In our view, today’s trading update from Amino reassures on the FY 19E financial outcome. Management expects to report trading performance in line with market expectations and strong operating cash flow delivery. The release confirms that 24i has been successfully integrated into the group, and we see the announcement of a contract win for the supply of an endto-end (“E2E”) video solution to Youfone as a further positive – it represents the first joint customer announcement from the “new” Amino group.
The announcement confirms management's expectation to report FY 19E trading performance in line with market expectations, and that the group "continues to deliver excellent operating cash flows". The closing FY 19E net cash position of $1.4m is behind our $5.5m forecast. We understand the latter part of H2 19E saw strong trading, with higher demands on working capital to turn into cash in H1 20E. Amino has also signed a new $15m revolving credit facility with Barclays, extending the expiration of the existing facility, which was due to mature in July 2020.
Integration of the online video specialist 24i acquired in July 2019 has been successfully completed, with the AminoTV business now fully integrated into 24i. As we noted in our recent research (Amino re-energised, 29 Nov 2019), the 24i acquisition supercharges the group's move towards a software-led business model, almost doubling the contribution to group turnover from stand-alone software sales.
Amino and 24i have jointly announced the sale of an E2E video solution to Dutch operator Youfone. The release is light on detail on contract size and value to Amino, but in our view highlights the strong operational synergy between Amino and 24i. The solution combines Amino’s IPTV and TV everywhere expertise with 24i’s strength in video experience design and user experience.
In our view today’s announcement gives confidence in the FY 19E financial outcome, and commentary on operating cash generation highlights an area which we have long viewed as a core Amino strength. The 24i acquisition was announced in July 2019. Confirmation that integration is now complete will be welcomed – as will the first major contract announcement from 24i as part of the Amino group.