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#Bull Case
Added one year ago


I am a holder of ST1 IRL and SM.

I was a bit meh with the results yesterday. Things do look like they are improving, the company is profitable and should be a beneficiary to Australia opening up. For a growth company I would have wanted to see better results.

I believe the kick up in SP today is because of a report of Aussie Broadband looking to acquire a company and the report suggested that ST1 would be the most obvious acquisition from an analyst perspective. This was in the same report as OTW who is in a trading halt on the news. I think this is speculation and punters getting in on the possibility of this becoming a reality. Although I believe ST1 is a serious takeover option for someone I think this is not the time.

I will continue to hold ST1 I am a fan of the CEO who is developing a good business and has good direction. I like that they are selling low growth segments of the business to use that capital to hopefully acquire better growth options. The entire telecommunications segment is seriously interesting at the moment and I expect a lot of M&A to occur in the next 12 months.

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#Quarterly update
Added one year ago

ST1 doing very well today. It has been sold off quite dramatically over the last year as the market seems to have missed that there is some seasonality in their numbers and was probably overly bearish about the effect the lockdown would have on the business. It wasn't a great result but the business showed resistance and the December quarter should be massive being one of due to school renewals and a bounce back in the economy,

Spirit Q1 FY 22 – Resilient Revenues of $30.9M & Balance Sheet Strength

  • Q1 FY22 revenues1 of $30.9M up 98% YoY
  • Positive Underlying EBITDA2 of $2.0M achieved during lockdowns and seasonally slower quarter.
  • In addition to the $2.0M, Spirit received $0.7M in NSW JobSaver payments due to lockdowns,
  • which has been excluded from this market update
  • As at 20 October 2021, Spirit had cash of $12.3M and $7.0M available in its CBA debt facility ($19.3M
  • in available capital to access).
  • Additionally, $5.1M of capital is being returned from the consumer asset divestment to be used
  • to fund acquisitions, drive organic growth or to meet deferred acquisition payments.
  • Structural changes impacting businesses and employee experience accelerating out of COVID
  • driving demand for digital workplace solutions: Cloud, MSP, Data and Cyber services.
  • In October, Spirit is already seeing the SMB market recover, with pent up sales demand expected
  • to come through Q2 and across FY22 H2.

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#ASX Announcements
Added one year ago

Spirit divests consumer assets for $5.1m in an attempt to focus the business on more modern digital workplaces to the business market, from SMB to corporates. These markets a lot more profitable and attract larger and longer contracts.

further news from the announcement is that Spirit has received other offers for their fixed wireless towers which they are considering the proposals put forward.

I find this a positive not only as spirit is now a large enough business to focus on key areas of growth but also they now have cash to further capitalise on the consolidation occurring in the industry.

spirit is a one stop shop for all telco and IT needs and I find the managing director a really good leader. He is old fashioned, likes to run a profitable business and has a clear direction and pathway to grow the business.

I expect that there will be no acquisition announcements this year as they integrate the many made last year successfully including the larger one of nextgen.

I personally see ST1 undervalued currently and would not be surprised to see some form of takeover offer come through. They have some really good contracts with large corporates in government and education.

Disc: held IRL and SM

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Valuation of $0.420
Added one year ago
Assuming they meet guidance of $20m and achieve a 15x multiple this should give them a share price of $0.42
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#Bull Case
Added one year ago

ST1 after a great report continues to get sold down. I have been tryng to work out why this is the case but finding it hard to understand the negative sentiment. The only issues I can think of are as follows - 

- whilst achieving incredible growth and proving that organic growth is kicking in, there are headwinds currently due to lockdowns as ST1 service a lot of businesses, which may be holding off spending. 

- ST1 flagged that there is wage inflation kicking in due to IT personal being in high demand. This could drive up their costs to some extent and they could risk loosing key personal to other companies who make a better offer. 

- They are selling their consumer business and this is taking longer than the market was anticipating. Sol their CEO actually stated that this is playing in their favour as asset prices are actually increasing in the current environment and that they are getting offers for other parts of their business as well. 

All businesses have their challenges and Spirit still have a unique offering in the market and the sudden sell down in my opinion is not justified. Trading now on an 8 times forward EBITDA multiple, it's looking very cheap compared to it's peers. 

Spirit have flagged that they want to be part of the consolidation going on in the industry and therefore the more the share price drops the more attractive they become as a takeover target. 

I am guessing their is one or two large sellers their driving dowth the price and its looking oversold to me. 

I value ST1 on a 15x multiple a share price of $042

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#Business Model/Strategy
Added one year ago

Takeover target...

Spirit report out and invetor call at 11am for anyone interested. 

Growth drivers in place and the business continues to perform showing organic growth but the current lockdowns are a challenging environment.

Flagged industry consolidation and Merger/acquision to take place this year. They are definitely a takover target and I wouln't be surprised if they are in talks at the moment. Also the divestment of their consumer business is going well and possibly the sale of other non core assets. Watch this space. 

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#Bull Case
Added 2 years ago

For those who were impressed with the recent ST1 update, worth listing to this broker view on the business. Still very undervalued in my opinoun and with the M&A activity going on in the industry I wouldn't be surprised to see them get taken over. I don't invest on the hope of takeovers though and feel that there is plenty of upside due to the organic growth taking place. 

Broker insight Spirit $ST1

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Valuation of $40.00
Added 2 years ago
See Last straw
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#ASX Announcements
Added 2 years ago

FY21 Revenue at $104.5 million up 200% YonY

H2 21 revenue grew 37% from $44 mil H1 Fy21 to $60.5 Mil H2 FY21

Recurring Revenue up 33% to $27.2 Mil

Strong balance sheet with $24.2 mil of cash available with further cash expected following the sale of consumer infrastracture assets. Net debt at $1.5 Mil


pleasingly provided FY22 Guidance of $150-155 mil up 44-48% on FY21 with underlying EBITDA forecast at $19.4-$20.2 mil up 68-75% from FY21.

The guidance reflects some nice organic demand occuring from recent acquisitions that were undertaken throughout FY21. We should now see some nice numbers coming from the business as integration of these businesses are achieved.


I firmly believe ST1 will be a takeover target from one of the bigger boys in town. I believe a lot of M&A will occur in this sector. A bit like BNPL this area is crowded and I think some consolidation will occur. With the above numbers $ST1 looks very attractive at this price.

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Added 2 years ago

Market Update 20th July 2021

Very nice update from Spirit this morning showing sustained organic growth. Guidance of $20m EBITDA putting it on a very low multiple of just over 9x. I am guessing management are being conservative and I also think this is a remarkable achievement with all the lockdowns we have had in Melbourne over the last year. 

I'm sticking to my valuation of $0.50

Looking forward to the sale of their consumber business which will raise more capital for acquistions and should be a catalyst for the share price.

Market update ST1 July 2021

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#Business Model/Strategy
Added 2 years ago

Market update May 2021

Good update - 

Recurring and S&P Revenue up 150% Year on Year (YoY)

Very strong growth again in FY21* - achieved off a record Sep-Dec FY21

  • Recurring and S&P revenue at $35.7M, up 150% YoY

  • Recurring revenue up 94% YoY to $16.6M and Solutions and Projects

    (S&P**) revenue up 224% YoY to $19.1M

  • Recurring revenue up 16% to $16.6M (Jan-April / 4 months)

  • Strong Jan-April total revenue up 8% coming off a seasonally high Sep-Dec FY21 - into a traditional B2B holiday period (January & Easter holidays)

  • Organic growth: 30% of deals exceed $250,000 in Total Contract Value (TCV) with 17% exceeding $500,000 (mid market & bundles)

  • TCV on Recurring Sales up 145% YoY to $11.9M

  • 10 consecutive quarters of recurring revenue growth (to Mar ‘21)

  • In April Spirit generated 1596 inbound sales leads up 75% on March

  • Nexgen had a record new sales month in April

  • Services Pending Delivery at $10.4M and IT Services & Technology Sales at $6.1M

  • Healthy balance sheet with $23M of cash and available debt as of 30 April 2021

Recurring and S&P Revenue +150% YoY

Recurring Revenue +16%




$35.0M $30.0M $25.0M $20.0M

$15.0M $10.0M $5.0M $0.0M


$18.0M $16.0M

$14.0M $12.0M $10.0M

$8.0M $6.0M $4.0M $2.0M $0.0M



 I have heard that the share price has sold off as a result of a downgrade from a broker, who was dissapointed in the quarterly growth for March compared to December. You can't compare the two though as revenue is seasonal due to the Trident business, which is affected by school holidays in January. The business looks to be on track and now they just have to prove to the market that they can grow organically. Based on a run rate of $150m in Rev and $20m EBITDA I value the business at $0.50

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#Acquisition Complete 8/4/21
Added 2 years ago

Spirit Completes Acquisition of Nexgen Group

Spirit Technology Solutions (ASX.ST1) is pleased to announce that it has completed the acquisition of the Nexgen Group (comprising the Nexgen and Business Telecom businesses). The Nexgen acquisition brings over five thousand new clients, and one hundred new sales people to Spirit to drive organic growth, complementary products, scale and is expected to generate $36.0M in combined revenue with 80% of this as recurring revenue.


  •  Over 5,500 Data & Voice business customers with 4,000 being contracted or recurring (80%)
  •  Average contract term is 4.5 years with no customer concentration.
  •  +100 sales team members instantly join Spirit to sell the existing Nexgen products and cross sell Spirit’s Internet, Cloud, Voice, Mobiles and Cyber Security.
  •  Nexgen is tracking to a forecast FY21 EBITDA in the range of $7.2M - $7.6M, the implied multiple is 6.5x with the completion payment (including a deferred component of $10M) capped at $50M excluding any agreed Milestone Incentives available based on performance target for FY22 and FY23

Disc: I hold

View Attachment

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#Sale of Assets 18/3/21
Added 2 years ago

Spirit announces intention to divest consumer infrastructure assets

Spirit’s consumer division provides high-speed internet to thousands of residential customers, primarily in large apartment buildings across Melbourne, Brisbane and Gold Coast.

The consumer network and infrastructure assets are in 97 buildings, with access to over ~18,300 possible connections. Spirit has built a dedicated switched ethernet network in these buildings to deliver end-user speeds of up to 1 gigabit, providing a robust connection that any mixed copper model is unable to compete with - at highly competitive pricing. High profile buildings include Eureka Tower, Freshwater Place, Yarra’s Edge complex, Central Equities cluster – Southbank Melbourne and Queensland’s largest residential building Southport Central.

The divestment is in line with Spirit’s shift to focus on the business market, from SME to large enterprise. The Consumer assets now account for a small amount of Spirit’s revenue compared to its B2B portfolio of assets.

“As Spirit has evolved to a large integrated IT and telecommunications provider, it is in line with our strategy to divest the consumer assets, which are no longer core to our strategy. Proceeds from the divestment will be used to continue to acquire high growth assets across cyber security, cloud and IT services, which are in high demand within our B2B customer base,”

“These assets are unique, given the limited competitors servicing these types of residential buildings nationally. We see this divestment returning a material sum of capital to our balance sheet. Additionally, we’ve already had strong interest with several parties enquiring about acquiring these infrastructure and customer assets.” said Sol Lukatsky, Managing Director.

The Company has appointed Tony Schiavello, Partner from BDO Melbourne’s M&A team to conduct a formal sale process.

The divestment will have no impact on existing customers and will see a seamless transfer to the new acquirers. The divestment process will run through Q3-Q4 FY21.

- ENDS –

DISC: I hold

This might have been foreshadowed in the ASX notice on 23/3/21 when they said

"Revenue mix continues to reflect shift towards medium & corporate market with higher value contracts."

View Attachment

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#H1FY21 Results 23/2/21
Added 2 years ago

Spirit Delivers Profitable H1 21 & Record Revenue Strong performance across all key financial metrics (reviewed):

  •  Record H1 21 with Revenue and Other Income of $44.0M, up 253% on H1 20.
  •  NPAT up 169% year on year to $508K, compared to loss of $740K in H1 20.
  •  H1 21 Underlying EBITDA* $4.4M, upper end of guided range (H1 20 was $1.6M).
  •  Positive Operating Cashflow for H1 21 of $4.3M.
  •  Healthy balance sheet with $23.3M of cash and available debt as of 31 December 2020.
  •  Average deal size increasing with major contract wins across corporate; education and health illustrating the strength of the Spirit offering and leverage of cross-sell opportunities

DISC: I hold

View Attachment

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#H12021 Update 22/1/21
Added 2 years ago

Spirit achieves record growth in H1 21 & Q2 21 across all financial and customer KPI’s

Record growth in Q2 21 & H1 21 across all key financial indicators (unaudited):

• Total revenue for the half was $42.7M, up 243% year on year (YoY).

• Total revenue for the quarter was $27.1M, up 338% year on year (YoY) and 73% on Q1 21.

• Q2 21 recurring revenue up 116% YoY to $11.5M and S&P** revenue up 1,768% YoY to $15.6M.

• H1 21 Underlying EBITDA* in the range of $4.1M - $4.4M (H1 20 was $1.6M).

• Positive Operating Cashflow for H1 21 of $4.3M.

• Significant demand with Total Contract Value (TCV) sales up 303% YoY to $14.1M, with pending installations at $15.1M and IT Services & Technology Sales at $6.6M as of 31 December 2020.

• Organic sales growth continues with several large contract wins across Corporate, Education and Health verticals.

• Healthy balance sheet with $23.3M of cash and available debt as of 31 December 2020.

• Acquisition integrations ahead of schedule.

Disc: I hold


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#Broker/Analyst Views
Added 3 years ago

30-June-2020:  Canaccord Genuity: Spirit Telecom (ST1): Building a modern telco

Rating: BUY (unchanged), Price Target: A$0.35 (unchanged).

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