essensys’ FY’20E prelims highlighted strong US performance. Group sales rose 9% y/y to £22.5m (recurring: +19% to £19.4m) underpinned by the US, were 59 new site adds drove recurring sales up +45% y/y to £8.1m. Lockdown saw some sales cycle elongation, yet Group recurring sales were stable h/h, 19 new sites were added in H2 and pipeline includes 47 new contracted Connect sites to deploy. Outlook remains positive, and reintroduced N1Se numbers forecast 15% CAGR in recurring sales to FY’22E. We also explore the adjacent addressable opportunity presented by the essensys STEP product which we estimate to be worth £90m pa in London alone (US market many multiples of that). Valuation at 2.9x EV/sales is at a c.50% discount to peers exhibiting similar attractive SaaS metrics and top-line visibility.
Companies: essensys PLC
essensys pre-close trading update highlighted FY’20 revenue progression in-line with pre-CV19 market expectations. Group sales rose to £22.4m (+9% y/y), whilst recurring revenues rose +18% y/y to £19.3m supported by continued strong US growth (+43% to £8.0m; c.+10% h/h). Ongoing pipeline execution has offset modest moderation in periphery Marketplace volume-based revenues. Site deployment pipeline continues to look healthy, with 26 new Connect sites contracted for deployment at year end. Management remain confident in long-term structural growth drivers, which we see being underpinned by the launch of the Group’s landlord focused STEP proposition. STEP increases the group’s TAM, offering an opportunity to benefit from structural tailwinds as traditional landlords look to shorter leases to protect yields and occupancy rates. Whilst market uncertainty is lower than in April/May we are keeping forecasts under review. essensys trades on 3.1x trailing EV/sales; peers displaying similar recurring revenue and gross margin characteristics trade at 4x-6x.
Companies: TILS IMO BONH ESYS CHAR VLS DIS SLN WINE AVO
In-line with the FRC recommendations for a moratorium on formal results publication, essensys has delayed issuing full interims. The Group has instead issued a long-form trading update inclusive of unaudited financials. The update shows continued strong momentum, with Group sales up 19% y/y to £11.4m (Recurring revs: +29% to £9.7m). US growth was particularly strong, where recurring revenue rose 52% y/y to £3.8m. Growth was underpinned by new contracted Connect logos added in the period (+32% to 90), as well as continued site roll-out with existing customers. Net revenue retention in Connect reached 116%, underpinning highly attractive LTV:CAC metrics (6.1x). Management have seen limited impact from Covid-19 to date, however the Group expects disruption to new commitments driven by imposed new restrictions. The flexible working market remains an attractive long-term opportunity, and we see market growth recovering quickly as the macro backdrop improves.
Dropbox shares bounced around after the company reported betterthan-expected third-quarter earnings on Thursday, as investors digested the company's improvements on some key metrics but widening GAAP losses from a year ago. Earnings excluding certain items came in at, 13 cents per share, vs. 11 cents per share as expected by analysts, according to Refinitiv.
Companies: 7DIG ZOO AMO ESYS KNOS MIRA
Shares of cloud communications company Twilio fell as much as 17% on Wednesday after the company gave lower-than expected quarterly earnings and revenue guidance. Earnings: Excluding certain items, 3 cents per share, vs. 1 cent per share as expected by analysts, according to Refinitiv. Revenue: $295.1 million, vs. $287.8 million as expected by analysts, according to Refinitiv. Twilio's revenue grew 75% in the fiscal third quarter, which ended on September 30, according to a statement.
Companies: CALL PHD KNOS ESYS
essensys has released a strong set of maiden full year results, beating expectations set at the time of the IPO. The group continues to benefit from the structural growth being seen in the flexible workspace market, with both its Connect and Operate platforms delivering strong performance. Today’s results highlight the recurring revenue and pipeline visibility inherent within the model, with run rate recurring revenue ending the year up 27% at £17.3m. We are prudently making no major changes to our forecasts today, despite the committed pipeline significantly underpinning our growth assumptions. With an experienced management team in place and a highly favourable market backdrop we believe the group is set to continue its impressive growth trajectory throughout our forecast period and beyond.
Companies: essensys Plc
Facebook has been working to develop augmented reality glasses out of its Facebook Reality Labs in Redmond, Washington, for the past couple of years, but struggles with the development of the project have led the company to seek help. Now, Facebook is hoping a partnership with RayBan parent company Luxottica will get them completed and ready for consumers between 2023 and 2025, according to people familiar. Needless to say, we highlight a potentially substantial threat to Snap Inc, and a potentially huge opportunity for developers within the Facebook ecosystem.
Companies: MVR ESYS BGO BOKU EQLS IMMO SMRT TECH VRE
We highlight the strong Workday numbers overnight which provides cause for enthusiasm for growth equities, the SaaS software sector and most specifically within AIM, could augur well for Kainos, given their close partnership on consulting and implementation. Beyond the beat, most noteworthy comment was that management saw no impact from Brexit as yet nor the trade tensions in the US and China. With enviable growth rates of 32% in the quarter, we highlight few names in AIM such as CloudCall* offer such compelling opportunity.
Companies: 7DIG CALL TRAK ESYS FST KNOS PHD QTX SAG SEE TRCS
Essensys is a leading provider of real-time IT provisioning and ERP software to the flexible workspace market. Its SaaS platforms allow flexible workspace operators to establish and run an efficient, scalable business, enabling the vast majority of IT tasks to be completed by non-technical staff. Founded in 2006, the group has benefitted from the dramatic increase in demand for flexible workspaces, a structural growth trend that shows no signs of slowing down. Its recurring revenue model features attractive unit economics, impressive SaaS metrics and excellent pipeline visibility, significantly underpinning our prudent forecasts. We expect 24% 3yr CAGR in recurring revenue to FY’21, supported by strong trading in FY’19, confirmed in today’s year end trading update. With an experienced management team in place, a highly favourable market backdrop and near-term forecasts well underpinned, we believe the group is set to continue its impressive growth trajectory throughout our forecast period and beyond.
SDIC Power Holdings China’s state-backed energy firm has received government approval to issue 10% of its share capital as Global Depositary Receipts (GDRs) on the London Stock Exchange
Companies: ETX AFN HYR EUA BGO ESYS BOOM STAR DELT IOF
Research Tree provides access to ongoing research coverage, media content and regulatory news on essensys PLC.
We currently have 11 research reports from 3
GB Group (GBG) expects to report underlying revenue growth of 10% y-o-y for H121, with a one-off contract in the US making a material contribution to revenues. Combined with strict cost control this resulted in adjusted operating profit growth of 26% y-o-y and a £32m h-o-h reduction in net debt. With management guidance for revenue well ahead of our and consensus forecasts for FY21, we have upgraded our revenue and EPS forecasts for FY21–23. Despite COVID-19 related pressure on new business in the short-term, we view GBG as well placed to benefit from the accelerated shift in the digitalisation of business processes.
Companies: GB Group PLC
This new Q3 update is a welcome addition to QTX reporting calendar, particularly as it reveals impressive resilience through the pandemic; far better performance than originally thought. Management expects FY 2020 revenue and FCF to be in line with consensus forecasts but with earnings substantially ahead. There is a caveat on the impact of the second wave of COVID-19, but so close to YE the risk is relatively low and we raise our forecasts appropriately. Fleet is the driver; despite the impact of lockdowns on new subscriptions in Q2, the subscription base has grown 11% YoY across the 9 months to 168k, fuelling 7% YoY growth in Fleet revenue. The annualised subscription base has risen 5.3% from £20.8m at YE to £21.9m in September, comfortably underpinning our FY 2021 forecast.
Companies: Quartix Holdings Plc
Gamesys Group’s Q320 trading update is ahead of expectations with pro forma revenue growth of 31% and an improved financial position. As in previous quarters, the company increased the active player base responsibly and benefitted from new game launches. We increase our revenue forecasts for FY20–22 by 5.7–7.0%, and EBITDA forecasts by a slightly lower 2–3% as management further invests in growing a sustainable and repeatable business, while ensuring revenue growth is done responsibly. This follows an EBITDA upgrade of 7.8% for FY20 at the time of the interim results. For FY21e, the free cash flow yield is 9.2% and the dividend yield is 2.9%.
Companies: JP7 GYS JKPTF
Expected profitability in H1E will be consistent with the level delivered in the interim period last year, albeit at a substantially higher margin. Order flow had seen some disruption from COVID-19 in fiscal Q1E and into Q2E but the September cycle for RFPs and order wins has been encouraging. Our FY21E forecasts are unchanged, and with the stock at the bottom of its trading range, we maintain our buy recommendation.
Companies: Shearwater Group plc
AGM statement as expected; Resume with a Buy
Companies: CloudCall Group PLC
LoopUp has announced a very strong H1 period, in line with the previous trading update and reflecting a number of months of exceptional performance. This is allowing the business to invest in the major identified new opportunity, to provide telephony within Microsoft Teams, where the early signs are extremely positive. We look forward to further detail on the Teams pipeline and sales levels over time.
Companies: LoopUp Group PLC
Benefiting from the pandemic-driven surge in sofa shopping, Asos has released strong FY20 results. However, the strong trading performance in FY 20 and a good start to FY21 were not enough to relieve management’s cautious view on the outlook.
The recent return rate has started to climb back from the bottom in April and the macro-economic consequence of COVID-19 may start to weigh on consumer demand. We should see the sales growth pace and profitability normalising in the coming months.
Companies: ASOS plc
H1 results were ahead of our estimates. However, excluding select factors, profits were well above our expectations. Sumo’s strong underlying results positions it to outperform current market expectations. In addition, Sumo announced the acquisition of Pipeworks, which we estimate could drive 18% earnings accretion even based on conservative forecasts. Given the relatively modest share price reaction, Sumo now trades at a lower multiple than prior to the acquisition.
Companies: Sumo Group Plc
Gamesys Group’s interim results reporting pro forma adjusted EBITDA growth of 17% exceeded consensus expectations, demonstrating the strength of its strategy of growing the player base responsibly, while aiming for a high player retention rate. The improving financial position has resulted in the introduction of a new dividend (company commentary implies 36p/share for FY20) earlier than anticipated by us and consensus. We have increased our FY20 EBITDA forecast by 7.8%.
Companies: GYS JP7 JKPTF
CAP-XX Ltd* (CPX.L, 4.5p/£19.9m) | Gfinity plc* (GFIN.L, 3.8p/£28.9m) | MTI Wireless Edge Ltd* (MWE.L, 44p/£38.7m) | Newmark Security plc* (NWT.L, 1.175p/£5.5m)
Companies: CPX GFIN MWE NWT
Gaming Realms is a creator and licensor of innovative games for mobile, with operations in the UK, U.S. and Canada. Flagship brand Slingo® is a highly popular and unique game genre which combines elements of slot, bingo and table gameplay. These games are licensed by some of the biggest online gaming operators in the world, including DraftKings, Sky Betting & Gaming and GVC, and distributed directly to operators or via global partners such as Scientific Games & Relax Gaming using the company's proprietary Remote Game Server platform.
Companies: Gaming Realms PLC
Nanoco is now focused on generating value from three core areas: nanomaterials for the sensor market, where it has a framework agreement with STMicroelectronics; quantum dots for TV displays where a number of development projects are underway; and pursuit of the patent infringement litigation against Samsung. Noting that net cash consumption is now c £0.3m per month, which management, led by Brian Tenner, estimates gives a cash runway to December 2022, we have reinstated our estimates.
Companies: Nanoco Group PLC
Audioboom plc* (BOOM.L, 177.5p/£24.9m) | Starcom plc* (STAR.L, 0.85p/£3.0m)
Companies: Audioboom Group PLC (BOOM:LON)Starcom Plc (STAR:LON)
Interims reveal a particularly strong trading period for the group, with underlying organic sales growth accelerating to +20% c/c (previously mid-single digit), underpinned by both strong trading in the US (+c.50% u/l) and the UK (+11%). Additionally, Eckoh benefitted from a large perpetual Coral licence deal, bringing reported sales growth to +37%. In our view, these results speak to the strong proposition, opportunity and momentum Eckoh across its markets. We leave FY u/l forecasts unchanged but acknowledge they look more than achievable. Currently trading on a 5% FCF yield, rising to 6% in FY21E, we think Eckoh offers a unique investment opportunity.
Companies: Eckoh plc
FY19 revenue increased 16.9% to £19.4m following a strong H2/19, c9% ahead of forecast. New products released included Concurrent's first AI board, aimed at the military market. Order intake was strong, especially during H2/19, continuing into 2020. Inevitably COVID-19 has caused uncertainty about H2/20 activity levels and potential delays from customers, though there has been no immediate slow-down. Concurrent is a supplier to some of the world's most prominent defence companies in the UK and US and continues to supply these customers uninterrupted. Given COVID-19 related uncertainty we have taken a prudent view and trimmed our FY20 revenue (and consequently PBT forecasts). With over £10.5m cash and no debt, a strong order book and top tier customers, Concurrent is continuing to invest in R&D and progress its plans to add new software and hardware product ranges and enter new markets.
Companies: Concurrent Technologies Plc