Why the Hansen (ASX:HSN) share price will be on watch today

The Hansen (ASX: HSN) share price will be on watch today following news the company has signed a significant new contract. Here's the latest.

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Hansen Technologies Limited (ASX: HSN) shares will be in focus today following the company's announcement it has signed a significant new contract. At Tuesday's market close, the Hansen share price ended the day slightly lower at $4.19.

Below, we take a closer look at what the billing technology company announced to investors.

Why will the Hansen share price be in focus?

The Hansen share price could be on the move today after the company increased its full-year guidance based on the new contract win.

According to the release, Hansen has executed a master services agreement with Telefónica Germany (Telefónica). The deal will see Hansen deliver its Cloud Native Communications product suite through a prepaid subscription to support Telefónica operations.

Established in 1995, Telefónica is one of the leading providers of broadband, landline and mobile telecommunications in Germany. The company offers a range of services to private and business customers such as mobile voice and data telecommunications. Last year, Telefónica had over 44.3 million wireless customers and 2.4 million broadband subscribers.

The initial term of the deal will be five years and will generate revenue of roughly $25 million for Hansen.

CEO commentary

Hansen group CEO Andrew Hansen hailed the milestone contract, saying:

We are delighted and very proud to be engaged with Telefónica. This agreement is testament to and a ringing endorsement of the Hansen Communication Suite and Hansen's ability to continually evolve as a valued partner to our customers.

Upgraded guidance

In news that could impact the Hansen share price today, the company upgraded its full-year guidance for FY21 as a result of securing the major contract. The company now expects revenue to be between $316 million and $326 million on a constant currency basis. Reported full-year revenue is anticipated to come in at $306 million to $316 million.

The company also advised that its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin is projected to be higher for FY21. This is due to the total licence revenue of $21 million being recognised in the second half of FY21. Hansen believes the underlying EBITDA margin will fall somewhere around 37% to 39%.

Hansen share price snapshot

Over the past 12 months, the Hansen share price has increased by more than 36%. The company's shares hit a low of $2.62 in April last year, before accelerating higher in August.

Based on the current Hansen share price, the company has a market capitalisation of about $834 million.

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hansen Technologies. The Motley Fool Australia has recommended Hansen Technologies. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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