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Listed firm posts profit and revenue decline after ‘flat year’

Listed firm posts profit and revenue decline after ‘flat year’

Decline, downward

An ASX-listed intellectual property firm has announced its full-year financial results for FY2016-17, revealing a decline in revenue and profit since listing.

Today marks the one year anniversary of Qantm Intellectual Property Limited’s ASX listing. The company announced its full-year pro forma financial results yesterday, showing that its first year as a listed entity was not without challenges.

Qantm reported revenue of $103.2 million for FY2016-17, down from $107 million in 2015-16.

This result was almost $10 million lower than its IPO prospectus forecast of $112.1 million. In its results presentation, Qantm attributed this to a “flat year” in patent applications.

Overall, the number of patent applications in Australia was 1 per cent lower in FY2016-17 than in the previous financial year, which was mirrored in Qantm’s results.

The firm recognised this challenge earlier in the year and downgraded its revenue guidance in May 2017 to between $100 million and $102 million. Although this caused a significant drop in its share price, the firm’s revenue ended up exceeding the revised guidance.

Qantm’s net profit after tax also suffered this year, down to $14.8 million from $16.4 million in the previous financial year. This represented a decrease of approximately 9.8 per cent.

Leon Allen, the firm’s managing director and CEO, said Qantm saw a slight recovery in May and June 2017 after a difficult financial year.

“The company, as with the industry overall, experienced a slower period of patent application, advisory and prosecution revenues [in FY2016-17],” he said.

“The company advised of this trend in its May 2017 market update. Qantm’s financial outcomes, while generally higher than the May market update ranges, were lower than IPO prospectus forecasts. This reflects the more subdued market conditions.

“Encouragingly, a recovery in the months of May and June was recorded in terms of patent application, advisory and prosecution, as well as legal revenues.”

Mr Allen noted that all the firm’s key clients have been retained since its IPO.

He also said Qantm expects its revenue to increase in FY2017-18 as the numbers of patent and trademark filings return to their historical growth rates.

“The company expects a return in Australian patent and trademark filing applications to long-term historical GDP growth rates,” Mr Allen said.

“This should be associated with revenue growth in line with market growth.

“The industry overall is very attractive and has strong long-term trends. What we seek to do is capitalise on this attractive industry that has very good growth dynamics over the long term, and we believe, as has been evidenced in the past, the long-term growth rate is stable at or above GDP levels.”

The market reacted positively to the financial results. Qantm’s share price rose by 11.5 cents to sit at $1.43 at COB yesterday.   

Listed law firms, including listed IP firms Qantm, Xenith and IPH Holdings, have been the subject of controversy in recent times, particularly since Slater and Gordon’s fall from grace.

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