Beta Systems Software - Termination of coverage

Edison Investment Research is terminating coverage on: • 2G Energy (2GB) • Apontis Pharma (APPH) • Artec technologies (A6T) • Beta Systems (BSSA) • Blue Cap (B7E) • Cyan (CYR) • Consus Real Estate (CC1) • Daldrup & Soehne (4DS) • DATAGROUP (D6H) • Datron (DAR) • Delignit (DLX) • Deutsche Börse (DB1) • Deutsche Grundstücksauktionen (DGR) • Deutsche Rohstoff (DR0) • DVS Technology (DIS) • Edel (EDL) • Ernst Russ (HXCK) • Exasol (EXL) • expert.ai (EXAI/EXSY) • Fashionette (FSNT) • Formycon (FYB)

Beta Systems Software - FY22 guidance increased

Beta Systems, a software provider for data centre intelligence and identity access management, reported FY21 EBITDA in line with guidance and raised its FY22 guidance. This was partly driven by new client wins and higher sales at existing clients. As a niche player in a sector dominated by giants such as IBM and VMWare, Beta Systems trades at a 37% discount to peers on a guided FY22e EV/EBITDA basis. The discount has decreased from 54% in our last note due to a sharp rise in the share price.

Beta Systems Software - Lower H1 results, but within guidance

Beta Systems, a software provider for data centre intelligence and identity access management, has reported weaker H1 results to March. Due to lower contract renewals in the DCI unit, FY21 EBITDA is expected to decrease, but this is guided to reverse next year. As a smaller player in the sector, Beta Systems trades at a discount of 54% versus international peers on an FY22 EV/EBITDA basis.

Beta Systems Software - Solid FY20 results driven by acquisitions

Beta Systems, a software provider for data centre intelligence (DCI) and identity access management (IAM), has reported both strong organic and inorganic growth in its FY20 revenues to September. The company raised its FY20 earnings guidance twice last year, driven by strong order intake, especially in the DCI unit, and cost savings. Due to lower expected contract renewals in the DCI unit, FY21 EBITDA is expected to decrease. As a smaller player in the sector, Beta Systems trades at a discount o

Beta Systems - Strong demand for data centre intelligence

Beta Systems, a software provider for data centre intelligence (DCI) and identity access management (IAM), has reported both strong organic and inorganic growth in its H120 revenues to April. As one of few companies in the sector, the company has raised its FY20 guidance, driven by a strong order intake especially in the DCI unit. As a smaller player in the sector, Beta Systems trades at a discount of c 45% compared to international peers on an EV/EBITDA basis for 2020e.

Beta Systems - DCI business stronger than expected

Beta Systems delivered full year results at the upper end of company guidance (upgraded in April 2019), underpinned by the solid performance of its core DCI division in the DACH region. The group continues to develop the product portfolio organically, supported by M&A activity. This includes the recent acquisitions of HABEL/Akzentum Group and infinIT Codelab. FY20e EV/EBITDA is 7.4x, underpinned by strong cash generation and high level of total recurring revenues (well in excess of 80% currently

Beta Systems - Guidance upgraded on German DCI activities

Beta Systems has been performing well, largely due to a strong performance from its core DCI mainframe software business. Consequently, in April, management upgraded FY19 guidance (revenue was upgraded by 4% and EBITDA by 27% at the mid-points) ahead of the interim results. While there has been a surprisingly strong level of orders in the group’s core DCI business in Germany, the IAM business has been performing in line. In our view, the shares are attractive, noting the potential sub 6x FY20 EV

Beta Systems - Underlying positive trends

While FY18 numbers dipped as management expected, revenue and EBITDA were in the top half of guidance. The results reflected weaker software licence renewals, which reduced revenues and slashed margins. FY18 cash generation was strong, with operating cash flow up nearly 60% at €8.3m and the maintenance book continued to grow with the help of acquisitions. In our view, the shares are attractive, noting the potential sub 6x FY20 EV/EBITDA ratio, given the strong cash generation and high level of r

Beta Systems - Positive outlook

Beta’s H118 results reflect the anticipated lull in the DCI licence renewal cycle, with EBITDA down 54% y-o-y. Despite the decrease, management believes it is on track to deliver to the top end of its guided range for the full year. With an anticipated pick-up in performance over the next two years, combined with the recent uptick in M&A activity, we feel that the FY18 EV/EBITDA premium to peers is justified.

Beta Systems - A record year; proposed dividend

Beta’s FY17 results were towards to the middle of its guidance; strong licence sales in DCI and management’s efficiency drive resulted in a 70% increase in EBIT, a record for the group. While FY18 is expected to be a smaller year in terms of client renewals, management is making good progress delivering to its plan to restructure and modernise the group.

Leading European data processing group

H117 revenues increased 28% and EBIT almost tripled, benefiting from the ongoing strong renewals cycle and upsell in its core mainframe customer base. Taking into account the seasonality bias to H1, management raised its guidance for the year. The shares have justifiably performed strongly and on EV/EBITDA multiples, now trade in line with peers.

Audioboom Group - Q1 24 revenue growth of +11%, FY24E forecasts reiterated

Audioboom’s FY23 results and Q1 trading update show Q1 24 revenue growth of +11% yoy, $6.7m of March 2024 revenue marking the platform’s highest revenue month since May 2022, and a confident outlook that leads us to reiterate our FY24E forecasts. Following the focus on new initiatives through FY23, the platform is now in its strongest ever operational position, with a record 1.1bn monthly ad impressions created in March 2024, record global audience reach of 38.6m unique global listeners in Janua

Alphawave Semi: FY23 trading update, amended forward guidance

Alphawave Semi has reduced guidance for FY23 and prospectively citing lower revenues from China, changes in expected revenue recognition from long-term contracts, and continuing investment in R&D. The share price has reacted negatively, giving up most of the gains since the trading statement at the end of January. Current consensus, which is a good match for pre-existing guidance, should be reduced, most likely following release of the FY23 results and full 1Q24 trading update due on 23 April. H

Crimson Tide - FY23 reports +15% revenue; investment phase complete

Crimson Tide has reported FY23 results to December in line with expectations, with additional operating leverage benefitting updated FY24 and maiden FY25 and FY26 forecasts. FY23 delivered +15% revenue growth to £6.2m at 86% GM, of which over 90% is recurring, and maintained £5.8m ARR even after unexpected customer churn in the year as we previously noted. Crucially, the Group achieved milestone adj EBITDA profitability of £0.4m at 7% EBITDA margin, and edges closer to adj PBT profitability expe

Morning Note – 16 April 2024

Devolver Digital (DEVO LN) - Rebuild year

Devolver Digital encouragingly delivered 2023 results slightly ahead of expectations and provided a steady medium-term outlook that leads us to reiterate our 2024 Adjusted EBITDA estimates. Longer term, the company is now planning to further develop its two major planned titles, Human Fall Flat 2 and System Era's next major new release. We now expect those major titles to be released in 2026 rather than 2025, meaning we lower our 2025 Adjusted EBITDA forecast to $10.6m from $17.6m but introduce

Morning Note – 15 April 2024

Checkit - New product launch and contract wins

Checkit has won contracts with two customers worth at least £417k over the three-year lives of the contracts, confirming its ability to upsell to its existing customer base and supporting our forecasts. Having trialled the new technology with multiple customers, Checkit has launched its Asset Intelligence module, which uses advanced analytics and machine learning to enhance customer sustainability, reduce costs and increase revenue.

Soft growth patch

Auction Technology Group - H1/24 Trading update

ATG’s H1/24 trading statement indicates revenue for the six-month period to 31 March 2024 was $86m, a 6% increase on H1/23 (1% organic growth), helped by the addition of the EstateSales.Net (ESN) marketplace last year, which performed well in the period. Total marketplace revenue increased 2% (organic), driven by growth in value-added services (VAS) and event fees, offsetting a decline in commission revenue (mainly through lower asset prices).

Morning Note – 17 April 2024

Touchstar - Full year results: Recurring revenue strategy delivers further profit growth

Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning's full year results reflect the outcome of a multi-year strategy coming to fruition for the group, with recurring revenue growth of 8.7% delivering overall revenue growth of 7.1% and in turn a 60% increase in PBT to £0.7m. Over the past few years, Touchstar has focused on enhancing the returns from their product offering through a shift towards recurring software licen

It’s not what you sell, it’s the way that you sell it

This report is intended to help UK small- and mid-cap investors gain a better understanding of software companies’ routes to market, and to highlight how one of the most important facets of the way in which they grow and deliver value is routinely ignored.  We examine sales processes for six UK-listed companies and one that has recently been taken over, and consider why they have followed their respective paths.

Engage XR Holdings - Expanding from FY23, FY24E forecasts reiterated

ENGAGE XR’s FY23 results show revenue and net cash in line with the February trading update, EBITDA ahead at -€4.0m vs -€4.5m due to the split of cash outflow between opex and working capital, and a confident outlook that leads us to reiterate our FY24E forecasts. FY23 revenue for the core ENGAGE platform was unchanged vs FY22 at €3.3m, as H2 23 revenue was impacted by the record seven-figure contract announced in February shifting to 2024, and several enterprise customers scaling back renewals

LIBERUM: Cirata plc: Cirata from the flames

Initial Equity Trading Comments - 19 February 2024