Release Date: February 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aussie Broadband Ltd (ASX:ABB, Financial) reported a 6.8% increase in revenue compared to the prior corresponding period, showcasing robust growth.
- The company has successfully expanded its Aussie fiber network, now covering almost 2,000 kilometers and connecting over 4,300 buildings.
- Aussie Broadband Ltd (ASX:ABB) declared a fully franked interim ordinary dividend of $0.06 per share and a special dividend of $0.04 per share, reflecting strong financial health.
- The acquisition of Symbio has diversified revenue streams and is on track to deliver a $38 million EBITDA contribution for FY25, marking a 30% earnings growth year-on-year.
- The company maintained its status as the most trusted telco in Australia and improved its market share in high-speed residential NBN plans.
Negative Points
- Operating cash flow before interest and tax declined by 25.8% to $49 million, primarily due to timing of working capital cash management.
- The residential segment experienced a decline in gross margin percentage due to a timing mismatch between wholesale price changes and customer billing.
- The launch of the Buddy brand faced significant price-based promotional activity from competitors, impacting its net growth trajectory.
- The enterprise and government segment faced cost pressures from US technology vendors, affecting gross margins.
- The company has increased its CapEx guidance by $20 million, which may impact short-term financial flexibility.
Q & A Highlights
Q: Can you discuss the impact of the upcoming NBN speed tier changes on Aussie Broadband and how you are positioned in the market with your two brands?
A: Brian Maher, Chief Financial Officer, explained that the new speed tiers, expected in mid-September, will provide free speed upgrades for customers, such as moving from 100 Mbps to 500 Mbps. Aussie Broadband is well-positioned in the high-speed market and anticipates benefiting from these changes. A significant project team is preparing for this transition, and the company is optimistic about the potential positive impact.
Q: Can you elaborate on the $5 million cost reduction and whether there are more savings to come?
A: Brian Maher noted that significant work was done in the first half to optimize management structures and call center operations, leading to cost efficiencies. The aim is to grow revenue faster than costs, and the shift to a divisional structure will enhance accountability for customer experience and financial performance.
Q: What should we expect regarding cash flow recovery in the second half?
A: Andy Giles Knopp, Chief Financial Officer, expects the operating cash flow conversion ratio to return to between 90% and 100% for the full year. The first half saw timing issues with creditor payments, but confidence remains high for a strong cash flow position by year-end.
Q: How does the increased CapEx guidance affect the expected margin benefits from the Aussie fiber rollout?
A: Brian Maher stated that the $20 million margin benefit from the fiber rollout will continue to grow as connections increase. The CapEx increase reflects strong customer demand and successful rollout progress, with an additional $5 to $6 million expected in the second half.
Q: Can you provide insights into residential churn and the impact of the Buddy brand launch?
A: Brian Maher mentioned that residential churn has remained consistent, with some fluctuations during promotional periods. The initial Buddy brand launch saw some customers transitioning from Aussie, but this has stabilized. The combined brand growth is solid, contributing positively to the group's overall performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
