ESK surges as the company announces FY2017 revenue growth

By Trevor Hoey. Published at Jan 11, 2017, in Technology

Wireless technology group, Etherstack (ASX:ESK), announced on Wednesday morning that it expects to achieve revenues of circa $6.1 million in fiscal 2017, representing the top end of its June guidance which was in a range between US$5.8 million and US$6.1 in fiscal 2017.

Based on this guidance the company should generate revenues of circa $8.3 million in Australian dollar terms. The market has responded positively to this news with the Etherstack’s shares opening 14.3% higher on Wednesday morning.

Note, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may not be replicated. Those considering this stock should seek independent financial advice.

Commenting on this promising news, Etherstack’s Chief Executive, David Deacon said, “2016 was a very successful year for Etherstack with the major growth coming from network orders for our utilities sector customers in both North America and in Australia, as well as our tactical communications products”.

Deacon highlighted that the network projects deliver revenues not only in the year of deployment but in future years, as an expanded installed base of established networks generate recurring support revenues and additional expansion/upgrade opportunities.

Having delivered at the top end of guidance, Deacon sees 2016/17 as the foundation for further revenue growth in 2017 and 2018 as newly developed products and technologies start to contribute to revenues.

The benefits of end-user diversification in relation to Etherstack’s business where it generates income from customers across the defence, utilities, transportation and resources sectors.

Given the group’s contracts are generally of a long-term nature with an established income stream, the significant proportion of recurring revenue provides earnings visibility.

For example, the company announced as recently as mid-December the award of a network expansion contract by Atco Electric to provide additional sites and capacity in relation to its mission-critical radio communications network which supports electricity distribution and transmission operations in Canada.

The current deliveries, additional phases and recurring support revenues are expected to generate approximately US$3.1 million in total over the next 4 to 5 years.

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