Public data tech group Information Services Corp (TSE:ISV) saw strong year-on-year growth in second-quarter revenue, helped in part by recent acquisitions.
Revenue in the second quarter rose 26% to US$31.06mln from C$24.65mln in the same period of 2017.
The increase was driven largely by new revenue from the acquisitions of AVS Systems and Alliance Online Ltd. (“Alliance”) plus strong growth in the group's Services segment, which more than offset lower revenue in the Registry Operations segment.
READ: Information Services bolsters its services business with acquisition of AVS Systems Inc
Net income climbed 9.1% to C$5.2mln from C$4.7mln a year earlier, equivalent to 29 cents a share (2017: 27 cents).
Underlying earnings, or EBITDA, improved 14.6% to C$10.1mln from C$8.8mln in the corresponding quarter of 2017.
The Services said did most of the heavy lifting in terms of generating the profit increase while the bottom line also received a boost from a C$1mln adjustment to the fair value of the contingent consideration associated with the acquisition of AVS.
The EBITDA margin for the second quarter of 2018 was 32.6% compared to 35.8% in the same quarter in 2017.
Free cash flow clocked in at C$7.0mln, compared to C$7.7mln in the corresponding quarter of last year. At the end of June, the company had cash of C$31.6mln, up slightly from C$31.3mln at the end of 2017 while total debt had narrowed to C$20.8mln from C$21.6mln at the end of 2017.
Revenue from ISC's Registry Operations segment was C$18.7mln, a decline of C$1.6mln (8.1%) from a year earlier.
Revenue for the Personal Property Registry for the second quarter of 2018 was C$2.7mln, down 2.5% compared with the same period in 2017, mostly due to lower volumes, suggesting a modest softening in this portion of the Saskatchewan economy, ISC said.
Revenue for the Corporate Registry dipped 4% to C$2.5mln from a year earlier.
The company's diversification into the provision of legal and financial services continues to pay off, with revenue from the Services segment rising by C$7.9mln year-on-year to C$11.5mln.
Revenue was up as a result of an increasing uptake of services for both legal and financial services customers for the company's KYC unit, due diligence and collateral security registration.
Recently acquired AVS chipped in with C$7.2mln, primarily from collateral security registration services
provided to financial institutions and original equipment manufacturers captives financing activity across Canada.
Revenue in the Technology Solutions segment was C$4.6mln, down from C$5.6mln the year before.
"Increases in interest rates and new mortgage qualification rules are clearly driving the year-over-year softening of results in our Registry Operations business in Saskatchewan. Nonetheless, as one of our key lines of business, Registry Operations continues to deliver a meaningful contribution,” said Jeff Stusek, the president and chief executive officer of ISC.
“The performance of our Services segment further demonstrates the benefits of having diversified, yet complementary revenue streams.
"After a busy year in 2017 completing a number of key strategic acquisitions, we are focused on leveraging organic growth opportunities from those lines of business, while ensuring that we provide great service to existing customers across the company. There is still much to be done in 2018 and as we pass the half-way mark, I remain confident about the road ahead," he said.