ST1 - Spirit Technology Solutions

[System]

On July 23rd, 2013, Transol Corporation Limited (TNC) changed its name to Arunta Resources Limited (AJR).

Previous discussion of this company can be found in the TNC thread: https://www.aussiestockforums.com/forums/showthread.php?t=4892

 

[System]

On June 23rd, 2016, Arunta Resources Limited (AJR) changed its name and ASX code to Spirit Telecom Limited (ST1).

 

[Mr Bear]

Disclosure - I own this stock..

Thought I’d add a brief comment on ST1, Peter Diamond has taken a roughly $8m stake, this guy knows what he’s doing and has done amazingly well investing in startups including iiNet. They offer a very competitive and profitable network with solid growth.

 

[So_Cynical]

A mixed bag of reviews - i doubt any ISP would rate much higher as its a fickle industry.

https://www.productreview.com.au/p/spirit.html

 

[Ann]

This stock has had a number of names over the years....
SPIRIT TELECOM LIMITED 23/06/2016
ARUNTA RESOURCES LIMITED 23/07/2013 - 23/06/2016
TRANSOL CORPORATION LIMITED 27/08/2003 - 23/07/2013
ONLINE TRADING SYSTEMS LIMITED 27/08/2003
The chart goes back to 1999 but I can't find what it was back then. I really don't like these born again companies they have history dragging after them.
There was some news today which should have sent the price upward but it fell 11.77% as I write...
Spirit Telecom to deliver ‘the internet Australia deserves’ with Morwell next on delivery list

Internet service provider Spirit Telecom (ASX: ST1) has struck a $1.1 million deal with the Victorian State Government that will deliver fast 5G-enabled internet in rural Victoria.


Through the new deal Spirit has secured $2.8 million in state government contracts over the past 12 months.


5G aims to usher in a new era of wireless telecommunications that will facilitate economic opportunities and set the stage for a futuristic modern society.


The new contract means Spirit will provide 5G connectivity to Victorian regional town Morwell with Spirit saying it is “thrilled” to be delivering super-fast internet in the region. More..

 

[greggles]

Solid three month uptrend in place. ST1 up another 11.11% to 20c today and is now back to where it was eight months ago.

 

[peter2]

We know the movie misquote, "If you build it they (he) will come".
If Spirit builds a faster ISP than the NBN and it's available to me, I'll dump the NBN service quicker than it's crappy upload speed.

Telstra 5G or Spirit I don't care. All I want is speed and reliability. Will be keeping an eye on ST1.

 

[peter2]

Hello Spirit, we have lift off and I didn't put this one in the public 40pos portfolio.

 

[Dona Ferentes]

Hello Spirit, we have lift off...

Just about called the top, there, @peter2


ST1 is a tele-communications company which provides Internet, cloud solutions, telephony services and Phone Names in Sydney, Melbourne and Brisbane and the Gold Coast.

Probably struggling to gain relevance, although it has been a serial acquirer of late
May '19 : Link One Group
May '19 : Building Connect
July '19 : Arinda IT
July '19 : Phoenix Austec Group
(Sept - management changes)
Feb '20 : Cloud Business Technology
Feb '20 : Trident & Neptune Group

As you'd expect, capital raisings and share allocations aplenty over that time, and now in a trading halt for more capital

Small cap telecommunications provider Spirit Telecom is on the hunt for fresh equity to help fund its purchase of more telco and IT services businesses. .... out looking for as much as $10 million on Thursday through a two-tranche placement. The first tranche of 78.8 million new shares and the second, conditional placement of 12.2 million shares, according to terms sent to funds.

... priced at 11¢ a share, a 21.4 per cent discount to Spirit's 14¢ last close and an 18.4 per cent discount to its five-day VWAP. Shaw and Partners was lead manager and underwriter on the offer.

Funds were told the money raised would be used to strengthen the company's balance sheet to take advantage of potential acquisition opportunities. The company is in the process of completing due diligence on two potential targets and is assessing other opportunities on companies that have revenues up to the $30-odd million mark.

 

[chiff]

If I understand correctly-no share offer at 11cents for retail investors?

 

[Dona Ferentes]

If I understand correctly-no share offer at 11cents for retail investors?

Spirit successfully raises $9.2M in a strongly supported capital raising, which comprises an unconditional placement of approximately $8.662M to professional and sophisticated Investors and Conditional Placement to Directors, Founders and Employees of approximately $0.5M (subject to shareholder approval.

- get to share the downside, but not the upside?

But sometimes a SPP comes along down the track. Contact the company and express displeasure?

 

[chiff]

Spirit successfully raises $9.2M in a strongly supported capital raising, which comprises an unconditional placement of approximately $8.662M to professional and sophisticated Investors and Conditional Placement to Directors, Founders and Employees of approximately $0.5M (subject to shareholder approval.

- get to share the downside, but not the upside?

But sometimes a SPP comes along down the track. Contact the company and express displeasure?

No SPP for retail shareholders ...was said by CEO it would be too risky with acquisitions in play -takeovers etc and may act against the company.....over my head!

 

[System]

Spirit Telecom targets low-risk high volume growth sectors

 

[Dona Ferentes]

April 2020:
• Very healthy monthly April 20 result with total revenue of $4.0M in a highly challenging macro environment.
• Recurring revenue across the group for April up to $2.3M.
• Solutions & Project revenue at $1.7M for April.

Jan-April 2020 vs Jan-April 2019:
• Total revenue growth up 146% to $14.3M and B2B revenue growth up 216% to $12.4M.
• Recurring revenue growth up 60% to $8.6M and B2B recurring revenue growth up 92% to $7.0M.
• Solutions & Project revenue growth up to $5.7M

 

[Dona Ferentes]

Spirit is looking to raise $18 million in a placement of new shares and up to another $5 million from existing investors via a share purchase plan.

Funds raised would be used to buy a handful of small internet service providers. It is understood Spirit has agreed to pay $6 million cash and issue scrip worth $2 million for three IT services companies on Australia's east coast, leaving $4 million for marketing and investment and $11 million for future deals.

The raising was at 32¢ a share, which was a 13.5 per cent discount to the last close of 37¢.

 

[Dona Ferentes]

Spirit Solutions Partners (the Company’s newly created wholesale division) has made three acquisitions in Australia’s largest Telco and IT market (NSW). These companies are highly complementary to Spirit’s IT services business, providing Managed Services, Voice, Cyber-Security and Cloud-Based solutions.

1. Reliance IT, a Cloud Managed Services Provider based in Central NSW and one of the largest providers of IT services in regional NSW;
2. Beachhead Group, a Sydney based IT Managed Services Provider, specialising in Cloud and Infrastructure deployment to businesses and private schools; and
3. Altitude IT, a Sydney based IT Managed Services Provider with a diverse base of recurring revenue across the commercial & industrial sectors.

Along with the VPD acquisition, by July the Spirit Wholesaler & Reseller Channel has expanded and Spirit Solution Partners created. ST1 is morphing from a telco servicing small enterprises to an IT company, with target market including Industrial parks, offices, educational, health, aged care and mining entities, and providing:
High Speed Internet
IT Support
Security
Voice/Telephone
Cloud Storage.

 

[Dona Ferentes]

• FY20 revenue up 100% to $34.9M, marking a transformative year for Spirit.
• Underlying EBITDA* up 88% on FY19 to $3.73M, at the upper end of guidance range.
• Recurring revenue made up 67% of portfolio ($23.5M over $34.9M).
• B2B revenue growth of 147% to $28.9M on FY19; total recurring revenue up 48% to $23.5M on FY19.
• Balance sheet with $14M of cash and available debt as of June 30.


Outlook :
ORGANIC
1. Current revenue rate is circa $80.0M
2. National marketing launch of Spirit Sydney, Melbourne and Brisbane in Q1-Q3.
3. NSW expansion via acquisitions & 300 active Spirit Solution Partners & resellers in Spirit X by Dec 20.
4. VPD Acquisition has performed strongly in July 20.
5. Identify $1.5M in additional Opex synergies across acquisitions.

M & A
1. Total current balance sheet capital availability at $36.0M (Assumes SPP fully subscribed at $5.0M).
2. At negotiation stages with multiple vendors / sellers.
3. Current acquisition targets identified; have >$35M in annuity based revenue.

2020-21 ST1 TARGET
1. Build scale via organic + M&A.
2. Circa +$85M Revenue run rate target by CY Dec 20.
3. 15% Normalised EBITDA run rate at end of FY21.

 

[System]

On October 13th, 2020, Spirit Telecom Limited changed its name to Spirit Technology Solutions Ltd.

 

[Dona Ferentes]

On October 13th, 2020, Spirit Telecom Limited changed its name to Spirit Technology Solutions Ltd.

in the modern shift away from pure telco service provider to a more integrated tech model, there has been the company name change. At least the code doesn't change, as it is a shift of emphasis, rather than a totally new direction (and the underlying assumption that previous attempt had failed). It is all about Voice, Data and Cloud (not necessarily in that order), and sectioning the market: Domestic, Small-Medium Business, Corporate, and Government.

But, some things remain the same. New Acquisition

Intalock Acquisition
Key Details:
• Acquisition of Intalock, one of Australia’s leading cyber security services businesses with a market leading and sophisticated full Security Operations Centre (SOC) for $15.0M upfront consideration.
• Allows Spirit to cross sell and deliver highly secure bundled Cyber Security Services with Data, Cloud and Voice.
• Comprehensive Cyber Security offering, with blue chip customer portfolio across Corporate and Government – in line with Spirit’s market expansion strategy for FY21 into Corporate markets.
• Intalock generated revenue of $23.6M and normalised EBITDA of $2.3M in FY20.
• Upfront consideration of $15.0M paid as a combination of cash (85%) and Spirit equity (15%) with a deferred consideration component. An additional earn-out consideration component is also available for out-performance in FY22 capped to maximum total transaction value of $22.5M.
• Transaction EBITDA multiple of x6.5.
• Cash component will be paid from cash reserves and CBA debt facility.

 

[Dona Ferentes]

Commercial Update:
• Record growth continues, as Spirit builds out a scalable and high growth IT & Telco company across SMB, Essential Services and now Corporate & Govt.
• Spirit generated revenue of $6.5M in October, up 16% on September and 196% YOY from $2.2M.
• Record November Sales / Total contract value was $6.9.M (recurring), up 166% MOM and up 565% YOY, with pending installations at $2.8M and IT Services & Technology Sales at $12.1M.
• Large new business wins drove the record sales results with Cloud, Voice and Data products being sold in bundles across Health, Education and Corporate Segments.