Gresham has announced a landmark win with a key Tier 1 existing banking customer worth up to £6.3m over a minimum of c. 5 years. Building on an initial 3 year contract signed in June 2020 worth £1.7m over 3 years, the scope of work has materially expanded with Clareti being chosen as the customer’s single enterprise platform across its whole UK business, covering retail accounts, cards, payments and as well commercial banking. Clareti will replace manual processes and, of particular note, legacy vendor systems. It continues to displace incumbents, whether greenfield or land and expand. The contract adds an immediate £0.5m of incremental ARR which is expected to grow to £0.8m over time as well as £1.3m of services over the next 12 months. It thereby provides increased confidence regarding FY22 expectations for 16% organic ARR growth and extends visibility beyond. We introduce FY23 forecasts with recurring revenues anticipated to grow c. 18% to £33.4m and EBITDA margins advancing 100ps to 23%. We calculate the market is valuing this fast growing and FCF generative FY23e revenue stream at 3.3x when stripping out Services and Legacy revenues and cash. We reiterate our 220p price target and Buy recommendation.
