Microsoft Azure and Office 365 demand continue to drive Rhipe's results

Microsoft Azure and Office 365 demand continue to drive Rhipe's results

Net profit increases seven per cent to $3.3M

Rhipe's Dominic O'Hanlon

Rhipe's Dominic O'Hanlon

Credit: Rhipe

Demand for public cloud software and infrastructure in relation to Microsoft Azure and Office 365 has led Rhipe towards 33 per cent sales growth to $152.7 million in the first half of FY20, ending December 31.

Group revenue for the publicly listed company also grew 24 per cent to $26.6 million, mainly due to increasing contribution from Microsoft Azure and sales from rhipe’s Asian operations, as well as ongoing changes to vendor incentives and competition. 

Net profit rose seven per cent year-on-year to $3.3 million and reported earnings before tax (EBITDA) was up 53 per cent to $7 million. 

As of December 31, Rhipe counted 547,000 Microsoft Office 365 seats, up 97,000 since 30 June 2019, and up 192,000 since December 2018.

Microsoft Office 365 annual recurring sales were up 50 per cent to $71 million in comparison to $47 million in the previous corresponding period. 

Specifically software product sales were up 32 per cent to $145.4 million while service and support activities rose 84 per cent to $7.9 million, mainly driven by rhipe’s acquisition of Microsoft Dynamics consultancy business, DBITS

For the six months to December, Microsoft CSP sales increased 78 per cent to $48 million. Asian local sales growth went from 53 per cent in FY19 to 57 per cent this period. 

In a statement to shareholders, Rhipe reflected on the strong performance and the investments it was making in its headcount and systems, hiring an extra 72 employees, across both its Licensing and Solutions business, since June 2019.

“This investment has covered many distinct service offerings including vendor and customer focused support as a service, consultancy services centred on Microsoft Dynamics product offering, and investment in our newly acquired encryption software offering, SmartEncrypt, Rhipe will continue to invest in these operations with the objective of increasing the revenue and profitability of our Solutions business,” Rhipe said.

In August, Rhipe made its first foray into Japan through a joint venture with Microsoft partner Japan Business Systems (JBS), which saw operating profit increase 18 per cent to $6.6 million.

Due to hiring delays, Rhipe has lowered its Japan investment, and the savings will be used towards additional investments in its DBITS and SmartEncrypt businesses.

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