Tern’s portfolio update for the year to December 2019 confirms the group’s strong progress in a number of different ways, across the entire investee portfolio. Growth in the portfolio companies’ combined revenues was some 27% year-on-year, held back by some delayed orders which are now expected early this year. The group remains well positioned to capitalise on its competitive advantages, and there appears to be a steady flow of positive validation – we look forward to more during 2020.
Key points Today’s update provides a summary of investee company developments during 2019, augmented by two specific new pieces of information. Overall revenue of the portfolio grew some 27% - we had been expecting a higher number, but as the group describes, some commercial orders were delayed from late 2019, which impacted overall revenue growth.
We note that employee growth has accelerated rapidly during H2, and presumably post the FundamentalVR (FVR) raise, with employee numbers now up 31% y/y, compared to an increase of just 9% y/y at the end of H1 2019.
Investee specifics We go into slightly more detail overleaf, but the RNS describes a number of developments in the portfolio, highlighting in particular the material (£4.3m) fundraise for FVR, and what appears to be a transformational sales order for InVMA (£0.8m revenues, announced in January 2020)…this latter item was clearly too late to include in the sales growth figures quoted above, and would have materially boosted the growth rate across the portfolio.
Progress overview Tern has seen multiple different types of progress over the past year – a major “up-round” for FVR, a material contract win at InVMA and improvement of revenue quality within Wyld Networks.
Overall, today’s RNS is a useful snapshot of performance and progress; Tern’s investee companies remain very well exposed to high-growth end markets, which are themselves attracting genuine cash spend and providing real-world products and services in increasing number, and on multiple fronts. We continue to see the group as well-positioned to invest intelligently in UK and European assets, and leverage these positions with access to USA opportunities both in end markets and investor capital. We await further information at the time of the full year results likely due in March 2020.