An excellent win, momentum rebuilding

Made Tech has won a material expansion (worth up to £19.5m/2yrs) with a long-standing customer, The Department for Levelling Up, Housing and Communities (“DLUHC”). Coming off the back of a soft H1 bookings performance, we expect this win to materially boost investor sentiment and reassure how notwithstanding a tough backdrop (given an impending general election) MTEC continues to outcompete legacy providers and in-so-doing, grow its share of wallet with large/strategic customers. Landing near FY

A clear path forward

Interims to November are consistent with a prior update and reiterate encouraging EBITDA progress, as this grew from £0.5m to £1.4m, reflecting higher utilisation and a lower cost base (total headcount down from 484 to 388). Improved profitability was achieved notwithstanding a lower top-line, as sales fell -7% to £19.1m. MTEC achieved a much better cash performance too, as cash burn reduced from £-3.4m to £-0.6m, thus leaving £7.9m net cash at period-end. Despite this improving bottom line, the

Improving margins underpin EBITDA growth

Made Tech has released an update covering 1HNov23, which shows good EBITDA progress: this increasing from £0.5m to £1.4m (~7% margin), driven by better utilisation and lower contractor numbers both benefitting GM%. In addition, MTEC also achieved targeted opex costs savings. This progress was notwithstanding a lower top-line, where sales fell from £20.6m to £19.1m, due to (well flagged) more cautionary customer spending. This theme is also reflected by H1 bookings - down sharply - from £32.6m to

Emphasis shifts towards profit

FYMay23 results are in line with revised expectations reflecting solid progress (particularly with Central Gov: sales +60% y/y) albeit curtailed by a disrupted Q4, as certain customers started to reprioritise spend, thus affecting the revenue profile of new and existing contracts. Now in Q2, we learn that while caution is abating, trading and utilisation has not fully recovered and so (despite a very strong backlog) we revise down FY24e sales by 7% to £40m. We however keep EBITDA and cash unchan

FY23 Trading Update

Made Tech has announced that it now expects FY23 revenue and EBITDA to be lower than previously expected, at c.£40m (vs. £43mE) on sales and "at least £1.5m" (vs. £3.9mE) on EBITDA. As despite a strong Q3 (and March), several of the Group's clients have since delayed the start date of projects into FY24 in response to tightening budgets, thus impacting revenue and profitability in these closing months. So for factors outside of MTEC's control, this year’s trading will be materially impacted and

Sentiment is changing

Interims show continued progress, as Made Tech has built on its FY22 break-out performance (sales: +120%) by growing sales a further 75% in 1H23. An exceptional feat, achieved through a strong b/f backlog (+133% y/y) and excellent sales execution in 1H23. This second point is pertinent, as it highlights how (notwithstanding macro headwinds) Made Tech has been able to land nine new customers in H1 (and more in Q3) such achieving >£60m bookings YTD. This achievement materially de-risks FY23&24 exp

Strong H1 update and contract wins

Made Tech has announced a very strong update: H1 sales +76% y/y and alongside this, also several wins/expansions worth £27m. As a result, Made Tech has now delivered 48%/FY23e sales and as well, has a very strong backlog: £48m (+53% y/y) so is very well positioned to drive continued growth, both this year and next. Margins meanwhile leave room for improvement, as having generated £0.5m EBITDA in H1, this leaves work to do, but with contractors now materially lower (at c.10% vs. c.20% in the PY)

A breakout year

Results are consistent with August’s update and confirm a breakout FY22, as Made Tech materially scaled its business – growing revenue 120% y/y (organic) to £29.3m, an exceptional result, which in turn drove a return to profitability, AOP: £2.3m (PY:£-0.8m). This was achieved by Made Tech more than doubling its headcount and alongside this, also delivered sales bookings of £51.1m (+115% y/y) which includes Made Tech’s largest ever win. Made Tech’s y/e backlog is also up sharply at £38.2m (+133%

FY22: A year of outstanding progress

Made Tech has produced outstanding FY22 headline results, with all key top-line metrics more than doubling (head of our expectations). Market uncertainty surrounding the ability to recruit and retain in a tight labour market has been dispelled with y/e employees of 478 up from last year’s 235. Importantly this has been achieved without undue impact on profitability, with GM flat yoy at 38% and EBITDA margin rising to 9% from the prior year’s loss. We continue to believe we are seeing the emergen

£7m Met Office contract win

Made Tech has today announced a contract win with the Met Office (a new customer) where the Group has been appointed its Digital Services Partner. This represents another highly impressive win in our view, as it provides further evidence for how key Public Sector organisations are entrusting Made Tech to help support and drive their digital objectives. Won via the Met’s own framework, this contract is worth circa £7m over a two year period and therefore represents the second largest award in the

Eleco - FY23 recurring revenue growth of +22%, EBITDA +2% ahead

Eleco’s FY23 results show robust organic recurring revenue growth of +17% with recurring revenue +22% to £20.7m, adj EBITDA +2% ahead of the January update, and a confident outlook with Q1 ARR already at £24.5m vs £22.6m at FY23. At this point, the excellent start to FY24 leads us to reiterate our FY24-26E revenue, adj EBITDA, EFCF, and DPS, and we include the April 2024 acquisition of Vertical Digital in our FY24-26E net cash, as we explain below. As Eleco builds upon the successful acquisition

LIBERUM: Cerillion: Continued strong trading in 1H

To infinity…

Cerillion has announced a very solid update, as H1 sales and EBITDA are both up 10% y/y to £22.5m and £10.9m respectively, notwithstanding the exceptionally strong base period (sales and EBITDA +27% and +38% resp.). Results therefore point to continued strong customer demand, reflecting how Cerillion’s out-of-the-box product continues to resonate and gain adoption, particularly in a ‘budget conscious’ environment, by offering faster time to market, greater configurability and at a lower cost. Me

Morning Note – 23 April 2024

In-line H1, strategic initiatives advancing at pace

As reported in March, underlying EBITDA profitability improved to record levels despite FX headwinds. Further platform and proposition developments were completed, key steps on its digital roadmap, and it has already won 7 contracts YTD. Alongside planned growth in private membership, this will at least offset the loss of one contract. Forecasts are left unchanged today and, as member engagement throttles back up, FX headwinds ease, and proof points of digital efficiency emerge, markets should b

itim - Further professional services contract secured with The Entertainer

itim is a disruptive SaaS-based platform that enables store-based retailers to implement a proven Omni-channel solution. This morning, the group has announced an additional professional services contract with its long-standing client, The Entertainer. Following a year-long trial, The Entertainer is opening in over 800 Tesco stores across the UK & Ireland, alongside a supplier agreement for Tesco stores across Central Europe. Under the contract, The Entertainer will extend its use of itim's Unify

Hybridan Small Cap Feast - 22 April 2024

22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

Intelligent Ultrasound Group - GE Healthcare launches new Voluson Signature with

GE Healthcare has announced the launch of the Voluson Signature 20 and 18 ultrasound systems, with the related press release noting these systems ‘comprehensively integrate artificial intelligence’ to improve the ultrasound procedure for clinicians and the women being scanned. These ultrasound systems include SonoLyst, the AI which incorporates Intelligent Ultrasound’s ScanNav Assist and ScanNav AutoCapture AI software. The launch of additional Voluson systems including the SonoLyst suite of AI

Morning Note – 26 March 2024

Hybridan Small Cap Feast - 14 Mar 2024

Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024

Morning Note – 8 April 2024

Hybridan Small Cap Feast - 17 April 24

17th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

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

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.

Eleco - FY23E EBITDA +3% ahead, FY24-26E EBITDA & EFCF reiterated

Eleco’s FY23 trading update highlights record recurring revenue growth of +22% to £20.7m, strong profitability that leads us to expect FY23E adjusted EBITDA +3% ahead of our previous forecast, and a confident outlook that leads us to reiterate our FY24-26E EBITDA and EFCF. Across the group, excellent execution of the SaaS transition has driven recurring revenue to 74% of group revenue from 64% in FY22, and ARR is +24% yoy to £22.6m (£19.7m at H1), including c£2m of ARR from the successful acquis