Morning Note – 26 March 2024

K3 Business Technology - ARR growth, cash cost savings, and a healthy sum of the

Finals to November 2023 demonstrate the continuing evolution of the business, primarily organisational simplification, solid net recurring revenue retention and cost savings to deliver margin expansion and to further improve cash generation. Revenue of £43.8m (£47.0mE) suffered the well-flagged challenges for services in Global Accounts, even though GA ARR did not suffer - with resulting group gross margin improvement from 59% in FY22 to 62% in FY23 delivering gross profit of £27.1m (vs £29.0mE)

Morning Note – 20 December 2023

Morning Note – 30 October 2023

The Joy of Techs - Cavendish Technology quarterly sector note

£23.3bn in enterprise value has been returned to AIM technology shareholders over the past six years in the form of 51 public to private takeouts, including 10 in 2023 alone with the takeovers of Smoove* and Tribal announced in early October. With UK valuations appearing cheap and looking more attractive to potential acquirers, we take a moment to reflect on the trends of corporate and private equity bidders targeting AIM-listed technology companies going back to 2017, through the uncertainties

Morning Note – 30 August 2023

K3 Business Technology - Interims: dedicated follower of fashion

In a typically 2H-weighted year, interims demonstrate growth in Strategic Products (K3 Fashion, K3 Pebblestone, K3 Viji) leading to Strategic Products ARR first half growth of 20% to £5.4m, and statement of bold management ambition to achieve 30% ARR growth in strategic fashion products in FY23 and beyond. In order to align closer to cash, present the value of the business and use market norm SaaS KPIs, the group has changed revenue recognition in fashion products from day one recognition to rec

Morning Note – 30 March 2023

K3 Business Technology - Rule of three: 2H weighted revenue, visibility, cash gr

Finals to November 2022 report performance in line with management expectations from the January trading update, describing a typically strong second half (£4.1m EBITDA, vs £1.0m in 1H22) and encouraging progress in the first full year of the reinvigorated growth plan. The upward trend of revenue growth, recurring revenue and cash generation reflects clarity on two reporting divisions, K3 Products and Third Party Solutions, alongside focus on driving growth within strategic K3 fashion products f

Morning Note – 7 March 2023

Morning Note – 12 January 2023

Morning Note – 24 August 2022

K3 Business Technology - 1H22 interims go with the flow

Interims to May 2022 report performance in line with management expectations, and a trading update describing encouraging trading in June and July, ahead of last year. Typical 2H seasonality in profitability and cash is expected to improve materially upon the £1.4m net cash position at period end. Recurring revenue of £14.7m in 1H22 equates to 72% Group revenue, giving encouraging visibility. Board confidence is evident in continuing investment in strategic products including a focus on sustaina

The Joy of Techs - finnCap Technology quarterly sector note

In previous quarterlies, we have focused on valuations, considering our tech indices for stocks below £1.5bn market cap and their performance as a herd. This time we focus on individual “zeitgeist” stocks: the stocks which confront a current theme – the indices over the period since the beginning of the year (finnCap Tech 40: -18%; finnCap Next 50: -17%) have shown unfortunate decline, therefore stock picking is more important now than ever. Median P/Es have declined 29x to 22x for the larger fC

K3 Business Technology - Finals to Nov 2021: refined and improved

KBT’s transformation began in 2016 and gained new energy in 2020 with the appointment of Chairman Tom Crawford, and Marco Vergani as CEO in 2021. After the disposal of the Starcom and the Sage businesses, the simplified structure enables clear focus on two reporting divisions: K3 Products; and Third Party Solutions (IKEA/Global Accounts and SYSPRO) – with management focus in particular on business-critical software solutions in fashion & apparel, and supporting sustainability. The recent acquisi

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

Audioboom Group - Q1 24 revenue growth of +11%, FY24E forecasts reiterated

Audioboom’s FY23 results and Q1 trading update show Q1 24 revenue growth of +11% yoy, $6.7m of March 2024 revenue marking the platform’s highest revenue month since May 2022, and a confident outlook that leads us to reiterate our FY24E forecasts. Following the focus on new initiatives through FY23, the platform is now in its strongest ever operational position, with a record 1.1bn monthly ad impressions created in March 2024, record global audience reach of 38.6m unique global listeners in Janua

Crimson Tide - FY23 reports +15% revenue; investment phase complete

Crimson Tide has reported FY23 results to December in line with expectations, with additional operating leverage benefitting updated FY24 and maiden FY25 and FY26 forecasts. FY23 delivered +15% revenue growth to £6.2m at 86% GM, of which over 90% is recurring, and maintained £5.8m ARR even after unexpected customer churn in the year as we previously noted. Crucially, the Group achieved milestone adj EBITDA profitability of £0.4m at 7% EBITDA margin, and edges closer to adj PBT profitability expe

Morning Note – 16 April 2024

Devolver Digital (DEVO LN) - Rebuild year

Devolver Digital encouragingly delivered 2023 results slightly ahead of expectations and provided a steady medium-term outlook that leads us to reiterate our 2024 Adjusted EBITDA estimates. Longer term, the company is now planning to further develop its two major planned titles, Human Fall Flat 2 and System Era's next major new release. We now expect those major titles to be released in 2026 rather than 2025, meaning we lower our 2025 Adjusted EBITDA forecast to $10.6m from $17.6m but introduce

Morning Note – 15 April 2024

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

Checkit - New product launch and contract wins

Checkit has won contracts with two customers worth at least £417k over the three-year lives of the contracts, confirming its ability to upsell to its existing customer base and supporting our forecasts. Having trialled the new technology with multiple customers, Checkit has launched its Asset Intelligence module, which uses advanced analytics and machine learning to enhance customer sustainability, reduce costs and increase revenue.

Soft growth patch

Auction Technology Group - H1/24 Trading update

ATG’s H1/24 trading statement indicates revenue for the six-month period to 31 March 2024 was $86m, a 6% increase on H1/23 (1% organic growth), helped by the addition of the EstateSales.Net (ESN) marketplace last year, which performed well in the period. Total marketplace revenue increased 2% (organic), driven by growth in value-added services (VAS) and event fees, offsetting a decline in commission revenue (mainly through lower asset prices).

Morning Note – 17 April 2024

Touchstar - Full year results: Recurring revenue strategy delivers further profit growth

Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning's full year results reflect the outcome of a multi-year strategy coming to fruition for the group, with recurring revenue growth of 8.7% delivering overall revenue growth of 7.1% and in turn a 60% increase in PBT to £0.7m. Over the past few years, Touchstar has focused on enhancing the returns from their product offering through a shift towards recurring software licen

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.

LIBERUM: Cirata plc: Cirata from the flames

Engage XR Holdings - Expanding from FY23, FY24E forecasts reiterated

ENGAGE XR’s FY23 results show revenue and net cash in line with the February trading update, EBITDA ahead at -€4.0m vs -€4.5m due to the split of cash outflow between opex and working capital, and a confident outlook that leads us to reiterate our FY24E forecasts. FY23 revenue for the core ENGAGE platform was unchanged vs FY22 at €3.3m, as H2 23 revenue was impacted by the record seven-figure contract announced in February shifting to 2024, and several enterprise customers scaling back renewals