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.

PROGRESSIVE: Idox: FY23 delivered – preparing for the next phase

Idox’s results for the year to 31 October are in line with the November trading update. Revenue grew 11% to £73.3m (FY22: £66.2m), with the principal driver being growth in the LP&PP division. Adjusted EBITDA improved 9% to £24.5m with a margin of 33%, vs £22.5m and 34% for FY22, respectively. With free cashflow generation of £9.1m (FY22: £7.2m), net debt at the year-end was £14.7m (FY22: £6.7m). The outlook statement is confident, but we have revised our forecasts to reflect increased spending

PROGRESSIVE: Idox: Resilience plus, as expected

Today’s trading update for the year ended 31 October confirms another year of robust performance, with key figures in line with expectations. Order intake and revenue are both up c.11%, at £82m and c.£73m, respectively. Adjusted EBITDA of c.£24.5m is an improvement of 9% on last year. Perhaps most encouraging is net debt at £14.7m, somewhat better than our expectation of £15.9m after the recent acquisition of Emapsite. Management has new, larger financing facilities in place, on better terms tha

PROGRESSIVE: Idox: Emapsite acquisition – accretive, strategic

The purchase of Emapsite, a leading UK geospatial software and data business, announced on 21 August, is an exciting step forward in Idox’s land and property strategy. Our forecast revisions indicate that the deal will be earnings accretive, while the announcement suggests that, with further debt available, the acquisition pipeline is both healthy and deliverable.

Hybridan Small Cap Feast - 08 Jun 23

8th June 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

PROGRESSIVE: Idox: Long-term value generation becomes clearer

Idox has today reported a strong set of half-year results for the six months ended 30 April 2023. Revenue grew by 8% to £35.8m from £33.2m in H1 FY22 and adjusted EBITDA of £12.1m was 10% above H1 FY22’s figure. Recurring revenues grew broadly in line with the headline revenue figure, while the adjusted EBITDA margin was slightly ahead at 34% (H1 FY22: 33%). The half saw Idox move from net debt (FY22: £-6.7m) to net cash (H1 FY23: £1.1m). Order intake grew, with the overall figure of £52m being

Hybridan Small Cap Feast - 18 May 23

18th May 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

PROGRESSIVE: Idox - Trading well, with no signs of turbulence

Today’s AGM trading update, covering the period from 1 November to date, confirms that Idox continues to perform well, having made an encouraging start to the financial year and with excellent visibility on revenues for FY23. The robust story and positive outlook we have seen growing in recent years looks set to continue.

PROGRESSIVE: Idox: Flying start to FY23

Idox’s results for the year ended 31 October 2022, released on Thursday 26 January, showed a strong performance in line with guidance given in the November trading update. Revenue of £66.2m was an increase of 6% on FY21, driven by strong growth in the public sector business; within this, recurring revenues grew by 12% to £40.5m. Adjusted EBITDA of £22.5m, up by 15% from £19.5m in FY21, was at an improved 34% margin (FY21: 31%) driven by operational improvements, acquisitions and mix. Year-end

Hybridan Small Cap Feast - 26 Jan 23

26 January 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

PROGRESSIVE: Idox: Trading update shows strategy driving results

Idox has today released a trading update for the year ended 31 October 2022. The statement reports a strong performance, with particularly encouraging news on order flow and sales of Idox Cloud. We have adjusted our forecasts for FY23 and FY24 to reflect new assumptions around cash payments and working capital. Management expectations for FY23 are maintained and the year has started well. The update reflects the progress over recent years and the strong position Idox holds, which should allow fu

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

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

Initial Equity Trading Comments - 19 February 2024