DUG Technology Ltd H1 FY24 Financial Results

DUG Technology Ltd (ASX: $DUG) has announced its auditor-reviewed financial results for the half-year ended 31 December 2023 (H1 FY24). The company reported a strong financial performance with revenue of US$30.0 million, marking a 23% increase compared to H1 FY23. The Services business revenue grew by 28%, while Software business revenue increased by 9%. Additionally, the company recorded an EBITDA of US$7.1 million, up 3% from the previous period. DUG also reported an operating cash inflow of US$6.2 million, representing a significant increase from the inflow of US$3.0 million in H1 FY23. The company's cash on hand stood at US$11.7 million with net cash of US$1.1 million, including new asset financing facilities at the reporting date. Furthermore, DUG's Services order book at 31 December 2023 increased by 45% to US$40.5 million, indicating a positive outlook for the second half of FY24.

Executive Commentary on H1 FY24 Results

This result demonstrates further strengthening of our business, driven by increased momentum in the Oil & Gas exploration & production sector. Our Services wins grew strongly by 64% on H1 FY23, whilst delivering record high revenues for the period. The Company recorded EBITDA of US$ 7.1m. For the first time we incurred third party compute costs; these costs are expected to cease when the compute upgrade is complete. It has been significantly more expensive to purchase third party compute than it is for DUG to provide its own. The balance sheet is stronger following positive operating cash generation for the period, operating profit and employee loan funded share repayments. We expect this to strengthen further. Debt levels are low and include new financing facilities to fund growth capex. The outlook for our Services business continues to strengthen, evidenced by the signing of US$40.6 of million new Services work in the reported period. We have discussed previously the potential of our unique MP-FWI algorithm to disrupt the seismic processing and imaging market. It is pleasing to note that after offering services based on MP-FWI for two years, we believe DUG still has a unique offering and we continue to see the momentum building behind this game changing technology. The sales of Services based on MP-FWI are the sole reason for the compute upgrades. We are very pleased to have opened a new office. A Geophysical Manager to co-ordinate the Middle East business development and operations has moved with his family to Abu Dhabi. We expect to add a key technical geophysicist to his team shortly.

Summary of H1 FY24 Results and Outlook

DUG Technology Ltd has reported a strong financial performance for H1 FY24, with significant revenue growth and positive operating cash flows. The company's Services order book grew by 45% to US$40.5 million, indicating a promising outlook for the second half of FY24 and beyond. DUG's unique MP-FWI algorithm continues to gain traction in the seismic processing and imaging market, driving the need for compute upgrades. The company's focus on strengthening its balance sheet and low debt levels, along with new financing facilities, positions it well for future growth and expansion. With the signing of new Services work and opportunities for software growth, DUG remains optimistic about its prospects and aims to continue supporting planned activities through its balance sheet and cash generated from operations.