Back office optimisation software company eg solutions has released an upbeat AGM statement. Trading performance remains strong, with new contract wins being recorded across a number of verticals. Revenues from these contracts will be recognised in the current financial year and management’s positive comment on the outlook gives us further confidence in the full-year outcome.
New contract wins continue to drive growth: As noted in our recent research reports1 , new contract wins continue to drive momentum in the eg business. Calendar 2015 has seen new business from existing blue-chip clients in the traditional financial services sector, and also in a number of new verticals. Revenues from these new wins will be recorded in the current financial year.
Performance builds upon a solid fiscal 2015: Positive developments in the first part of calendar 2015 continue a period of solid execution from eg. Ten significant contract wins for the eg intelligence suite were recorded during FY2015 (to January), and were a key driver of impressive improvements in revenue (+69% in 2015), margin and cash flow.
Outlook positive: Today’s statement, a quarter of the way through the year, sees management suggest that the positive start to fiscal 2016 will continue on both a product and business level.
Forecasts unchanged: Fiscal 2016 has clearly started well; we leave forecasts unchanged for now, but will revisit as the year progresses. Interim results due in September 2015 may provide an opportunity to re-assess our full-year expectations.
Today’s release provides welcome confirmation that momentum delivered in fiscal 2015 is being sustained into FY 2016. We note the share price currently sits at the same level as early January 2015, and also at the same level as when we wrote on the stock in March. With momentum building, good revenue visibility (note the £15m order book disclosed in March) and a solid cash position following the January fundraising, eg seems well set to deliver on full-year targets.