Emphasis shifts towards profit

FYMay23 results are in line with revised expectations reflecting solid progress (particularly with Central Gov: sales +60% y/y) albeit curtailed by a disrupted Q4, as certain customers started to reprioritise spend, thus affecting the revenue profile of new and existing contracts. Now in Q2, we learn that while caution is abating, trading and utilisation has not fully recovered and so (despite a very strong backlog) we revise down FY24e sales by 7% to £40m. We however keep EBITDA and cash unchan

FY23 Trading Update

Made Tech has announced that it now expects FY23 revenue and EBITDA to be lower than previously expected, at c.£40m (vs. £43mE) on sales and "at least £1.5m" (vs. £3.9mE) on EBITDA. As despite a strong Q3 (and March), several of the Group's clients have since delayed the start date of projects into FY24 in response to tightening budgets, thus impacting revenue and profitability in these closing months. So for factors outside of MTEC's control, this year’s trading will be materially impacted and

Sentiment is changing

Interims show continued progress, as Made Tech has built on its FY22 break-out performance (sales: +120%) by growing sales a further 75% in 1H23. An exceptional feat, achieved through a strong b/f backlog (+133% y/y) and excellent sales execution in 1H23. This second point is pertinent, as it highlights how (notwithstanding macro headwinds) Made Tech has been able to land nine new customers in H1 (and more in Q3) such achieving >£60m bookings YTD. This achievement materially de-risks FY23&24 exp

Strong H1 update and contract wins

Made Tech has announced a very strong update: H1 sales +76% y/y and alongside this, also several wins/expansions worth £27m. As a result, Made Tech has now delivered 48%/FY23e sales and as well, has a very strong backlog: £48m (+53% y/y) so is very well positioned to drive continued growth, both this year and next. Margins meanwhile leave room for improvement, as having generated £0.5m EBITDA in H1, this leaves work to do, but with contractors now materially lower (at c.10% vs. c.20% in the PY)

A breakout year

Results are consistent with August’s update and confirm a breakout FY22, as Made Tech materially scaled its business – growing revenue 120% y/y (organic) to £29.3m, an exceptional result, which in turn drove a return to profitability, AOP: £2.3m (PY:£-0.8m). This was achieved by Made Tech more than doubling its headcount and alongside this, also delivered sales bookings of £51.1m (+115% y/y) which includes Made Tech’s largest ever win. Made Tech’s y/e backlog is also up sharply at £38.2m (+133%

FY22: A year of outstanding progress

Made Tech has produced outstanding FY22 headline results, with all key top-line metrics more than doubling (head of our expectations). Market uncertainty surrounding the ability to recruit and retain in a tight labour market has been dispelled with y/e employees of 478 up from last year’s 235. Importantly this has been achieved without undue impact on profitability, with GM flat yoy at 38% and EBITDA margin rising to 9% from the prior year’s loss. We continue to believe we are seeing the emergen

£7m Met Office contract win

Made Tech has today announced a contract win with the Met Office (a new customer) where the Group has been appointed its Digital Services Partner. This represents another highly impressive win in our view, as it provides further evidence for how key Public Sector organisations are entrusting Made Tech to help support and drive their digital objectives. Won via the Met’s own framework, this contract is worth circa £7m over a two year period and therefore represents the second largest award in the

Exceptional bookings, resourcing holding back

H1 results are exceptional, as MTEC has achieved sector leading organic sales growth of 131% y/y to £11.7m, in line with a previous update, while booking are stronger still at £26.5m +148% y/y, driven by a combination of new wins and material expansions. Furthermore this strong progress has continued into H2 following a record c.£19m win with NHS Digital (also announced today). Consequently MTEC’s current backlog is likely even stronger than reported (£31.3m ~+170% y/y) thus providing strong vis

Initiation: Making a difference

The Government’s Digital Transformation (DX) programme has created powerful market tailwinds for a new breed of IT services partner. Made Tech is one of a select few cutting edge Public Sector DX experts finding strong endorsement amongst prestigious UK Public Sector bodies with this reaching an inflection point in FY21 when sales grew 144% to £13.3m. This trend has continued into FY22 and hence we model similar rapid growth looking ahead and in turn significant operating leverage. Senior civil

Sondrel Holdings - Siemens Holding

Following the news on Friday 1 December that Siemens has, subject to completion, disposed of its 11.2% holding in Sondrel at 6p per share, we see a significant buying opportunity. We believe the sale was for Siemens AG organisational convenience rather than in relation to Sondrel’s fundamentals. We have summarised the history of the relationship, our view on the rationale for the sale and touch on the latest industry outlook. We reiterate our 1-year price target of 74p which is just shy of the h

Intercede - Record contract win

Intercede has secured a major contract win with a large US Federal Agency, $6.6m of which represents licence fee for immediate recognition, with a further $1.4m in maintenance and support. The contract win lifts FY24 forecasts substantially higher, on the back of a previous upgrade last month, by +31% in revenue and +186% in EBITDA, with further improvement in FY25 and FY26 from associated support and maintenance. The order for Intercede’s MyID Credential Management Solutions came after a rigoro

CML Microsystems+ (CML, House Stock at 388p) - Growth in new and existing markets

LIBERUM: Cerillion: Learnings from the CMD

iomart - Solid interims demonstrate stability

iomart has delivered interims to September in line with unchanged expectations, alongside a small vertical focused acquisition, demonstrating the benefit of organic and acquired growth. 18% group revenue growth included cloud services growth of 20%, which comprised modest organic growth, price adjustments after last year’s strong energy price movements, and some slowdown in organic non-recurring revenue, before the benefit of the Concepta (August 2022) and Extrinsica (June 2023) acquisitions, ad

Morning Note – 4 December 2023

Morning Note – 5 December 2023

PROGRESSIVE: CML Microsystems: The unusually reliable semis co delivers, again

CML’s interim results to 30 September show that, despite challenging markets, the group continues to make progress. Revenue improved by 5% to £10.6m, up from £10.1m in H1 FY23. Profit from operations was flat at £1.9m, prior to third-party acquisition related costs from the MwT transaction of £0.3m and share-based payments. Cash balances at the period-end were £20.95m (31 March: £22.26m), after significant expenditure on product development, share buybacks and the FY23 final dividend. With the M

Journeo - The Merry Journey Continues

Journeo has released a positive trading update following strong business activity in October and November. The company references strong trading in its core Fleet and Passenger Systems divisions, as well as the newly acquired Infotec and MultiQ divisions. We expect that the investment made in the Infotec factory to facilitate higher production speed has contributed to clearing the prior backlog and the ability to win new orders. We believe the positive trading momentum will continue into FY24E a

TPXimpact 1H24 Interim Results

TPXimpact reported a strong 1H24 performance and maintains FY trading guidance; we make some small tweaks and overall retain our expectations.

Morning Note – 28 November 2023

CML Microsystems+ (CML, House Stock at 395p) - Board & Senior Management Appointments

Initial Equity Trading Comments - 1 December 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 – 1 December 2023