COVID-19 continues to crush RXP Services in half yearly results

COVID-19 continues to crush RXP Services in half yearly results

Net loss increased by 87.3 per cent, year-over-year

Ross Fielding (RXP)

Ross Fielding (RXP)

Credit: RXP

COVID-19 continues to impact RXP Services’ bottom line in its first half year results for 2021, with the company posting a $10.2 million loss for the half year ending 31 December 2020. 

This sees the digital services consultancy increase its overall net loss after tax by 87.3 per cent when compared to the same period last year, according to documents released to the Australian Securities Exchange (ASX).

Revenue was also down 10 per cent, to $58.6 million, which RXP blamed on the ongoing pandemic and working from home arrangements impacting its sales processes and conversions in the second quarter.

For comparison, the consultancy’s FY20 results saw its revenue decline by 10 per cent, to $126.8 million, and its profit drop by 44 per cent, to a loss of $1.9 million. Back then, COVID-19 was also mentioned as having an impact on its results, particularly affecting the second half of the previous financial year.

RXP CEO Ross Fielding said that its particularly difficult second quarter for FY21 came off the back of a positive first quarter.

“We entered FY21 with momentum and this continued during the first quarter of FY21, as businesses recognised the need to invest in brand development, brand awareness and call to action marketing,” he said.

“Despite this, sustained remote working arrangements impacted the effectiveness and efficiency of our sales processes in Q2, resulting in softness in new project pipeline development and conversion.”

He added, however, that client retention remained “extremely” high, with RXP also seeing project extensions take place and its digital marketing services producing “solid” results.

“[We] continued to have strong demand for our digital marketing services, along with some good blue-chip client and project wins”, Fielding said. 

In addition to seeing an increase in its net loss and another hit to its revenue, its earnings before interest, tax, depreciation and amortisation (EBITDA) were up by 1 per cent, to $5.3 million.

Despite the hit to the consultancy, Fielding was optimistic about the half-year ahead, claiming there has been “early signs of improvement in the operating conditions”.  

“With many businesses now focused on a return to the office, we are seeing more face-to-face meetings, resulting in increased activity in terms of our sales processes,” he said. 

“Combined with growing business confidence and greater clarity of client priorities, we look forward to a stronger result in the second half of FY21.”

RXP’s financial results for the first half of FY21 come months after the announcement of its acquisition by Capgemini Australia for $95 million

At the time of the acquisition announcement, RXP's board of directors unanimously recommended the scheme as it stood.

“The RXP board believes the offer from Capgemini represents an excellent opportunity for RXP shareholders to realise certain value at a significant premium,” RXP chairman John Pittard said back in November. 

“The RXP board has unanimously concluded that the scheme is an outstanding outcome for all RXP stakeholders: shareholders, employees, clients and other business partners.”

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