TIO is trending in the right direction, says CantorFitz Cantor Fitzgerald Canada analyst Ralph Garcea says he likes what is happening to
TIO Networks’ (TSXV:TNC) bottom line.
Yesterday, TIO Networks reported its Q3, 2015 results. The company earned $24,056 on revenue of $13.56-million, a topline that was up five per cent over the same period last year.
“We are executing on our M&A synergies and related cost reduction strategies and its paying off,” said CEO Hamed Shahbazi. “We experienced record performance in adjusted EBITDA, the strongest in the company’s history. All our acquired entities including Tio’s core business recorded meaningful improvements in profitability this past quarter. We made strong progress with our platform consolidation and shared services initiatives. When fully implemented these initiatives will make the company a financially strong competitor in the receivables management and bill payment processing industries.”
Garcea, who notes that TIO reported its highest-ever R&D expenses, says despite a revenue decline the company’s bottom line is looking better and is setting up for growth. In the long term, the analyst says he expects TIO will deliver EBITDA margins of between 15-20%.
“EBITDA and Gross Margins are trending in the right direction,” says Garcea. “Despite the revenue decline during this transition (should be completed by the end of FQ4/15 (July)), gross margins improved to 47% vs 39% q/q and 34% y/y, as transaction volumes increased to 13.3M vs 8.9M y/y.”