Why the Tesserent (ASX:TNT) share price jumped as much as 10% today

The Tesserent Ltd (ASX: TNT) share price jumped as much as 10% following strong quarterly results. Here's the run down.

| More on:
Digital screen depicting padlock overlaid on circuit board

Image source: Getty Images

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

The Tesserent Ltd (ASX: TNT) share price soared as high as 10% this morning following a strong quarterly announcement. The Tesserent share price faced selling pressure however, and is currently up 4.05% at the time of writing. Here is the rundown of its quarterly update. 

Tesserent earnings 

The internet security-as-a-service provider delivered strong Q1 revenue of $15.1 million, up 42.5% from the previous quarter. Q1 revenue included two months of revenue from Seer Security and one month's revenue from both Airloom and Ludus. All three were acquisitions that the business made in mid-late FY19. 

With the addition of full quarter revenue from all three acquisitions as well as full quarterly revenue from its most recent acquisition iQ3, subject to audit, the group's current revenue run-rate is now in excess of $100 million. This is anticipated to increase to more than $150 million by the end of FY21 on a quarterly annualised basis with continued organic growth and the completion of planned future acquisitions. 

The company continues to build its high-value recurring annuity revenues with multi-year, locked-in managed security services (MSS) and security operations centre (SOC) contracts now exceeding $30 million. 

A cash flow positive business 

Q4 FY20 saw Tesserent achieve quarterly earnings before interest, tax, depreciation and amortisation (EBITDA) and operational cash flow positivity for the first time in its history. The company has been able to maintain its trend in profitability with Q1 increasing operational profit to $405,000, up from $17,000 from the previous quarter. It expects to continue this growth trend for the foreseeable future.

Additionally, the company maintains a healthy cash balance of $13.76 million available at the end of September. This will provide the balance sheet flexibility it needs to pursue additional acquisitions. The quarterly update notes that there are a number of acquisitions in an 'advanced stage'. 

Business integration update 

The business continues to identify and realise cross-selling opportunities across its business units resulting in a number of notable wins in the quarter. This includes: 

  • New federal, state and local government contract wins across the group in excess of $6 million in the September quarter 
  • Significant enterprise contract wins in aggregate in excess of $4 million in September with large financial services, insurance, advertising and media organisations 
  • 14 cross-selling wins in September from the recent acquisitions 
  • Growing pipeline of opportunities and wins across business units leveraging Splunk service and capabilities 

Moving forward 

The company's primary objective moving forward is to maximise shareholder value by increasing earnings margins through the growth of its high-margin annuity-based income and the inclusion of proprietary intellectual property in its solutions. 

The quarterly highlights important goals for the remainder of this current financial year including capturing market share in government, critical infrastructure and banking & finance, exploring international market opportunities and integrating its acquisitions. 

Should you invest $1,000 in Zip Co right now?

Before you buy Zip Co shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Zip Co wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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

Smiling man with phone in wheelchair watching stocks and trends on computer
Share Market News

5 things to watch on the ASX 200 on Monday

A decent start to the week is expected for Aussie investors.

Read more »

A man in a blue collared shirt sits at his desk doing a single fist pump as he watches the Appen share price rise on his laptop
Broker Notes

These ASX 200 stocks could rise 30% to 40%

Analysts are tipping these shares to go to the moon. Let's find out why.

Read more »

A man and woman dance back to back as they cook in kitchen.
Share Market News

ASX 200 'safe-haven' shares delivered divergent performances last week

ASX 200 utilities shares lifted while healthcare shares tanked last week.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A businessman hugs his computer and smiles.
Opinions

2 ASX 300 shares I plan to own forever

Both of these businesses have good ultra-long-term outlooks.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Share Market News

$10,000 invested in the ASX 200 5 years ago is now worth…

Guess how much $10,000 invested in the ASX 200 five years ago is worth today!

Read more »

Retired couple hugging and laughing.
Share Market News

Eyeing retirement: Do you really need $1 million?

AustralianSuper recently weighed in.

Read more »

Happy woman working on a laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a pleasant end to the trading week for investors this Friday.

Read more »