Gamma’s FY 2018 results show the anticipated continuation of the healthy performance which the Group has provided in recent years. In particular, they feature adjusted numbers which are 3-5% ahead of our estimates which were upgraded after January’s trading update. Importantly, the commentary and the numbers are consistent with recent trading updates and the evolution of Gamma’s strategy which was announced in some detail at the recent Capital Markets Days (CMD). The channel showed further growth during FY 2018 with more contract wins while the direct business also enjoyed a good 2018 – helped by a useful tailwind from contracts won in 2017. The outlook comments are positive and note the visibility afforded by the Group’s recurring revenue base. We make some small positive changes to adjusted estimates for FY 2019E and FY 2020E and introduce estimates for FY 2021E. In viewing the continued momentum in the business, we see our numbers as conservative and we expect to see Gamma further exploit the growth opportunities which it has identified.
Gamma has reported strong full year results for FY 2018 with Adjusted EBITDA 3% ahead of our (and market) estimates which we had upgraded after January’s trading positive update. Dividend growth of just over 10% for the full year was in line with expectations.
The channel saw further strong growth in SIP, Cloud PBX and Data products and solutions during 2018. The Group’s robust channel proposition benefited from heightened focus on cross-selling and upselling more of its existing products, selling new products and services into the current channel base and developing new partners and programs to support the growth of their businesses.
Gamma has previously noted further significant new contract wins during 2018 in its direct business with some reflecting Gamma’s ongoing strategic focus on evolving its strong cloud telephony position into the Unified Communications as a Service (UCaaS) market.
The outlook comments in the results announcement are positive for the near-to-medium term and the Board has identified ‘no material issues which are specific to Gamma’ from Brexit. Gamma expects to continue to invest in supporting the channel and on maintaining focus on growth with larger enterprises and the public sector in the direct business.