Learning from ransomware attacks that befell giant corporations Optus and Medibank in recent months, Australian enterprises have been increasingly vigilant about their cybersecurity as no one wants to make headlines as the next victim. This brings good business to managed services and IT solutions company Cirrus Networks (ASX: CNW). The Company proudly announced that it has been awarded significant contracts with leading Federal government agencies worth $11.5 million in total.
Cirrus’ offerings include networks & connectivity, collaboration, digital transformation & hybrid cloud, and modern workplace & mobility will soon be covering sixteen Federal Agencies and Canberra-based businesses, the strongest start the business has had to a financial year. These contract wins also put Cirrus in a strategic position as it will become a subcontractor for the Australian Department of Defence, providing design and implementation to deliver new and enhanced capabilities.
The 2-year contract, with a 1-year extension option, also covers the potential for additional network and security services, managed IT services with level 2 (midweight, technical) and level 3 (advanced) support, as well as a program of onsite support.
Commenting on the success in Canberra, Cirrus Managing Director and CEO, Chris McLaughlin, said: “We are thrilled to continue the momentum from H2FY22 into FY23 with a number of important contract wins particularly in our key Canberra market. Cirrus continues to establish itself as the partner of choice offering sustainable value through our innovative, agile and customer-focused approach.”
Cirrus quickly grew an extensive base of blue-chip clients across industry, government and not-for-profit sectors, focusing on their recurring-revenue high-margin Managed Services. Some of its notable contract wins include a transformational managed service contract with Federal Government entity Geoscience Australia in excess of $13M in March 2021, drinking water and wastewater company Icon Water in March 2022, and energy company ENI Australia in August 2022.
Cirrus reported a gross loss of $454k in FY22, but courtesy of a $926k tax benefit, it delivered a net profit of $471k while keeping a strong $9.6m cash at bank. This was still lower than the $845k net profit in FY21, though the cash balance figure was an improvement from $7.7m in FY21. Cirrus attributed the loss to a costly failed hostile takeover attempt by rival WebCentral, supply chain delays, and labour impacts from the pandemic. However, the Canberra contract success adds to the Cirrus solid start to FY23 and supports the Company mission to be a national managed services provider of choice.
Uncertainty within the economic environment, global supply chain disruptions, as well as tight labour markets and associated cost pressures are still some of the ongoing issues for the Company, but things are expected to flip over in 2H FY23 given a full six month contribution of the recently won Perth-based ENI Managed Service, as well as the ramp up of Canberra-based Icon Managed Service from 4Q FY23 that will significantly improve the service revenue.
Furthermore, the company continues to maintain a strong debt-free balance sheet and a substantial cash balance. This provides the company with optionality to take advantage of market opportunities that may arise during the potentially tight and uncertain period ahead, while also considering other capital management initiatives including dividends and buybacks.
Clara is a Business Reporter for The Sentiment.
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