Nexion has made an extremely strong start to FY22, as it signals positive EBITDA later in the financial year.
Hybrid cloud provider Nexion Group (ASX:NNG) has signalled a strong start to FY22, with Q1 revenue growing by 130% from the last quarter to $1.25m.
The solid numbers capped off a busy quarter for Nexion where it acquired Perth-based telco Blue Sky, the first acquisition play since its IPO listing in February.
Including the contribution from Blue Sky prior to acquisition, Nexion’s revenue is up 252% to $1.91m, the highest revenue reported in the history of the company.
And with Blue Sky now consolidated into the group, Nexion’s sales and delivery capacity have essentially doubled, setting the foundation for accelerated growth in the coming months.
In addition to revenue generated from Blue Sky, Nexion is also seeing organic growth as it continues to move rapidly to the next phase of the business.
Targeting EBITDA positive
Nexion’s annualized recurring revenue (ARR) was also significantly up by 145% – from $2.4m in Q4FY21 to $5.9m in Q1FY22.
Total contract value grew by 38%, on top of Q4 FY21’s exceptional 68% increase, to $14.15m.
On the expense side, the synergy gained from the Blue Sky acquisition resulted in $900K of annual cash costs being eliminated.
The company says these efficiencies plus the addition of two new high-margin recurring revenue streams (satellite and voice), is set bring Nexion closer to EBITDA positive later in the financial year.
It has been a very rapid growth for the company over the last three years, and particularly since listing this year.
The company has hit on every metric that it said it would in the prospectus, as some analysts have commented that breakeven in FY22 could be a real possibility.
A busy quarter
During the quarter, Nexion also formed key strategic partnerships, including one with US-based Fortune 500 company NetApp to bring NetApp’s Keystone Storage-as-a-Service solutions product to the ANZ market.
The agreement with NetApp represents the third US global technology company to have selected Nexion as its principal partner in the region (the other two being IBM Global and Aryaka), which further enhances the global hybrid cloud ecosystem Nexion is creating.
To build on the New Zealand business that was established in the last half of FY21, Nexion also formed a strategic relationship with Spectrum Consulting during the last quarter.
Spectrum is an Auckland-based business that’s expected to bring the full suite of Nexion solutions to the market.
The consulting company has a long history delivering mission-critical Cloud, networks & security, and data management services for enterprise clients across most industries.
Nexion also made key hires to its C-level executives team during the quarter — including Evelyn Hogg who took on the role of CFO, and Luke Poyner who was promoted to chief technical officer.
Jamie Morgan meanwhile became Nexion’s chief revenue officer where he will spearhead global revenue growth.
Joining Nexion from IBM, Morgan told Stockhead that he was attracted to Nexion because of its potential in becoming a contender in the enterprise IT Managed Services market globally.
“One of the things that attracted me to work for Nexion is the question of what’s next,” Morgan said.
“We’ve done the global partnerships, we bought in the satellite capability, and so I’m now looking at what’s next and I know we have a clear target to drive the next phase forward,” he told Stockhead.
As enterprise shifts to consumption of technology as a service, the demand for Nexion’s Hybrid Cloud solutions will only continue to grow.
As the past year has shown, enterprise customers continue to select Nexion to provide all aspects of technology-as-a-service, including networks, helpdesk, storage, cloud, security, wireless, professional services, satellite, and voice.