Etherstack (ASX:ESK) delivers strong revenue and earnings growth as recurring income builds

By Trevor Hoey. Published at Feb 22, 2017, in Technology

Etherstack plc (ASX: ESK) has delivered an impressive full-year result for the 12 months to December 31, 2016, having achieved revenue growth of 169% and earnings before interest, tax depreciation and amortisation (EBITDA) of US$836,000, a significant improvement on the previous year’s loss of US$703,000.

From an operational perspective it has been a successful year for the group having been awarded several multi-million dollar projects in North America. Most of these have related to large corporates and utilities that provide the company with exposure to defensive earnings streams.

ESK also broadened its customer base in Australia having received its first order from the Australian Department of Defence

Recurring revenue growing exponentially

The company boasts strong recurring revenue, with royalty income increasing exponentially relative to group revenues on a year on year basis.

Income from support and royalties nearly doubled from US$550,000 in 2015 to US$1.07 million in 2016 and now accounts for approximately 18% of group revenues. Notably, royalty revenue grew by 180% on a year-on-year basis.

This provides earnings visibility and predictability, making growth of royalties and income from ongoing support a key focus for the group. Chief financial officer, David Carter, said he expected robust growth in this area in fiscal 2017, and he will be updating the market on the company’s progress.

Just how much growth remains to be seen and investors considering this stock for their portfolio, should seek professional financial advice.

ESK has finished the year in a sound financial position as it transitioned to a cash flow positive operation. Furthermore, financing costs were reduced through the repayment of convertible notes following a capital raising.

Carter expects this trend to continue in fiscal 2017 due to a substantial reduction in interest costs.

View Our Investment Portfolios

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why is Australia’s leading small cap publication

Founded seven years ago, is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise. provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more. is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!