Aconex Ltd (ASX: ACX), the $750 million construction software business, today reported a half-year loss of $3.5 million.
The company reported 38% revenue growth for the period to 31 December 2016, or 45% in constant currency.
However, an increase in sales and marketing, product development and general expenses saw the company report a loss of $3.5 million, down from a profit of $4.5 million in the same period last year.
"We will continue to invest in product, sales, marketing and customer service to capture the large global market opportunity," Aconex CEO Leigh Jasper said. "This investment will further consolidate our market leading position, underpinning our growth for years to come and enabling Aconex to deliver on its mission of connecting teams to build the world."
Just last month, Aconex shocked the market by forecasting a steep fall in operating profit and revenue growth for its 2017 financial year. Today, it reiterated those forecasts:
That little '2' next to the scary looking jumble of letters (EBITDA) says their operating profit forecasts excludes integration costs.
EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation, but it is not approved by accounting standards.
Despite making a loss, Aconex's half-year EBITDA from "core operations", which excludes business acquisition costs and integration expenses (bear with me), was $7.4 million.
So, in summary, that would imply today's profit was at the lower end of its EBITDA guidance provided last month. Remember, that figure squeezes out costs and some other items, so make of it what you will.
Aconex did not declare a dividend.
Should you buy Aconex shares?
Aconex is a $750 million company reporting a half-year prof…err…loss of $3.5 million. Automatically, that would make it too expensive for me unless it was making heaps of cash. It reported operating cash flow of $905,000 during the half — or $0.9 million, since we are talking in millions.
The company does not appear to be free cash flow positive, from my calculations. Fortunately, it has a decent wad of cash on its balance sheet.
In my opinion (you can take it or leave it), Aconex shares are not a buy. In fact, I think they are at best a 'hold'.
If I were looking at growth and dividend stocks to buy today, I'd look elsewhere.
