Nanosonics Surges with 18% Revenue Growth and $10.9M Profit in H1 FY25
Nanosonics delivers a robust H1 FY25 trading update, reporting an 18% rise in revenue to $93.6 million and a profit before tax of $10.9 million, signaling strong momentum in its infection prevention business.
- H1 FY25 profit before tax expected at $10.9 million, up from $4.9 million in prior year
- Total revenue rises 18% to approximately $93.6 million
- 20% growth in consumables and service annuity revenue streams
- Gross margin steady at 78.5%, slightly down from prior year
- Operating expenses increase 10%, reflecting strategic investments
Strong Revenue Growth Drives Profitability
Nanosonics Limited (ASX:NAN), a leader in infection prevention solutions, has reported a promising start to FY25 with a preliminary unaudited trading update for the first half. The company expects to post a profit before tax (PBT) of approximately $10.9 million, more than doubling the $4.9 million recorded in the prior corresponding period (pcp). This robust profitability is underpinned by total revenue growth of 18%, reaching an estimated $93.6 million.
The revenue increase was primarily fueled by a 20% rise in consumables and service annuity revenues, highlighting the strength and recurring nature of Nanosonics’ business model. Capital revenue also contributed positively, with an 11% increase compared to the pcp, despite the total number of trophon units sold remaining broadly in line with forecasts and prior year sales.
Margins and Expenses Reflect Strategic Balance
Gross margin for the half is expected to be around 78.5%, a slight dip from 79.7% in the prior corresponding period but an improvement over the 76.3% recorded in the second half of FY24. This stability in margin amidst revenue growth suggests effective cost management and pricing discipline.
Operating expenses rose by 10% to approximately $66.7 million, reflecting ongoing investments in growth initiatives and operational capacity. Despite this increase, the company’s operating leverage has contributed to a significant uplift in earnings before interest and tax (EBIT), which is forecasted at $8.7 million, up 122% from the previous year.
Currency Movements Provide Additional Earnings Boost
Nanosonics also benefited from foreign exchange gains, with an unrealised FX gain of about $1.3 million due to the Australian dollar’s depreciation against the US dollar during the half. This compares favorably to a $0.4 million loss in the prior corresponding period and partially offsets the group’s hedging activities. The company’s CFO and CEO have noted that this currency movement has positively impacted the bottom line but remains mindful of potential volatility going forward.
Outlook and Market Position
Looking ahead, Nanosonics expects FY25 revenue, gross margin, and operating expenses to land near the top end of its previously guided ranges, assuming an AUD/USD exchange rate of 0.67. This guidance reflects confidence in sustained demand for its infection prevention technologies and the resilience of its recurring revenue streams.
With the full H1 FY25 financial results and a comprehensive performance review scheduled for release on 20 February 2025, investors will be keen to see how these preliminary figures translate into audited outcomes and what strategic priorities the company will emphasize for the remainder of the year.
Bottom Line?
Nanosonics’ strong H1 momentum sets a high bar for FY25, but currency swings and expense growth warrant close monitoring.
Questions in the middle?
- How will Nanosonics manage operating expenses to sustain margin expansion?
- What impact might future AUD/USD fluctuations have on earnings?
- Can capital revenue growth accelerate beyond the current steady pace?
