FY 19 results in line, strong software performance: Amino has announced FY 19 results in line with our expectations. The group reported adjusted EBIT of £10.2m (-8% YoY), versus our forecast of £10.3m. Standalone software sales grew strongly during the year (+41% YoY), reflecting the transformation programme announced during 2019 and also the acquisition of online video specialist 24i Media. 

Improved earnings quality: Group financial performance is visibly benefitting from the move towards a more software-driven business model. We highlight: 1) Improved revenue visibility, with recurring revenues growing 47% YoY during FY 19A and ARRRR* up 86% YoY to $9.5m; 2) Margin improvement – Amino delivered a 5pp improvement in adjusted gross margin during FY 2019; and 3) Strong conversion of EBITDA into cash. FY 19 adjusted operating cash flow increased 21% YoY. This represents EBITDA: cash conversion of 114%, +30pp on FY 18A. 

Dividend to be maintained FY 20E: At 7.32p/share the dividend has been sustained, and management has re-affirmed its intention to maintain the dividend at the current level in FY 20E. 

Positive outlook commentary: Noting a strong order book and sales pipeline visibility, the release signals that current trading is in line with meeting management’s full-year expectations. With inherent flexibility in the in the Amino supply chain, we hope that any impact on the business from the Coronavirus can be contained and believe there is potentially scope to “make up” any production time lost in calendar Q1.

Earnings estimates unchanged: We leave FY 20E earnings estimates unchanged and introduce FY 21E forecasts. We lower FY 20E cash flow forecasts reflecting revised investment and working capital expectations.