Fonix Reports Strong H1 Growth and International Expansion
Why we think this is good
Fonix has delivered a solid performance in H1 FY25, with growth in key metrics despite a slight revenue decline. Gross profit increased by 6.5%, adjusted EBITDA by 6.8%, and adjusted EPS by 8.8%. The company's expansion into Portugal and new partnerships demonstrate strong growth potential. While there are some execution risks associated with international expansion and new product launches, the overall outlook remains positive. The company expects a stronger H2 and is confident in meeting full-year market expectations. The current share price near its 52-week low suggests these positive results may not be fully reflected in the market valuation yet.
Key Points
- Gross profit up 6.5% to £9.8m
- Adjusted EBITDA increased 6.8% to £7.8m
- Adjusted EPS grew 8.8% to 6.2p
- Revenue slightly down 2% to £38.8m due to reduction in voice telephony services
- Secured contracts with major mobile network operators in Portugal
- Launched new products PayFlex and DonationPortal
- Over 99% of income is recurring
- New partnerships with News UK, Lebara, and Grace Media
- Anticipates stronger H2 and meeting full-year market expectations
- Interim dividend increased by 11.5% to 2.90p per share
Summary
Fonix plc has reported strong results for H1 FY25, demonstrating resilience and growth potential. Gross profit increased by 6.5% to £9.8m, while adjusted EBITDA rose 6.8% to £7.8m. The company's adjusted EPS grew by 8.8% to 6.2p, reflecting improved profitability. Fonix has made significant strides in its international expansion, securing contracts with major mobile network operators in Portugal and forming a strategic partnership with NOS. The company has also launched new innovative products like PayFlex and DonationPortal, which are expected to drive future growth. Despite a slight 2% decline in revenue to £38.8m, primarily due to reduction in low-margin voice telephony services, Fonix maintains a strong cash position of £11.0m. The company anticipates a stronger H2 performance and is confident in meeting market expectations for FY25. With over 99% of income being recurring and new partnerships with major clients like News UK, Fonix appears well-positioned for sustained growth.