Digital transformation services provider The Panoply’s H1 19/20 results in our view demonstrate impressive momentum and the importance of the group’s core purpose and values in driving financial performance. Revenues grew 33% YoY during the period, and adjusted EBITDA by 38%, reflecting the strong commercial progress made. 209 clients were billed during the half – more than double the comparable period. Commentary on the outlook is positive, with management confident of meeting full-year expectations and underpinned by a £25m sales backlog. We leave estimates unchanged following the release and continue to believe The Panoply is strongly placed to deliver on its targets.
The group reported statutory revenue of £13.4m (+33% YoY) and like-for-like adjusted EBITDA (i.e. pre-investments) of £1.3m (-£0.3m H1 18/19A), with robust performances from all businesses across the group. Although reporting a post-FutureGov decline in the net cash position to £0.7m, the business remains cash generative operationally, reporting a £1.8m YoY improvement in net cash flow from operations during the period to £1.3m
In our view the group reported strong commercial progress during H1 19/20. 209 clients were billed during period – more than double the comparable period. Furthermore, repeat business volumes remain high - 78% of customers billed during H1 19/20 were billed during 2018 and 2019. With revenues of £7.9m (+72% YoY, 59% of the total), the group continues to gain good commercial traction with public sector clients. A number of contract wins in the commercial sector, were also recorded, including Tails (Nestle) and growth with NewsUK.
Management commentary highlights that current trading is “robust” and underpinned by a sales backlog of £12.8m to March 2020 and £12.2m beyond then. The M&A pipeline contained 30 companies at period end, with a combined annual revenue of £150m.
We make no changes to forecasts following the release. Although our FY 19/20E forecasts may appear somewhat challenging given H1 performance, the release re-iterates management guidance that business performance is expected to be weighted to the second half, reflecting investments made in new service areas.