jeromy Wells said:

Whispir again delivered strong financial performance, securing record revenues while reducing operating expenses in the fourth quarter. Our strengthened management team has contributed to Whispir’s continued success as we firmly aim to become EBITDA positive in the second half of FY23.

Further building confidence in the Whispir product, Wells said:

Governments, businesses and other organizations are now clearly committed to a future where digitalization will play a vital role in ensuring that communications are targeted, efficient and effective. The benefits of integrating artificial intelligence, algorithms and data to inform how and when to communicate are becoming clear, and this awareness continues to drive our business in all markets. Simply put, it becomes costly for organizations not to invest in intelligent communication services.

And after?

Rather than a separate range of financial expectations for FY23, management opted today for a commentary on the broader outlook. This could make Whispir’s share price difficult to predict in the short term.

Overall, the company aims to continue delivering strong revenue growth across all regions. In addition, management is targeting gross margin improvements.

Finally, Whispir expects positive EBITDA in the second half. Management believes this is achievable without additional capital requirements.

Wwispir Share Price Overview

It’s been a runny knocker of the past 12 months for the Whispir stock price. During this period, investors saw their stocks erode by 41% in value.

The company’s valuation was likely penalized during this period as the market abandoned its desire for unprofitable companies. Evidenced by the 27% drop in the S&P/ASX All-Tech Index (ASX: XJO) over the past year.

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