ESYS results were in-line with the March update, yet a newly reported strong contracted pipeline performance is the key takeaway from interims. H1 performance: revenues were resilient in a challenging macro environment, growing 3% y/y to £10.9m (+4% constant currency (‘cc’)). US revenues were up strongly (+20% y/y in $ terms), although as previously highlighted, this was offset by a lost customer in the UK due to CV19 occupancy headwinds. Challenges regarding sales team expansion and sales cycles were as flagged in March, yet capital deployment and hiring has improved markedly since January and management “expect to catch up with delayed investment” in the next few months. New regional heads have also been hired, and ESYS now has established presence in AUS. The key takeaway however: Forward revenue visibility has markedly improved since Feb, with contracted sites rising to 53 (Feb’22: 28), higher even than H1’20 pre-pandemic. With occupancy headwinds clearing, demand for flex is growing strongly once more – ESYS remains well placed to capitalise on the secondary CV19 factor of greater flex penetration. We make no changes to forecasts, and continue to project 25% revenue CAGR to FY’24e. ESYS trades on 1.4x EV/FY’23e sales (1.7x ex-cash) – successful pipeline execution has potential to drive rapid multiple expansion.
