Amino’s trading update for the six months ending May 2019 confirms that the group is currently on track to deliver its expectations for FY 19E. The business is traditionally seasonally-weighted towards the second half, so with H1 19 revenues of approximately $35m and a closing net cash position of $19.3m, we believe our FY 19E forecasts of $70.7m and $23.6m respectively to be achievable. We leave estimates unchanged following the release, but believe the commercial progress delivered during H1 and the successful completion of the transformation programme give further grounds for optimism in the outlook.
The release confirms that the Board’s expectations for FY 19E financial performance are unchanged. Management expect H1 19 revenues of $35m. Although a decline on H1 18, this is approximately half of our FY 19E forecast. With revenues being seasonally weighted to H2, we believe this is a positive signal towards the full– year outcome.
Amino reported a number of contract wins across the globe during H1 19. These include the first major sale of AminoOS through the group’s new Original Design Manufacturer partnership (for a top-tier pay TV operator in Asia), the first deployment of Amino TV on a multi-tenanted platform (Netherlands) and the deployment of AminoOS powered devices in the USA and Bolivia.
The release confirms the transformation programme announced in February 2019 was successfully completed in April 2019. With an enhanced focus on software, services and value-add hardware, management is confident the resulting $5m annual cost savings will be delivered.
Net cash at 31 May 2019 was confirmed at $19.3m, a $4.3m improvement on H1 18, reflecting strong margins and cash flow. Cash receipts are also seasonally weighted to the second half and we note that H2 18 saw a cash inflow of $5.3m.
As we have noted in previous reports, Amino has faced challenging market conditions over the past few years. The restructuring programme announced in February was designed to tackle these challenges and in our view, today’s announcement, together with the recent contract wins provide early evidence that the programme is working. Furthermore, guidance on FY 19E results provides further grounds for reassurance around the nearterm outlook for financials.