AMS beat, once again, the street’s expectations, releasing revenues and adjusted operating margin in the upper half of guidance. More importantly, the Q2 outlook is well above consensus, factoring in a limited COVID-19 impact.
AMS’s results beat both guidance and expectations for Q4, along with a sharp profitability improvement and for Q1 20 guidance. Cash generation was strong in Q4, as well as in FY19, driving leverage meaningfully down. Regarding OSRAM, AMS intends to complete the transaction in Q2 20, and the company announced its intention to enter into a domination agreement, which in our view will limit the positive reaction of the Q4 publication.
For the third time in a row, AMS has released a sound publication, beating the consensus on every metric for Q3, and delivering a confident message for its Q4 guidance. However, the company failed to convince the street on its 2020 prospects or on the target synergies from the OSRAM/AMS combination.
AMS has reiterated its bid offer on OSRAM at €41/share (all cash), but has lowered the acceptance threshold to 55% from 62.5% after having failed in the previous attempt at 51.6%. We believe that this new challenge should be easier given AMS is now OSRAM’s largest shareholder. We are cautious on the stock in the short term given the stretched balance sheet, but we remain positive on the company’s long-term perspective.
AMS published a sound set of result for the second quarter in a row, driven by the product ramp-up and a stabilisation in the consumer environment. The company updated its guidance for the third quarter, which is new expected to show an impressive growth of at least +45% qoq, as well as a strong improvement in profitability. On top of this, the broad adoption of the 3D sensing solution seems to be making good traction, a positive sign for subsequent years.
AMS released a sound first quarter by reporting above expectations and sending a strong message to the market of a return to sequential growth starting in Q2. The mix of a stabilising environment for smartphones, along with the launch of new Android platforms, should help the company to grow its top line and beef up its margins.
AMS published its Q4 results which were roughly in line with expectations; however, Q1 guidance missed market expectations by far.
Ams reported Q3 18 results which were in line with guidance but disappointed the market on its Q4 operating margin outlook.
ams reported Q2 revenues of $252m, down 42% qoq, but higher than what it anticipated. The operating margin reached -19%, although it was expected to be in the -20% to -25% range. Looking forward, ams expects a strong Q3 in terms of revenues (i.e. in the $450-490m range or +78-94% qoq), boosted by high smartphone sensing solutions volumes. Also, better capacity utilisation should drive a strong improvement in the operating margin which is expected to reach a low teens percentage.
ams reported very strong Q1 results with revenues up 147% yoy thanks to volume effects, although with a decreasing gross margin (down to 36% from 46%). The operating margin, on the contrary, strongly increased to 17% leading the net result to reach $99.9m in Q1 18. For Q2, the group expects to be strongly affected by customer-driven product transitions and expects revenues to reach a $220-250m range (vs $452m this quarter).
ams reported Q4 revenues of €470.4m, corresponding to a 79.2% increase sequentially and 252.1% yoy. The Products business line accounted for €458m (+83.3% sequentially, +296% yoy), leaving €12.2m to the Foundry business (-31.8% yoy). Over the FY17, revenues reached €1,064m (+93.4%), of which €683.5m for Consumer (+225%), €329m for Non-Consumer (+15.2%), and €51.6m for Foundry (-5.3%).
The Q4 adjusted gross margin reached 43.5% (40.5% in IFRS), down 840bp yoy (870bp in IFRS); the adjusted EBIT came in at €128.5m (€100.7m in IFRS), for a margin of 27.3% (vs. 21.4% in IFRS), leading to a net result of €102.6m. Over the FY17, the adjusted gross margin came in at 43% (38.5% in IFRS), for an adjusted EBIT margin of 15.9% (7.1% in IFRS) and a net result of €88.7m.
The company announced it would report its primary financial statements in USD from now on. For Q1 18, the company expects revenues of $440-490m, with an adjusted EBIT margin of 17-20%. The FY18 is expected to be back-end loaded, similar to FY17’s, and will be supported by about $600m of capex. The new long-term guidance has been confirmed: revenue growth of 60% per annum over 2016-19, leading to 2019 revenues of $2.7bn, associated with a 2019 adjusted EBIT margin of 30%.
The company announced the acquisition of KeyLemon, a facial recognition software maker for an undisclosed amount. It also announced a design win for an automotive 3D LIDAR using VCSEL, valued at $600m, and ramping from 2021, as well as a potential secondary listing in Hong Kong within 12 months.
The proposed dividend for 2017 is €0.33 per share.
ams reported Q3 revenues of €262.5m, corresponding to a 44.6% increase sequentially and 78.9% yoy. The Products business line accounted for €250m (+49.6% sequentially, +89.8% yoy), leaving €12.5m to the Foundry business (-16.7% yoy).
The adjusted gross margin reached 41.4% (37% in IFRS), down 1400bp yoy (1600bp in IFRS); the adjusted EBIT, came in at €34.8m (€10.5m in IFRS), for a margin of 13.3% (vs. 4% in IFRS), leading to a net result of €20.2m.
For Q4, the company expects revenues of between €440m and €480m, associated with an adjusted EBIT margin of about 26-29%. The long-term guidance has been confirmed (2016-19 CAGR at above 40%).
The company also announced the formation of an independent software services and licensing company (dedicated to 3D and spectral sensing), with a stake of 30% in Q1 18 and an option to buy the whole company at a later time.
ams reported Q2 revenues of €181.5m, corresponding to a 21.6% increase sequentially and 37.1% yoy. The Products business line accounted for €167.1m (+22.1% sequentially, +38.7% yoy), leaving €14.4m to the Foundry business (+21% yoy).
The adjusted gross margin reached 41.4% (34.7% in IFRS), down 1460bp yoy (1870bp in IFRS) following fab underutilisation as a consequence of capacity expansion to support the expected H2 ramp-up, similar to Q1; the adjusted EBIT, came in at €1.3m (-€21.6m in IFRS), for a margin of 0.7% (vs. -11.9% in IFRS), leading to a net result of -€21.6m.
For Q3, the company expects revenues of between €260m and €290m, associated with an adjusted EBIT margin of about 10%.
For Q4, revenues should increase sequentially by about 51.5% at the midpoint of guidance.
Finally, the long-term guidance has been upgraded: the 2016-19 CAGR is now expected at above 40%, vs. 30% previously.
ams reported Q1 revenues of €149.3m, corresponding to an 11.8% increase sequentially and 8.9% yoy. The Products business line accounted for €136.8m (+18.2% sequentially, +7.3% yoy), leaving €12.5m to the Foundry business (+30.2% yoy).
The adjusted gross margin reached 46.1% (39.7% in IFRS), down 1090p yoy (1420bp in IFRS) following fab underutilisation as a consequence of capacity expansion to support the expected H2 ramp-up; the adjusted EBIT, came in at €4m (-€13.8m in IFRS), for a margin of 2.7% (vs. -9.2% in IFRS), leading to a net result of -€16.2m.
For Q2, the company expects revenues of between €174m and €181m. The adjusted EBIT margin is expected to be around breakeven due to consolidation effects from Heptagon.
The capex target for the FY17 is now €400-450m in order to support additional design wins leading to a stronger than expected ramp-up in production; as a consequence, the mid-term revenue growth target is currently under upward revision.
ams reported Q3 revenues of €133.6m, corresponding to an 8.9% decrease sequentially and 9.2% yoy. The Products business line accounted for €115.7m (-12.1% sequentially, -15.1% yoy), leaving €17.9m to the Foundry business (+62.7% yoy).
The adjusted gross margin reached 51.9% (49.3% in IFRS), down 490bp yoy (530bp in IFRS) following an expected customer-specific development; the adjusted EBIT, came in at €16.4m (€7.1m in IFRS), for a margin of 12.3% (vs. 5.3% in IFRS), leading to a net result of €13.7m.
For Q1, the company expects revenues of between €141m and €148m, including consolidation of the Heptagon business. The adjusted EBIT margin is expected to be around breakeven due to consolidation effects from Heptagon. For 2017, Heptagon’s contribution is expected at about $300m, almost entirely in H2.
The company announced a dividend of €0.3 per share, as well as the continuation of its share buy-backs up to CHF60m, mostly to cover Heptagon’s earn-out.
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Final results for the year to March are in line with the April trading update, which had been well ahead of expectations in profit and cashflow: with some customer orders postponed beyond year end, revenue of £10.4m had been 6% behind expectations while adjusted PBT (£0.8m) and free cashflow (£1.0m) were respectively 499% and 227% ahead. Strong cost control still permitted £2.8m (FY19: £2.9m) of R&D, leading to the continuing development of the global large enterprise products, but also of MyID Professional, simplifying the solution and expanding the addressable market. With cost control clearly in hand, and even confidence in cost expansion after two years of restraint, the group is driving opportunities for high-margin revenue growth and the future continues to brighten. Target 80p reiterated, with the chance for TP review with greater COVID-19 clarity at interims in December.
Companies: Intercede Group
After completing six acquisitions over the last two years, CentralNic has diversified its market exposure and significantly improved its competitive position. In this report we provide an update of the company’s markets and its competitiveness within each market. We conclude that CentralNic’s increased scale and broadened market exposure puts it in a strong position to consolidate the market and deliver further synergies to investors. We provide our estimates for H1 2020.
Companies: Centralnic Group
AGM statement as expected; Resume with a Buy
Companies: Cloudcall Group
Instem’s audited FY19 results showed strong double-digit organic growth, with an ongoing transition to SaaS (now 25% of group revenues) and strong growth from SEND services and the Informatics offering. Given the current backdrop, we have moderated our assumptions around new business wins offset partially by lower discretionary expenditure. The net PBT impact is ~£0.5m this year and next, which in our opinion is relatively minor in the grand scheme of things. The fundamental point remains that Instem is a market leader in its field with high barriers to entry. It has a robust, resilient model, multiple secular growth drivers and a solid strategic and financial position. The balance sheet remains strong with substantial net cash.
If you are working from home, earning the same salary as last year, and not commuting, holidaying abroad or eating out, then you’ve probably saved a great deal of disposable income since the COVID-19 lockdowns began in March. The same is true for corporates, especially those who haven’t been materially impacted by the pandemic, or incurred significant extra costs (eg social distancing, cleaning, PPE). Take BuildTech software developer Elecosoft, who said today that although revenues declined 3% April YTD (2% constant currency: ED Est split -14% month vs +2% Q1’20). PBT had jumped an impressive 25% YoY – as tradeshows were postponed and less money was spent on travel, hotels, marketing & other discretionary items. Altogether lifting YTD EBIT margins to circa 20% (ED Est) vs 16.8% H1’19, and closing April with net cash of £3.1m vs £1.1m in Dec’19.
Launch of public preview confirms WANdisco’s LiveData platform has been successfully integrated at Microsoft Azure and that commercial services can begin. As highlighted previously, we believe this will be a significant financial catalyst. No estimate of the expected revenue contribution is given but the company is aiming to sign 50 new customers over the next 12 months. Our conservative scenario analysis suggests this relationship alone could generate over $80m in annual revenues by 2023.
Avation is a lessor of 48 commercial aircraft to a diversified airline client base. Intra-day yesterday, the group announced that, as a result of the present uncertain backdrop caused by COVID-19, the Board had withdrawn from the previously announced strategic review and formal sale process, and that it was no longer in active discussions with any interested parties. The key reasons behind this were 1) the present uncertainty meaning that an attractive valuation was seen as unlikely to be achieved at this present moment in time and 2) the distraction of the process in the day to day operational activities of the business.
Petards supplies advanced security and surveillance systems to the Rail, Defence and Traffic Technology markets. Intra-day yesterday, the group confirmed that its RTS Solutions subsidiary had secured a multi-year renewal agreement for the provision of software support services to one of its major rail customers.
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning, the group has released full year results to 31 December 2019, alongside providing an update on progress against the present COVID-19 backdrop. In line with the market updates provided in February and April, group revenue in the year increased by 3.2% to £7.1m, whilst revenue from continuing operations, excluding the Onboard business that was disposed of in the year, increased by 7.2% to £6.7m, driven by traction being gained with new products and services. The gross margin in the year increased by 280bps to 53.9% reflecting the greater proportion of software and service income. This resulted in a trading loss after tax before exceptionals of £89k, which post exceptionals of £412k that predominantly related to the disposal of OnBoard, resulted in a loss after tax of £501k. As previously reported, the year-end net cash position stood at £850k, which reflected an increase of £554k in the year; this post £1.1m of new product development expenditure and cash costs associated with the disposal.
Companies: AVAP TST PEG
ECSC Group plc* (ECSC.L, 70.5p/£7.0m)
Companies: ECSC Group
Rosslyn is expected to move into positive operating EBITDA for FY20E. Moving the business model into self sustaining status will be a major milestone. Rosslyn has raised £7.3m gross in a Placing of new equity to increase its sales & marketing capability, maintain its investment in R&D and position it to take advantage of bolt-on acquisition opportunities.
Companies: Rosslyn Data Technologies
Synairgen (SNG.L): Preliminary 2019 results | Yourgene Health (YGEN.L): COVID-19 testing service launch and business update
Companies: Synairgen Yourgene Health
Success breeds success. Take B2B software developer Rosslyn, who over the past few years has meticulously built a leading Big Data & spend analytics SaaS platform (RAPid), supporting an illustrious roster of 100+ clients (many global multi-nationals). Topped off with the synergistic acquisition of Langdon in Sept’19, & becoming EBITDA positive in FY’20 for the 1st time ever - thanks to increasing ARR (+12% to >£6m vs £5.4m LY) & favourable operational leverage (81% gross margins).
Instem has reported FY 19A results consistent with the March-20 trading statement and in line with our forecasts. Double-digit revenue growth was confirmed for the year, alongside margin improvement and cash generation. Furthermore, revenue visibility remains high and operationally, all three business areas continue to deliver. We make reductions to forecasts following the announcement (FY 20E EBITDA -8%, FY 21E -9%), reflecting a more prudent view on the medium/longer term outlook for the group. Having seen limited impact from COVID-19 to date and with £6m gross cash on the balance sheet, we retain our view that Instem is well positioned to weather macro-driven turbulence.
The Coronavirus pandemic is a human tragedy of vast proportions – as well as the terrible human toll, COVID-19 has led to economies across the globe going into physical lockdown and financial freefall. Entire populations are adapting to the “stay at home” edict, to safeguard the vulnerable – and some of these changes will lead to long-lasting or perhaps permanent changes in the way we live or work. This note describes some of our client companies whose business models are well adapted to these changes, or who might see a change in long-term structural demand.
Companies: AMO BGO FDM GAMA KAPE LOOP TERN ZOO
FY19 revenue increased 16.9% to £19.4m following a strong H2/19, c9% ahead of forecast. New products released included Concurrent's first AI board, aimed at the military market. Order intake was strong, especially during H2/19, continuing into 2020. Inevitably COVID-19 has caused uncertainty about H2/20 activity levels and potential delays from customers, though there has been no immediate slow-down. Concurrent is a supplier to some of the world's most prominent defence companies in the UK and US and continues to supply these customers uninterrupted. Given COVID-19 related uncertainty we have taken a prudent view and trimmed our FY20 revenue (and consequently PBT forecasts). With over £10.5m cash and no debt, a strong order book and top tier customers, Concurrent is continuing to invest in R&D and progress its plans to add new software and hardware product ranges and enter new markets.
Companies: Concurrent Technologies
The Panoply’s trading update for the year to March 2020 confirms that H2 trading was solid, and that the Board expects to report revenue and EBITDA in line with market expectations. The group’s financial position remains robust and will be enhanced by cash collections from the solid 20E trading performance. The Panoply is actively involved in the response to the COVID19 pandemic, with the business being only minimally impacted so far. Overall, we believe the announcement contains a number of positive messages. However, with ongoing macro-driven uncertainty over the medium/ longer-term outlook, we revise forecasts. Our FY 21E and FY 22E EBITDA estimates are reduced by 37% and 21% respectively.
Companies: The Panoply Holdings