The shares of software-as-a-service company Aconex Ltd (ASX: ACX) will be on watch today after it announced its full year results. The leader of digital innovation in the construction industry certainly had a strong year to post total revenue of $123.4 million, up 50% year on year.
Revenue from the Australia-New Zealand market rose 35%, whilst international revenues jumped 61% thanks to a combination of acquisitions and strong organic growth. Whilst Aconex did receive a boost from favourable currency fluctuations, on a constant currency basis revenue still increased by 31% on last year.
A lot of the justification for investing in Aconex despite its shares trading on extreme multiples has been that as it scales, its profitability will increase. I believe these results have gone some way to proving this to be the case.
Earnings before interest, tax, depreciation, and amortisation grew an impressive 350% to $13.6 million. Even better though was the news that net profit after tax from core operations came in at $9.9 million, compared to a $2.5 million loss last year.
The company's total cash and cash equivalents rose to $52.5 million, compared with $29.1 million in FY 2015. Net operating cash flows from core operations for FY 2016 were $9.2 million, compared with $6 million for FY 2015.
Overall I think this is a strong result and shareholders should be very happy with it. But how the market reacts could be a different story. A number of growth shares such as Domino's Pizza Enterprises Ltd. (ASX: DMP) were punished during earnings season for not delivering above and beyond expectations.
Whether that happens to Aconex today we'll soon find out, but if it does I think it could be viewed as a great buying opportunity for a long-term investment. This is after all a company with a very bright future ahead of it. Aconex has a market-leading position in a $10 trillion construction industry which is rapidly going digital. As far as I'm concerned its growth story is only just being written.
