Why the AD1 (ASX:AD1) share price rocketed 25% today

The AD1 Holdings Ltd (ASX: AD1) share price rocketed 25% after the company announced a milestone contract award.
The post Why the AD1 (ASX:AD1) share price rocketed 25% today appeared first on The Motley Fool Australia. –

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The AD1 Holdings Ltd (ASX: AD1) share price has been flying high today after the company announced a milestone contract award.

The AD1 share price rocketed to an intraday high of 6.8 cents, up 25%, in opening trade but has retreated through the day to 5.7 cents, up 9.62%.

A quick take on AD1

Based in Melbourne, AD1 provides customer-branded recruitment technology platforms, utility software billing services and management platforms.

Its ‘Acquire solutions’ is an energy industry sales intelligence tool that allows a company to manage its sales database.

‘Zone solutions’ is a customer portal that collates information to provide a range of reporting metrics for customers. The platform also offers customer-self service options, negating the need to connect to a company representative.

What did AD1 announce?

In today’s release, AD1 advised its utility division has signed a 5-year agreement with Australian energy retailer, Locality Planning Energy (LPE).

The new deal will expand AD1’s current scope of work for LPE. This will include energy sales intelligence (Acquire) and customer portal (Zone) solutions for LPE’s existing customers. In turn, the new offering will enable improved cost efficiencies by enhancing the customer experience using sophisticated technology.

The expanded agreement builds on the original contract signed in May 2018. AD1 previously delivered billing & operations Software-as-a-Service (SaaS) solution and related managed services for LPE’s on-market customers.

It’s expected that the new deal will generate revenue of about $10 million for AD1 over the 5-year term. This is a 200% revenue increase on the previous contract signed.

Management commentary

AD1 CEO Prashant Chandra welcomed the new agreement, saying:

This is a landmark deal for the company and we are thrilled to extend and expand our partnership with LPE for a further five years.

Our utilities SaaS solutions assist energy retailers enhance their value offering and achieve their growth objectives in a very cost-effective manner. The five-year expansion of services is a validation of the value in our commercial offering.

Mr Chandra said additional revenues under the deal would start post-implementation, which was anticipated to be completed during the July-September 2021 quarter. It would increase the company’s recurring SaaS and managed services revenue by approximately 50% compared to FY20, he said.

AD1 share price snapshot

The AD1 share price has surged 510% higher since early June last year. At the current share price, AD1 has a market capitalisation of $34 million.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the AD1 (ASX:AD1) share price rocketed 25% today appeared first on The Motley Fool Australia.

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