Pentanet Limited Q4FY24 Financial Update: Revenue and Subscriber Growth
5GG (5GG) Share Update August 2024 Thursday 1st
Pentanet Limited Reports Strong Q4FY24 Financial Performance
Pentanet Limited (ASX: 5GG) has released its financial results for Q4FY24, showcasing impressive growth in both its telecommunications and cloud gaming segments.
Instant Summary:
- Gross Telco sales increased by 26% QoQ.
- Gaming subscription revenue growth up 114% YoY to $1.7m.
- CloudGG paid membership growth up 79% YoY.
- Consolidated revenue up by 6% YoY to $20.9m.
- Recurring revenue now constitutes 96% of total revenue.
- Consolidated EBITDA loss down by 62% to $1.2m.
Financial Performance Overview
Pentanet Limited has reported a strong financial performance for Q4FY24, with consolidated revenue up by 6% year-over-year (YoY) to $20.9 million. The company's recurring revenue now constitutes 96% of total revenue, reflecting a stable and predictable income stream.
The telecommunications segment saw a 2% YoY increase in revenue to $19 million, driven by subscriber growth. The cloud gaming segment experienced remarkable growth, with revenue up 120% YoY to $1.8 million, in line with a 79% increase in paid memberships.
Profitability and Margins
Pentanet's consolidated gross profit increased by 13% YoY to $9.6 million, with a gross margin of 46%, up from 43% in the previous year. The telecommunications segment's gross profit rose by 5% YoY to $9.2 million, while the cloud gaming segment's gross profit surged by 195% YoY to $0.4 million.
The company's consolidated EBITDA loss decreased significantly by 62% to $1.2 million, despite increased marketing expenditure on the EOFY promotion and other initiatives aimed at long-term growth.
Subscriber Growth and Churn
Pentanet closed Q4FY24 with a total of 17,383 subscribers, adding 263 new subscribers during the quarter. On-net customers, who use Pentanet's private high-speed wireless network, constitute 39% of the total subscriber base. The company's 5G subscribers grew by 46% quarter-over-quarter (QoQ) to 400.
The churn rate decreased to 1.31% in Q4FY24, and strategies are in place to further reduce churn, including retention initiatives and promotional offers. The blended Average Revenue Per User (ARPU) increased to $93, while the on-net ARPU slightly decreased to $88.
Cloud Gaming and NVIDIA Partnership
Pentanet's cloud gaming service, powered by NVIDIA GeForce NOW, continues to gain traction. The company reported a 114% YoY increase in gaming subscription revenue to $1.7 million, with a 195% YoY increase in gaming subscription gross profit to $0.4 million.
CloudGG, Pentanet's user management platform for NVIDIA GeForce NOW, saw a 79% YoY increase in paid subscriptions and a 54% YoY increase in total membership, reaching over 589,000 members.
Pentanet has also integrated NVIDIA's Graphics Delivery Network (GDN), expanding its computing capabilities beyond gaming and unlocking new enterprise opportunities in emerging markets.
The strong financial performance and subscriber growth reported by Pentanet Limited are likely to positively impact the company's stock price. The significant increase in revenue and profitability, coupled with the growth in cloud gaming subscriptions, reflects the company's successful execution of its strategic initiatives.
The integration of NVIDIA's Graphics Delivery Network (GDN) and the expansion into new enterprise markets further enhance Pentanet's growth prospects and revenue diversification.
Investor Reaction:
Analysts are expected to react positively to Pentanet's Q4FY24 financial results, given the strong growth in revenue and profitability. The company's ability to reduce its EBITDA loss and increase its subscriber base, particularly in the high-margin on-net segment, is likely to be viewed favorably by investors.
The expansion of the cloud gaming service and the integration of NVIDIA's GDN are also expected to be seen as strategic moves that position Pentanet for future growth and revenue diversification.
Conclusion:
Investors should consider Pentanet's strong financial performance and growth prospects when evaluating their investment portfolios. The company's strategic initiatives, including the expansion of its 5G network and cloud gaming services, position it well for continued growth. Investors are encouraged to stay informed about Pentanet's future developments and assess the potential long-term impacts on their portfolios.