Michael Omeros (OTW)
A double acquisition has proved bittersweet for Over the Wire, delivering both a revenue uplift and a dip in post-tax profits for the year ended 30 June 2021.
The publicly-listed IT and telco services provider posted FY21 revenue of $112.7 million, a rise of 29 per cent from last year’s $87.6 million.
However, the company’s annual profit after tax fell by 32 per cent to $3.4 million from FY20’s $5 million.
Over the Wire noted that the latter had decreased predominately due to $3.9 million amortisation incurred on $51.8 million of intangible assets with a limited life in its acquisitions of J2 Global and Digital Sense.
Collectively, Over the Wire paid $63 million for the two companies.
The acquisition of J2, which included the brands Fonebox and Zintel, added $19 million in revenue and 9,000 new business customers to Over the Wire. Meanwhile, Digital Sense added revenue of $18.3 million to Over the Wire’s coffers.
In particular, the deals have sparked strong growth for Over the Wire’s voice division, which grew by 77 per cent to $34.7 million and its hosting business, which grew by 113 per cent to $21.5 million.
In addition, Over the Wire noted its recurring revenue had grown by 38 per cent to $103.2 million, claiming it was “delivering strong positive operating cash flows”.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for the year was $23.5 million, rising from $17.4 million in FY20, with EBITDA margin improving from 20 per cent in the previous year to 21 per cent.
“The completion of the carrier interconnect project and the completion of the Zintel, Fonebox and Digital Sense acquisitions provides us with a strong platform to lock in a variety of new, recurring revenue streams,” said Michael Omeros, Over the Wire's managing director.
During FY21, the company completed its transition to becoming a Tier 1 voice carrier, which means it can now offer full-service voice capabilities and sit alongside the likes of Telstra, Optus, TPG, MyNetFone and Vocus.
Omeros claimed this would make Over the Wire less reliant on third-party providers and “unencumbered by legacy technology”.
“We have the people, solutions and platform to deliver strong organic growth in the current year and are focussed on ensuring we deliver in line with our expectations,” he added.
Earlier this year, when Over the Wire posted its half-year results, the company claimed COVID-19 played a significant role in Over the Wire’s FY20 results, but it had a minimal impact on the business in the following half year.
Over the Wire recently saw its FY2022 kick off with the departure of its CEO Scott Smith, who announced his exit after just 17 months with the company and with nobody lined up as a replacement.
