Breast-imaging business Volpara Health Technologies Ltd (ASX: VHT) has released its FY21 half result with more solid growth.
Volpara revealed that its total revenue increased by 38% to NZ$9.5 million, with subscription revenue jumping 71% on the prior corresponding period to NZ$8.8 million.
In terms of its annual recurring revenue, which is if its existing subscriber base paid for a full year of subscriptions over the next 12 months, it increased to NZ$19.9 million (up 26.7% compared to last year’s number of NZ$15.7 million).
In terms of market share, Volpara said that approximately 27% of women had a group product applied on their images and data compared to around 25.8% at the end of the corresponding period, equating to an increase of 1.2 percentage points. Average revenue per user (ARPU) was US$1.16 million, which was up approximately 26%.
The Volpara gross profit jumped by 42.9% to NZ$8.68 million with the gross profit margin increasing to 92%, up from 89%.
Volpara reported a net loss after tax (before foreign currency effects) of NZ$8.9 million, which was 11% worse than the prior corresponding period.
The company said that continued investment has been made in research and development with the roll out of its Volpara Breast Health Platform, which is an end to end solution that’s fully integrated and delivered through a virtual appliance.
Volpara finished the half-year period to 30 September 2020 with NZ$64.3 million of cash.
The company says that its revenue is on track to match management’s expectations for the full year. It expects annual recurring revenue to keep rising, but coronavirus impacts are causing growth to slow particularly at hospital-based imaging centres.
Volpara expects ARPU to keep rising, but it may lose some clinics as it targets legacy MRS customers in support contracts (at very low ARPU) to upgrade to SaaS or risk not being supported. The SaaS contracts have much higher ARPU.
It also expects to see increasing revenue from its partnership with genetics company Ambry, which is starting to show significant ARPU potential, well above internal expectations.
With the ongoing strength of the business, and the increasing ARPU, gross profit margin and market share, I think Volpara looks like a very promising business that is worth being (at least) on your watchlist.