StarHub (CC3) Q3 2024 earnings summary

Executive summary

• Net profit after tax rose 11.1% year-on-year to $40.4 million in 3Q2024 and 9.5% to $123.7 million for 9M2024, marking the seventh consecutive quarter of YoY NPAT growth, driven by operational profit, non-operating income, and lower taxation.

• Service revenue was flat year-to-date and down quarter-on-quarter due to timing in cybersecurity revenue recognition, but full-year guidance remains unchanged with expected year-on-year growth.

• EBITDA and margins improved, supported by high-margin enterprise segments, operational efficiencies, and CapEx to OpEx substitution.

• Free cash flow for 9M2024 was $167.2 million, about 50% higher than net profit, supporting dividends and growth investments.

• Leverage remains low at 1.25x net debt to EBITDA, providing financial flexibility for expansion and acquisitions.

Financial highlights

• 3Q2024 total revenue was $575.2M (-5.8% YoY); 9M2024: $1,671.7M (-1.5% YoY).

• Service EBITDA margin for 9M2024 was 22.6%, up 0.9 percentage points year-on-year; 3Q2024 margin was 22.6%.

• Net profit after tax for 3Q2024 was $40.4M (+11.1% YoY); 9M2024 was $123.7M (+9.5% YoY).

• Free cash flow for 9M2024 was $167.2M, or $0.0907 per share.

• Interim dividend of $0.03 declared, with full-year guidance of $0.06, maintaining a payout of at least 80% of net profit after tax, excluding non-recurring items.

Outlook and guidance

• Full-year 2024 service revenue is expected to be in line with guidance of 1%-3% growth, despite flat performance for nine months due to timing in cybersecurity revenue.

• CapEx commitments are within expectations at 7.1% for the period, with DARE+ transformation spend on track to complete by mid-2025.

• Service EBITDA margin guidance at ~22%; 9M2024 achieved 22.6%.

• Commitment to dividend policy and prudent capital management reiterated, with strong cash and leverage positions maintained.

• BAU capex guidance at 4–6% of total revenue; including investments, 7.1% for 9M2024.