Gresham has finished FY22 in line with our recently upgraded expectations at the revenue level and modestly ahead of our (also recently upgraded) expectations for EBITDA and cash EBITDA. FY22 saw Clareti ARR grow 17% yoy aided by 12 new name clients, solid repeat business (NRR>100%) as well as FX tailwinds. The group currently has over £42m FY23 contracted revenues or some 84% of our forecast. We nudge up FY23 EBITDA, cash EBITDA and FCF forecasts by 2%, the latter to £4.4m. Deal momentum has been solid recently and this is driving operating leverage, with Gresham indicating that £1m of incremental ARR generates 40% EBITDA margins. Alongside top-line growth it is this leverage that we believe will drive FCF towards £10m over a meaningful time frame and larger milestones beyond.
