After kicking off the financial year with multiple contract wins, IT solutions provider Cirrus Networks (ASX: CNW) is closing off with its strongest financial year in history—made possible thanks to some major contract wins and reduced overhead costs.
Cirrus is expecting to achieve a consolidated revenue of $112 million in FY23, setting a new record for the Company. This represents an 8% increase compared to FY22. The performance is a testament to the ongoing positive momentum in Cirrus’ business—especially cybersecurity—and its esteemed client base, which includes prominent Australian Government entities (Federal, State and Local) as well as leading Tier-1 companies in the Resources sector.
Cirrus is a tech company delivering end-to-end IT solutions. It offers a range of services, including network design and implementation, cybersecurity solutions, cloud services, data centre solutions, unified communications, and managed IT services.
Cirrus Managing Director, Chris McLaughlin, said, “It is very pleasing to report these record results and the continued strong momentum in the business. This marks the third consecutive strong half earnings result, with growing revenue and margins being achieved with a relatively lower cost base. I want to recognise and thank the wonderful Cirrus staff across all our locations who have continued the drive to improve and innovate in delivering great client outcomes and enhanced business value.”
In FY23, the Company’s gross margins improved, accounting for 14.3% of the revenue in FY23 compared to 13.5% in FY22. Cirrus also experienced a 14% boom in gross profit, totalling $16 million, surpassing the figures from FY22. Notably, the growth in gross profit was observed across all major product and service categories on a year-on-year basis.
The combined revenue from Professional Services and Managed Services reached $34 million, marking a 10% increase on FY22’s $30.8 million. The previous year saw significant growth in both Professional Services and annuity Managed Services, with respective increases of 11% and 9%.
Its profitability streak is set to continue as the Company’s Icon Water contract signed in March 2022 is set to become lucrative in early FY24. Besides this, Cirrus has many new contracts lined up, including several tenders that have been submitted and are awaiting final outcomes. With these favourable factors, Cirrus is confident that its revenues from Professional and Managed Services will continue to expand during FY24.
In FY23, the unaudited adjusted EBITDA amounted to $4.8 million, showing a significant increase of $2.7 million or 126% compared to the previous year. This record-breaking earnings result is due to revenue growth, especially in the services sector, and improved operating efficiency.
Cirrus also reduced overhead costs, with a 5% decrease from FY22. Additionally, the business generated $5.4 million in cash from operations, representing a strong cash conversion rate of 112% compared to EBITDA.
McLaughlin added, “The significant ongoing momentum, growing pipeline of quality opportunities and enviable client base, coupled with a solid debt free Balance Sheet and $13.9 million of cash, puts the business in the strongest position it has ever been going into a new financial year and provides confidence to deliver continued improvement in FY24 earnings.”
With the Icon Water contract set to materialise in the upcoming financial year, the Company expects greater profitability, further boosted by product backlogs, opportunity pipelines and more cost-cutting measures.
Alinda is a Business Reporter for The Sentiment
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