MNF (ASX:MNF) share price rockets 17% on strong result and bold growth targets

Here's why this tech company's shares are soaring…

| More on:
Vanadium Resources share price person riding rocket indicating share price increase

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 MNF Group Ltd (ASX: MNF) share price is rocketing higher on Tuesday following the release of its full year results.

In morning trade, the VoiP-focused technology company's shares jumped 17% to a multi-year high of $6.76.

MNF share price rockets after beating guidance

  • Recurring revenue increased 12% to $113.2 million
  • Recurring gross profit up 14% to $68.1 million (total gross profit $102.2 million)
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) up 13% to $43.1 million (guidance: $40 million to $43 million)
  • Underlying net profit after tax before amortisation up 16% to $19.2 million
  • Full year dividend of 7.6 cents per share, up 25% year on year
  • Balance sheet of over $100 million in cash and undrawn debt
  • Outlook: No guidance but growth in July
  • 2030 target of 100 million phone numbers

What happened in FY 2021 for MNF?

As you might have guessed from the MNF share price reaction today, the company was in fine form during FY 2021.

While its overall revenue declined 5% during the 12 months to $218.7 million due to lower global roaming and audio-conferencing usage, MNF continued to grow where it arguably matters most. Its high-quality recurring revenue increased 12% to $113.2 million and recurring gross profit lifted 14% to $68.1 million. The latter now makes up two-thirds of its gross profit, with management aiming to take this to 80% over the long term.

Key drivers of this growth were a 29% increase in phone numbers to 5.8 million and a Net Revenue Retention (NRR) rate across its top 10 customers of 115%. This means that its top 10 customers are not just staying on board, they are lifting their spending.

What did management say?

MNF's CEO, René Sugo, was rightfully pleased with the 12 months.

He said: "After a strong start to the year, I am pleased to report we have ended the 2021 financial year at the top end of market guidance, achieving solid performance across all metrics, including record EBITDA of $43.1 million and a 29% growth in phone numbers."

"I'm particularly proud of the progress we have made against our strategy during the year, as we build MNF into a world-class software company. We completed the divestment of parts of our Direct business, aligning our business to wholesale revenue and the multi-billion-dollar opportunity we see ahead of us."

What's next for MNF?

Following the divestment of its direct business, MNF is refreshing its strategy.

Mr Sugo explained: "MNF has refreshed its strategy for FY22 to focus on three areas to build MNF into a world-class software company. The new strategy seeks to simplify the business, build best in-class software capability and network, and scale and expand throughout Asia-Pacific both organically and through acquisition, driving short term revenue and margin growth and medium term EBITDA."

The CEO also revealed that the company has set itself a bold growth target over the remainder of the decade and aims to increase the phone numbers on its network significantly from 5.8 million currently.

"Enabled by the most experienced industry professionals, a strong culture and a genuine commitment to sustainability, MNF's refreshed strategy underpins its new strategic goal: to reach 100 million numbers on network by 2030," he added.

The company's expansion across the Asia-Pacific market is expected to be a key driver of this.

Mr Sugo commented: "Our new strategy will support MNF to achieve its new 2030 vision, and sets a clear path for global expansion, with the goal to reach 100 million numbers on our network by 2030. This will be achieved by increasing our market share and expanding our presence across Asia-Pacific. Singapore provides the stepping-stone into more opportunities in APAC. Now, supported by a strong balance sheet, we will further invest in our three business divisions, to capture further market share and expansion across the region."

This appears to have gone down well with investors, judging by the MNF share price performance today.

And while no guidance has been given for FY 2022, MNF revealed that it has started the new financial year positively.

"MNF continues to benefit from the increased utilisation of collaboration and communications software applications due to the COVID-19 pandemic. The business has had no immediate impact due to current lockdowns and July 2021 trading showed continued growth," he concluded.

The MNF share price is up 53% since the start of the year.

Should you invest $1,000 in Agl Energy Limited right now?

Before you buy Agl Energy Limited 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 Agl Energy Limited 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 James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended MNF Group Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another tough day for investors this Tuesday.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Dimerix, Evolution Mining, Inghams, and NextDC shares are charging higher today

These shares are rising when many are falling today. But why?

Read more »

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a rough trading day for ASX stocks this Monday.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why 4DMedical, Gold Road, Syrah, and Tyro shares are racing higher today

These shares are starting the week strongly. But why?

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

2 ASX gold stocks racing higher in Monday's sinking market

Investors are sending these ASX gold stocks flying higher on Monday. But why?

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords share just rocketed 19% on BIG news

Investors are sending this ASX All Ords share flying on Monday. But why?

Read more »

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a happy finish to the week for ASX shares this Friday.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Share Gainers

5 ASX All Ords stocks rocketing higher this week

Investors sent these five ASX All Ords stocks soaring this week. But why?

Read more »