Minds + Machines Group Limited (LON:MMX) has reported continued top-line billings growth in its first half as the company said its business had proven “resilient” to the effects of the coronavirus pandemic.
In a trading update for the six months to June 30, 20920, the internet top-level domain (TLD) specialist reported a 31% rise in registrations to 2.38mln, while automated online channel billings rose 20% to US$7.8mln, delivering overall billings growth of 7% to a total of US$7.9mln. Cash generated in the first half also increased by 13% to US$2.5mln.
MMX said the uplift in online channel billings reflected an “underlying improvement” in renewal and new registration billings, which were up 17% and 23% respectively.
The company said the improvement reflected the success of its strategy to move away from one-off brokered billings. Which fell by US$800,000 to US$100,000 in the first half. It added that channel billings are generally recognized as revenue over the life of the registration, whereas one-off brokered billings are generally recognized as revenue as billed, therefore the change to predominately channel billings will result in an increase in deferred revenue such that, despite a 7% increase in billings in the first half, reported revenue is expected to decrease by around 5% year-on-year.
MMX also said it expected first-half channel sales from its brand protection activity were “held back” by the impact from the coronavirus pandemic, but it anticipated its initiatives that were delayed in the second quarter will resume in the second half of the year.
"I am delighted that our business has proved so resilient to the [coronavirus] crisis. The momentum we've been building in the channel over the last three years is now demonstrably coming to the fore and driving the ongoing improvement in our billings mix, with 66% of our [first half] billings being renewals compared to 60% in H1 2019”, MMX chief executive Toby Hall said in the trading update.
“It is also encouraging to note that the H1 uplift was not reliant on either brokered or brand protection billings. In short, we are now an incrementally cash generative business with a robust SaaS-type revenue model where 99% of billings in the period were through the automated channel. As a traditionally H2 weighted business, we are further encouraged by the outlook for the full-year as new partner initiatives delayed in Q2 due to [coronavirus], are now set to commence in H2", he added.
In a note on Thursday, analysts at house broker finnCap said they expected “similar strong billings growth” in the company’s second half and new partner initiatives commenced, adding that they were “very encouraged by this update and the prospects”.
Shares in MMX were steady at 5.9p in late-morning trading.
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