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Highlights

  • Solution Dynamics recorded a 14.6% YoY increase in revenue to NZD 26.09 million for the half-year ended 31 December 2024.
  • Despite higher revenue, SDL's net profit fell 5.2% to NZD 2.34 million, and earnings per share declined to 15.9 cents.
  • The company generated NZD 5.19 million in operating cash flow and ending the period with NZD 12.41 million in net cash.
  • SDL forecasts a potentially weak second half of FY25, with earnings expected to range from breakeven to a loss of up to NZD 0.3 million.

Solution Dynamics Limited (NZX:SDL) is a provider of customer communication solutions across New Zealand, Australia, Europe, and the United States. In the six months ended 31 December 2024 (H1FY25), the company's revenue climbed 14.6% YoY to NZD 26,091,000. However, profitability took a hit, with net profit after tax falling by 5.2% to NZD 2.34 million and earnings per share (EPS) declining to 15.9 cents. EBITDA also slipped by 7.1% YoY, settling at NZD 3.71 million.

Operationally, SDL generated a robust cash flow from operations of NZD 5.19 million, while net cash stood at NZD 12.41 million at the end of the reporting period. The company attributed part of this cash position to timing-related factors and noted that a normalized net cash level is closer to NZD 10–NZD 11 million.

Despite a healthy balance sheet, the Board has decided not to declare an interim dividend, citing ongoing uncertainty. A key reason for the cautious stance is the company’s largest customer shifting to a multi-vendor arrangement, which could impact future revenue streams.

Outlook

Looking ahead to the second half of FY2025, SDL projects earnings could range from breakeven to a potential loss of up to NZD 0.3 million. This would place the full-year profit in the range of NZD 2.0 million to NZD 2.4 million. The company flagged that market and customer volatility could introduce greater-than-usual variability in these projections.

Dividend considerations for the full year will be revisited once the FY2025 results are finalised, the Board confirmed.

Share Buyback Initiative Launched

In a move to enhance shareholder value, SDL announced a share buyback programme of up to NZD 0.55 million, on 31 March 2025 through the NZX. The Board believes the current share price does not adequately reflect the intrinsic value of the company or its assets. As such, the repurchase is seen as a value-accretive action for investors.

Share performance of SDL

SDL shares touched its 52-week low of NZD 0.60 per share on 8 May 2025. With this, over the past year, SDL’s share price has dropped by almost 44.42% and in the last three months, it has declined by 9.52%.

52-week high of SDL is NZD 1.38, recorded on 16 May 2024.

Resistance and support summary

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 08 May 2025. The reference data in this report has been partly sourced from EODHD/Others.

Technical Indicators Defined:

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.