Melbourne IT reports "horrendous" SMB sales

Melbourne IT has reported a “horrendous” SMB result in its first half of 2012, in what the company’s CEO admitted was a “mixed bag” result.

The domain name registrar posted an 18 percent jump in net profit to $5.8 million for the first half of 2012, helped by a strong performance by its digital brand services and enterprise services divisions. The two business experienced year-on-year revenue growth of 19 percent and 5 percent respectively.

But its SMB eBusinesses Solutions and Global Partner Solutions (GPS) revenue fell 8 percent, with sales dropping from $8.1 million to $5.9 million.

"Our direct SMB business had a quite a few challenges. We started the year reasonably solidly and then we were attacked by this credit card scam out of Asia," CEO Theo Hnarakis said.

"Unfortunately, that clogged up our web sales where we were being smashed by these fraudulent transactions [which meant] real customers couldn't get through."

The mass migration from Microsoft Office Live Small Business to Office 365 caused additional distractions for Melbourne IT's SMB division, which received more than 10 times the usual number of phone calls between May and June.

"It created almost a panic move with most of the Microsoft customers and of course they couldn't get through to Microsoft, so they called us. That jammed up our customer service line and e-business sales line. Instead of selling, we were basically trying to save Microsoft's bacon," explained Hnarakis.

Hnarakis said he expected the SMB division to stabilise in the next half of 2012 due to "seasonality" factors. 

"We do tend to get a lot of the contracts and a spike in spending from the US through to September."

Hnarakis said he was pleased with the results overall.

"We are very confident of where the [enterprise division] is going," he stated. "April, May and June saw the trend line going in the right direction and July which we just closed has been one of our biggest months."

Hnarakis highlighted the appointment of new senior executives, including CFO Peter Findlay, among key factors contributing to Melbourne IT's growth, now and in the future.

"Having a range of leaders that can bring in new initiatives will lead these businesses to the next level of growth and in the future will be potential successors for me as well," Hnarakis said.