ASX tech share latest to dump its dividend and guidance

ASX tech share Rhipe Ltd (ASX: RHP) has withdrawn its full year guidance and cancelled its dividend in the face of coronavirus uncertainty.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Rhipe Ltd (ASX: RHP) has withdrawn its full year guidance and cancelled its dividend in the face of coronavirus uncertainty.

Rhipe is a cloud software licensing company that supports service providers in adopting cloud technology. The company said the increasing level of uncertainty arising from coronavirus meant it considered it appropriate to withdraw its previously announced FY20 operating profit guidance. 

Dividend dumped

Rhipe said it continues to be pleased with its performance, profitability, and retention of a strong balance sheet with significant cash reserves. Nonetheless, it has cancelled its interim dividend of 1.2 cents per share. The company said this measure was precautionary and reflected a desire to maintain strong liquidity in an increasingly volatile and uncertain time. 

Rhipe shares have fallen 34% from their peak of $2.42 in February and are currently trading at $1.58, which includes a 6% gain in today's trade.

Rhipe results 

In its first half results (released in February), the company reported strong sales and revenue growth. Group sales growth was 33%, due to demand for public cloud software and infrastructure, particularly Microsoft Azure and Office365. Revenue grew by 24% due to an increasing contribution from Microsoft Azure and the company's Asian operations, plus changes to vendor incentives and competition. 

Group earnings before interest, tax, depreciation, and amortisation grew 53% year on year to $7 million, while net profit after tax grew 7% to $3.3 million. Rhipe was predicting full year profits of $16 million prior to today's announcement. 

At the end of the first half, Rhipe had $24 million cash versus $25.5 million at 30 June 2019. By cancelling the payment of the interim dividend, Rhipe will save over $1.6 million. Rhipe is among a growing number of companies that have cancelled or deferred dividend payments in the last couple of weeks. 

Range of companies impacted 

Qantas Airways Limited (ASX: QAN) deferred its dividend of 13.5 cents per share from April to September, and cancelled an off-market share buyback in order to preserve $150 million in cash. Flight Centre Travel Group Ltd (ASX: FLT) cancelled its interim dividend of 40 cents per share in order to save some $40.1 million

A large number of ASX shares have also withdrawn earnings guidance due to the impacts of coronavirus. Auckland International Airport Limited (ASX: AIA) withdrew guidance as New Zealand introduced strict new border controls to contain the spread of the virus. Cochlear Limited (ASX: COH) withdrew guidance as cochlear implant surgeries were deferred

oOh!Media Ltd (ASX: OML) withdrew guidance due to the economic impacts of coronavirus on the advertising market. Seven West Media Limited (ASX: SWM) and Nine Entertainment Co Holdings Limited (ASX: NEC) did likewise. 

Kate O'Brien owns shares of Cochlear Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. The Motley Fool Australia has recommended Cochlear Ltd., Nine Entertainment Co. Holdings Limited, and oOh!Media Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Happy man working on his laptop.
Share Market News

5 things to watch on the ASX 200 on Wednesday

Will the Australian share market continue climbing today? Let's find out.

Read more »

Person holding Australian dollar notes, symbolising dividends.
Broker Notes

The best Australian shares to buy with $7,000 right now

Analysts think these shares could give you a good return on investment.

Read more »

A man in business pants, a shirt and a tie lies in the shallows of a beautiful beach as he consults his laptop on the shore, just out of the water's reach.
Opinions

1 ASX stock I bought for my superannuation fund and another I'm planning to buy

I believe in these ASX shares for the long-term.

Read more »

A smiling man take a big bite out of a burrito
Opinions

3 reasons the Guzman y Gomez (GYG) share price could still be a buy

Here’s why I think spicy growth could continue.

Read more »

A beautiful ocean vista is shown with a woman whose back is to the camera holding her arms up in triumph as she stands at the top of a rock feeling thrilled that ASX 200 shares are reaching multi-year high prices today
Record Highs

17 ASX 200 shares that smashed new record highs on Tuesday

Do you own any of these lucky stocks?

Read more »

Man raising both his arms in the air with a piggy bank on his lap, symbolising a record high.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a huge Tuesday for ASX shares, with the index resetting its record high.

Read more »

A piggy bank on the cloud in the blue sky symbolising a record high share price.
Share Market News

Here's why Morgan Stanley says the record-high ASX 200 has more room to run

The top broker also thinks investors should prepare for a rotation out of ASX bank stocks in 2025.

Read more »

A business person holds a big balloon in front of their face.
How to invest

I'm fine with a stock market crash. You might be too

This article might leave you longing for a ride to the downside.

Read more »