08.12.2022, Author: Stefan Feulner

Stock News: Aspermont – Growth at all levels — Double-digit increase despite difficult conditions

  • B2B
  • XaaS
  • Energy
  • media
  • digitalization

The economic challenges for successful business development could hardly be more challenging than now. First, there was the Corona pandemic, then blown-up supply chains and now steadily rising inflation. Few companies are managing to emerge stronger from the crisis. One of the exceptions is Australian mediatech company Aspermont, which reported high double-digit growth in both revenue and profitability for the fiscal year, demonstrating the resilience of its business model. In the current financial year, the leading media service provider for the global raw materials industry intends to keep growth high and ignite the next stage with investments from organic cash flow.

Time to read: 3 minutes

Like from a textbook

Aspermont's successful transformation could have come out of a textbook. The once venerable publishing house with a combined brand history of 560 years and publisher of magazines such as Mining Journal and Mining Magazine, transformed itself within a few years into a mediatech company with highly scalable platform technology. CEO Alex Kent took the database of some 8 million contacts of board members and executives from key industries, built up over decades, as the basis for turning the Perth-based company's business model 180 degrees to become the leading provider of business-to-business (B2B) digital media in the mining, energy and agriculture sectors.

Launched in 2017, Aspermont's Anything-as-a-Service (XaaS) model distributes high-quality content to a growing audience via a subscription model. To the normal subscription, however, existing customers can add more premium content services, adopt new content formats or even add more members to the account. On the one hand, this provides the B2B service provider with high recurring revenues; on the other hand, the revenue per customer is continuously increased by adding new services. In addition, a data and services business has been built to leverage the Company's paid audience base and provide marketing and information services to its customers. Aspermont's three integrated business models - content, data and services are highly scalable and can be extended to new sectors, new countries and new languages. Already, Aspermont has offices in the UK, Australia, Brazil, the USA, Canada, the Philippines and Singapore.

25 consecutive quarters of continuous sales growth for Aspermont. Source: Aspermont Ltd.

Trend continues intact

The focus on pricing and the horizontal level is impressively demonstrated by the Company's figures. For the full year 2022, the Australians reported total revenues of AUD 18.7 million, up 17% from fiscal 2021, meaning Aspermont has steadily increased its revenues over the past 25 quarters. The key recurring revenue metric grew to 75% from 70% in the prior year and gross margin was 64% on a gross profit of AUD 12 million. In terms of normalized EBITDA growth, growth was 41% to AUD 2.8 million, compared to the full year 2021. In addition, after interruptions due to the Corona pandemic, the "live events" sector relaunched with revenues of over AUD 2 million.

From linear to exponential growth

As early as 2022, significant investments in new technologies were made from free cash flow and cash on hand. Aspermont launched the Blu Horseshoe digital financing platform with partners IPC and Spark to enable qualified customers to access the lucrative secondary issuance market on the ASX. It also invested in Skywave, a platform designed to transform Aspermont's ability to monetize data and optimize its own processes. Despite the higher spending, year-end cash balances increased to AUD 6.6 million, and net cash climbed 42% to AUD 4.7 million.

Having focused on revenue quality and margin growth in recent years, Aspermont is looking to move away from linear growth and invest in the future. However, the debt-free company intends to finance this from free cash flow as well as from its cash reserves; in contrast, it does not plan to raise new funds in the form of equity or debt capital. In addition to the further expansion of the workforce, which increased by 10% in 2022, the first generation of the Skywave, Esperanto and Archive platforms are to be launched. At the same time, organic growth models are to be prepared for a sustained and accelerated period of long-term growth. Geographically, Aspermont aims to develop new markets primarily in North America. In order to support this new growth phase, a long-term listing on the Nasdaq technology exchange is planned.

CEO Alex Kent believes his company is well positioned: "Aspermont is a high-growth business with healthy profit margins and strong cash flow. We have high unit economics, a strong balance sheet, and the ability to capture true blue ocean opportunities in sectors that employ 22% of the world's population and account for about one-fifth of global GDP. There are not many other companies with an organic sales growth of 20% and margins of over 50% that have a price-to-sales ratio as low as 3." Source: Aspermont Ltd.

Interim conclusion

Aspermont's growth story remains on track, with double-digit growth across the board demonstrating the scalability of its business model. Despite the fundamentally strong performance, the stock, which is traded on the ASX as well as in Germany, has been trading sideways in the AUD 0.02 range for months. In a recent report, the analysts at GBC AG confirmed their "buy" rating with a price target of AUD 0.11, which means a potential of around 450% in relation to the current price.

The update is from our initial report 01/2022

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