Hybridan Small Cap Feast: 07 Feb 24

7th February 2024 @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 obje

Pennant International - FY23 update – well on track and strategy delivering

This morning's update from PEN confirms that the company delivered significant upside to numbers in FY23E, in line with our forecasts (£15.5m sales, £1.3m adj. PBT). PEN provides software / integrated product support solutions to an extensive client list of OEM's and governments, while also supplying complex training products to a prestigious global client base including BAE Systems, Boeing and others. The gross margin has again moved ahead materially, to 50% (H1-23E: 47%, FY22A: 42%) as the

Pennant International - Benefitting from complexity; positive H1's and growth / margin agenda

H1 results from PEN today reflect further progress with its agenda of growing the business across a range of activities, with software a key component and complex work for global OEM's continuing to contribute meaningfully, given the technical nature and complexity of assets and the requirement to manage through-life costs. PEN provides software / integrated product support solutions to an extensive client list of OEM's and governments, while also supplying complex training products to a prestig

Hybridan Small Cap Feast - 11 Sep 23

11th September 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 ob

Pennant International - New Pennant, new partnership, attractive beachhead in training information management systems

This morning's Reach announcement from PEN highlights a further step forward for the company as it continues to grow the software orientation of the business. We anticipate that the new partner, Aquila Learning Ltd, will form an attractive enhancement of PEN's capabilities in training information management systems based on Aquila's Learning and Requirements/Resource/Record Management System (ALaRMS). The agreement is expected to provide a platform for growth to PEN's partner, given PEN's extens

Pennant International - Much improved margins reflect business upgrades; order intake up on back of wins

PEN's update this morning reaffirms the company's strategy of developing higher value added business streams, while showing impressive increases in margins at gross, EBITDA and EBITA levels. PEN supplies software / integrated product support solutions to an extensive client list of OEM's and governments, with its products in general becoming ever more software-orientated and software licenses and related streams key to the mix. With large training product contracts being fulfilled, it is impress

Hybridan Small Cap Feast - 13 Jun 23

13th 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 objecti

Pennant International (PEN) – Corporate – New wins highlight increasing software slant, good momentum, diversity

This morning's announcement from PEN highlighting several new contract wins, licences and / or renewals in the software / technical space, ranging in size from $AU5.2m to £130k, demonstrates the attraction these products hold for a wide range of global clients. The latest wins are well-aligned to the company's strategy of shifting the business mix towards higher margin software and technical services, which accounted for three quarters of revenues in FY22A, compared with under 60% in the prior

Pennant International Positive profit swing on back of enhanced mix, efficiencies; c.80% revenue cover

This morning's FY22A results strongly reaffirm PEN's strategy of shifting the business mix towards higher margin software and technical services, together with judicious paring of costs, with a big upward profit swing (£1.3m). Gross margins at 42.3% outpaced those of a year earlier (27.3%) by a country mile. PEN supplies software / integrated product support solutions to an extensive client list of OEM's and governments, with an increasing accent on software products/ services, whose revenues

Pennant International - Forthcoming results upswing; earnings enhancing deal prompts upgrade

Ahead of forthcoming FY results from PEN, we anticipate FY22E to feature a meaningful (c.£1.3m) positive profit swing, in turn reflecting the ongoing progressive mix change towards higher margin earnings together with a reduced cost-base. PEN supplies software / integrated product support solutions to an extensive client list of OEM's and governments, with an increasing accent on software products/ services (which in turn results in maintenance revenues over the longer term). The company's acqu

Pennant International (PEN) – Corporate – Earnings enhancing acquisition of UK rail business

PEN's acquisition of the rail services business, Track Access Productions (“TAP”), announced this morning, represents a positive development, which is well aligned to the group's increasing focus on recurring and software-based revenues. TAP is an established rail service business, which provides driver training, route mapping and route familiarisation services to the UK rail industry, with customers including train operating companies, engineering contractors and infrastructure providers. TAP c

Pennant International - Defence credibility, software, repeat earnings – themes which will pay off for Pennant

This month's Defence Integrated Review Refresh 2023 (IR23) has mainly attracted comment around the implications of available funding set against the substantial global ambitions which remain a feature of the Review. Focusing on Pennant, however, we note the preoccupation with (a) value – getting more out of existing resources over an extended timescale; (b) constant preparedness - the need for the Services to be able to sustain engagement with the minimum of delay; (c) agility – highlighting so

Pennant International - Positive update highlights profitability, order book, dramatic shift in gross margin

PEN's FY22E update this morning highlights a c.£1.3m positive swing in profitability to a c.£0.5m EBITA number, reflecting in turn a number of good developments, including an encouraging revenue mix change and increased repeat earnings as well as a meaningfully re-aligned cost-base. PEN supplies software / integrated product support solutions to an extensive client list of OEM's and governments, with an increasing accent on software products/ services (which in turn brings with them a tail of l

Hybridan Small Cap Feast - 08 Feb 23

08 February 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 objec

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

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

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

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

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

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.

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