Spirent reports good first quarter order intake growth

The FTSE 250 company said revenue for the three months ended 31 March was in line with the first quarter of 2020, which was a “strong” comparator period before the impact of Covid-19.

It said its order book was continuing to build, with a book-to-bill ratio of 104 for the first quarter.

Spirent said it was continuing to “win” in the 5G space, with the development of 5G technology and networks remaining a firm driver underpinning its growth, securing more than 180 deals during the quarter from more than 80 customers.

The board said that, while the company continued to invest to support its future growth plans, it had also started implementing a global research and development engineering plan. which would rationalise the number of sites and extend its flexibility to serve customers.

It said the estimated exceptional cost would be around $8m (£5.76m) between 2021 and 2023, with cash payback estimated within two years.

In the networks and security division, Spirent said demand for its positioning products and high-speed ethernet solutions were gathering momentum, with the pipeline for both growing “robustly” through the first quarter.

In particular, it said it was securing more support and services orders as it focussed on the “growing opportunity”.

For lifecycle service assurance, the firm said “strong” order growth in the quarter was driven by continued demand for both its lab and live solutions.

The company was focusing on expanding its services offering, adding that it secured a number of new wins with leading service providers globally for its managed solutions business.

In addition, it said demand for its new 5G device test solutions and services was continuing to expand.

From 1 January, it merged its connected devices segment into the lifecycle service assurance business.

In March, it acquired octoScope which, in combination with its own emerging Wi-Fi test business, positioned the company as “the leader” in the growing market segment, the board said.

The founder of octoScope and the company's management team were working with internal teams to drive an effective integration, which the directors reported was on track.

Cash closed the quarter at $221m, after paying for the recent acquisition of octoScope.

Payment of the previously-announced final dividend of 3.87 cents per share, and the special dividend of 7.5 cents per share, totalling $69m, would be made on 30 April, subject to shareholder approval.

“We have started the year well and our orderbook continues to grow,” said chief executive officer Eric Updyke.

“We are winning more multi-year contracts, which improves visibility.

“Demand for our assurance solutions continues to strengthen as market drivers for reliable communications remain robust and the pipeline build for our networks and security segment is reassuring.”

Updyke said the company’s focus on growing its services business was working, with new secured customer wins for managed solutions and a growing pipeline of new opportunities.

“We are also delighted to have commenced our targeted merger and acquisition programme welcoming octoScope to the Spirent family, firmly establishing our position as the Wi-Fi test leader.

“The integration is on track and enhances our portfolio of offerings.”

Spirent was managing the current volatile environment “well”, Updyke said, adding that its business model was proving “resilient”.

“The board remains confident of continued growth in the year.”

At 0842 BST, shares in Spirent Communications were up 2.3% at 257.8p.