Core ARR, revenue, EBTIDA and FCF all improved in 1H24, as Tribal continued to demonstrate resilience, driven in turn by its extensive customer base and product suite, which collectively are generating strong and sustainable growth (1H24 NRR: 107%). Indeed the quantum of this ongoing opportunity has led to a greater focus on monetising TRB’s existing products and for this reason, gross R&D fell and (in combination with broader cost rationalisation) this led to materially better FCF. We believe there remains a significant opportunity in this regard and hence notwithstanding modest top-line growth at present, we continue to see a how EPS/FCF could grow at stronger rate over the medium-term. While in due course, we expect such returns to be further augmented by TRB’s new pricing model. We believe this creates an attractive backdrop relative to an undemanding valuation: 1.5x EV/sales or 2.4x ARR.
