Esker’s FY15 revenue update confirmed that strong growth continued into Q415, with full year revenue growth of 27% and organic constant currency growth of 13%. The company expects strong growth to continue in FY16 – we have upgraded our forecasts to reflect this, with EPS upgrades of 10% in FY15e and 13% in FY16e.
Esker expects to report 27% revenue growth for FY15 (13% organic constant currency), compared to our forecast for 24% growth. Q415 revenues grew 23% (10% organic constant currency), representing a record quarter and year for revenues. SaaS-based revenues made up 72% of FY15 revenues, up from 66% in FY14. Net cash at year-end stood at €11.6m compared to our €6.0m forecast. The company expects to be able to generate double-digit revenue growth in FY16, which implies revenues of at least €64.3m versus our €60.8m forecast.
We have upgraded our forecasts to reflect the strong performance in FY15 and the guidance for FY16. We upgrade FY16 revenue by 6% to €64m, equating to 10% y-o-y growth. We assume the company continues to invest in growth and have increased our headcount assumptions for both years. We now forecast an EBITDA margin of 24.2% (up from 23.2%) and upgrade EPS by 10.3% in FY15; in FY16 we upgrade our EBITDA margin from 23.5% to 24.4% and upgrade EPS by 13.1%. We note that with c 40% of revenues but a smaller proportion of costs generated in the US, Esker’s profitability is sensitive to changes in the US$/€ exchange rate.
On our revised forecasts, Esker trades on a P/E of 18.2x FY16e EPS, at a discount to global software companies with DPA offerings (despite better profitability) and at a small premium to French small-cap software peers (consistent with its superior profitability). With nearly 80% recurring revenues, Esker has good visibility for FY16, and recent acquisitions have broadened the company’s product offering. The company has a strong balance sheet, providing funds for further acquisitions and product development, and supporting growth on a medium-term basis.