DUG Technology Ltd

ASX:DUG

DUG Technology Ltd

ASX:DUG
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$1.300 (+1.2%)
Last close price
#279
Rank
5
Held by
21
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Forum Topics DUG DUG ASX Announcements

Pinned straw:
rh8178
Added 8 months ago

02802104 - DUG 1-5-24.pdf

DUG's announcement today attached, from my earlier post's looks like my thesis is intact, demand for High Performance Computing is strong and their cost base shouldn't rise proportionally with revenue. Good growth is 2 of the 3 business lines with revenue up 39% and EBITDA up 24%. US$5.6M FCF for the quarter isn't bad either, so nice to see the EBITDA translating to cash flow. Having said that I was more impressed with the operational leverage last half (profit rose faster than revenue last quarter which is always preferable). This dip in leverage is explainable. They are still being weighed down by having to hire compute power, so hopefully with the new install done by June this will improve, but maybe not full impact till Q1FY25 from what this announcement says. So I'll be looking for that October update to see if the thesis really remains true. Still has net cash on the balance sheet (c. US$5m), which is always a plus...and management maintain a strong holding, another plus.

Hold IRL and SM.

Dominator
Added 8 months ago

Increased revenue, YOY, only slightly higher than last quarter though. Order book is continuing to grow. External compute cost should disappear soon. Cash on hand increase and remains net cash. All generally good news.

However, I find it hard to get any hint on the direction of profitability though. I don't know if EBITDA or cash flows are a good indicator to the underlying profitability, especially a quarterly figure. DUG are investing heavily in new compute power so cash flows show a higher cost than usual while I guess EBITDA figure doesn't account for the cost of depreciation of the equipment and financing costs which are real and ongoing costs to the business. Guess I have to wait and see with the FY figures...

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