The Spacetalk Ltd (ASX: SPA) share price has soared into the green during Thursday's session as the wearable communications company reported its FY21 earnings.
Let's investigate further.
Spacetalk share price jumps on 44% revenue increase
The company detailed several investment highlights in its report, including:
- Revenue of $15.1 million, a 44% year on year increase and record for the company
- EBITDA of $1.1 million, up 615% year on year
- Device revenue grew 65% to $10 million
- Wearables revenue of $12.75 million that also grew 65% over the year prior
- Cash balance of $4.2 million which expanded 32% over the year
- Decreased the debt load by 60% to $1.27 million
- Earnings per share (basic) cents increase of 65%.
What happened in FY21 for Spacetalk?
It was the best quarter on record for Spacetalk in terms of revenue, which came in at $15.1 million. Positive EBITDA that grew more than 600% from the year prior was underscored by "strong device sales" of $10 million.
For instance, Australian and New Zealand device sales grew by 85% to $9.1 million whereas UK sales were flat from the previous year.
In addition, sales benefited from "more than one Spacetalk device being offered in the same category for the first time" in the company's history.
As an example, this was attributable to the Spacetalk Kids and Adventurer devices in the children's domain. Moreover, the Spacetalk LIFE device defined a new category "of seniors connected wearables".
Moreover, app revenue also grew 75% to reach $2.2 million, driving annual recurring revenue of $2.8 million. That's an 88% year-on-year increase.
The company said it managed to "meet its MNO and mass market retailer inventory demands", successfully navigating its way through COVID-19 to do so.
What did management say?
Speaking on the Spacetalk Adventurer's success to date, Spacetalk management said:
Spacetalk Adventurer has been a particular success since its
launch in December 2020 and is our flagship device, accounting
for 41% of device sales revenue achieved in just over six months
of the year ended 30 June 2021 (versus 55% for Spacetalk Kids
and 4% for Spacetalk LIFE, which sold for the whole year).
Moreover, touching on the company's operating leverage, it added:
The strong global growth in the kids smartphone watch category,
and the urgent focus of retailer and MNOs, has enabled us to
increase sales while decreasing our Customer Acquisition Costs1
("CAC") to $1.5 million (-14%), as the Company increasingly benefits
from operating leverage.
What's next for Spacetalk?
According to the company, it is "well positioned for strong growth in FY22".
For instance, it is committed to expanding Spacetalk Life for seniors to a business-to-business model, where it is seeing "strong interest" from aged care providers.
In addition, it is working with a handful of NDIS and aged care providers to pilot a strategy to "enable over 39,000 Aged care and NDIS service providers promote and sell Spacetalk Life".
Investors have favoured the news, pushing the Spacetalk share price well into the green on Thursday. Spacetalk shares are now exchanging hands at 19 cents apiece, a 15% jump from the open.
This extends the run into the green for the Spacetalk share price, which has climbed 73% since January 1. As such, Spacetalk shares have outpaced the S&P/ASX 200 Index (ASX: XJO)'s gain of around 14% this year.
