The ReadyTech Holdings Ltd (ASX: RDY) share price is gaining today after the company released its results for financial year 2021 (FY21).
Right now, the ReadyTech share price is $2.78, 6.73% higher than its previous close.
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ReadyTech share price jumps on 27.4% increase to revenue
Here's how the people management software provider performed over FY21:
- Revenue increased 27.4% to $50 million
- Profit (after tax) of $2.1 million, a 45.3% increase
- Underlying earnings before, interest, tax, depreciation, and amortisation (EBITDA) of $18.9 million – a 21.4% increase on that of FY20
- No dividend
FY21 was a good one for ReadyTech.
Of the company's revenue, 87% came from reoccurring subscription contracts.
The company reported that its customer revenue retention for the 12 months ended 30 June was 96%. Additionally, ReadyTech's average revenue per new customer increased to $35,500 in FY21, up from $28,600 in FY20.
As part of ReadyTech's long-term strategy, its sales and marketing spend increased to 11% of its revenue.
The company's education & work pathways segment brought in $24.9 million –16.9% more than the prior financial year. Its workforce solutions' revenue also increased by 13.3% to reach $20.3 million.
Additionally, the company expanded its $19 million high conviction new business pipeline.
ReadyTech ended the period with $11.9 million cash in the bank and $30.9 million of borrowings.
What happened in FY21 for ReadyTech?
FY21 was a big one for ReadyTech and its share price.
Perhaps the most exciting news from the company was its $80 million acquisition of Open Office.
Open Office is a software business servicing local and state governments, courts, tribunals, and commissions.
ReadyTech's FY21 results include the part year contribution of Open Office, which was $4.8 million.
ReadyTech also underwent a $25 million placement in November and completed a share purchase plan in April.
Additionally, ReadyTech's growth strategy is working. It's focusing on its 'sticky' products, which mean its customers must use its products to operate effectively. It's also working on improving its customer service and support.
Finally, ReadyTech began a rebranding project in FY21. According to the company, the rebranding aims to "evolve and elevate ReadyTech's master brand and brand architecture" while still underpinning its growth plans.
What did management say?
ReadyTech's CEO and co-founder, Marc Washbourne, commented on the results driving the company's share price higher, saying:
The results reflect increasing recognition in the marketplace of ReadyTech's expertise in next generation customer-centric SaaS solutions that streamline operations, improve user experience and meet the strict compliance and regulatory needs of the education, workforce, government and justice sectors. This is particularly true of the higher value end of the market, where have seen strong new business performance across all markets we serve, with an impressive list of new customers onboarded during the year. At the same time, we continued to successfully execute on upsell/crosssell to our loyal customer base.
A strong top line and healthy profit margins have also allowed us to reinvest back in the business, supporting the long-term growth and earnings power of the company. ReadyTech operates in multiple large addressable markets that are ripe for digital transformation – and we are listening very closely to the needs of customers and investing accordingly. Our continued reinvestment in research and development supports ReadyTech's strong product-market fit, new roles in sales and marketing drive execution on go to market, and investment in customer onboarding contributes to the streamlining of operations as we scale.
What's next for ReadyTech?
Here's what might drive the ReadyTech share price in FY22:
While ReadyTech didn't give exact guidance, Washbourne did give us a slight outlook.
He commented that ReadyTech hopes to achieve organic revenue growth in the midteens in FY22, with an EBITDA margin of 36% to 38%.
Additionally, Washbourne stated ReadyTech is targeting organic revenue of more than $125 million by FY26.
The company also noted it can't rule out being further impacted by COVID-19 in the current financial year.
ReadyTech share price snapshot
The ReadyTech share price has gained 32% year to date. It has also increased 70% since this time last year.
