Amino has reported H1 FY19 results which appear to be well on track for our full-year estimates and which, more importantly, provide the group with the time and cash to execute on the strategic transition to value-added software on a recurring revenue model, with services and hardware as appropriate. Margins have improved markedly, and cash generation has been strong. We make no material changes to estimates, but see these results as a step in the right direction for the group
The group has reported a solid H1 which, although demonstrating the near-term revenue decline as previously heralded, has also delivered much-improved margins (both gross and operating margin) with a strong level of cash generation. We detail results further overleaf.
Today’s results appear to reasonably well underpin the financial outcome for FY19 – revenue and operating profit are both just below half of the full-year expectation, and the pipeline and order book provide good levels of reassurance. Taking all this into account, we leave our full year FY19 (and FY20) estimates unchanged other than minor adjustments to EBITDA and depreciation based on lower-than-anticipated levels of CAPEX in H1
In addition to the purely financial performance, the group has also made material strides in terms of operational delivery, and the steps required to execute on its strategic transition, towards provision of a higher value-added suite of software-heavy solutions, with services and hardware provided where appropriate. The sales of AminoOS through a channel partner, and AminoTV on a multitenanted platform are both clear examples of this success.
Overall, Amino’s H1 is reassuring in two ways – financially, the group is on track to deliver FY19 results in line with our expectations, with the strong performance providing the group with the leeway (both financially and strategically) to execute on its plans. Secondly, those plans are being delivered upon, with new products beginning to find customers in the field, building reference sites and gaining credibility. It is this strategic evolution which offers value to the Amino shareholders over time, and it is pleasing to see this six month period deliver both the financial stability to allow it to happen, and additional early-stage evidence of delivery. We await further newsflow in H2, but take a good level of reassurance from today’s results.