H1: Excellent contracted visibility

Gresham has delivered H1 organic revenue growth of 5% y/y (cc.), driven by continued positive momentum in Clareti revenues (+11% y/y). 5 new Clareti contract wins alongside 16 upgrades, have all contributed to strong top-line growth, with performance also underpinned by a NRR of 103% (+1pp h/h). Cash adj EBITDA was £1.7m (H1’22: £1.8m), with net cash of £3.8m (H1’22: £6.3m). The key highlight is contracted forward-looking revenue visibility of 95%/FY’23e (at Jun’23), leaving an undemanding c£2m

New Forecasts: breaking through

With FY22 in line and no changes to our existing FY23 forecasts, our focus is on the introduction of new forecasts for FY24 and FY25. We model Clareti recurring revenue growth of 17% and 18% resp. With Clareti having broken through to positive cash EBITDA for the first time in its history in FY22, we expect operating leverage to drive significant margin expansion over the next three years and beyond (Gresham guides to 40% of ARR dropping through to cash EBITDA). We model cash EBITDA margins of 1

Clareti Connect Tier 1 bank win

Gresham complements several large deal announcements during 2022 with a further $1.3m (minimum over 5 years) Clareti Connect deal with an existing Tier 1 banking customer, providing further evidence of the success of its land and expand strategy. Additional fees will come from recurring usage-based fees and professional services. This is a solid end to a successful year, where Clareti ARR is likely to have seen mid-to-upper teens organic growth. Such progress is likely to exert upwards pressure

Significant contract win

Gresham announces a 3-year $1.9m win, ramping to $0.5m recurring ARR, with a new customer that is a leading global asset manager. The deal is significant not only in terms of its size and quality but also as it includes core functionality from both Clareti and Electra, providing further validation of this acquisition and instrumental in yet another replacement of legacy vendors. Momentum remains strong at Gresham, which remains a core tech holding.

Further upgrades

After upgrading FY22 revenues and adj. EBITDA by 10% and 4% in early October we upgrade both by 5% today, bringing the total upgrade to 15% and 10% resp. We also upgrade FY23 revenues by 4% (9% since Oct), adj. EBITDA by 3%, cash EBITDA by 15% to £4.5m and FCF by 18% to £4.3m. Gresham is one of the fastest growing companies in our universe with operating leverage further magnifying earnings growth. The potential to push towards £10m FCF in a meaningful time frame is likely to exert upwards press

Upgrades on contract wins

Gresham announces contract wins today that cause it to expect FY22 revenues and earnings to be ahead of expectations. The first is a £1m over 5 years Clareti deal to replace a legacy incumbent solution for one of Europe’s largest privately owned banking and financial services groups (new logo). The second comprises renewals and extensions across a broad array of products and services with Gresham's largest customer, ANZ. Furthermore, management expects to close further subscription business in Q

Strong H1 supports a record FY22

Gresham has delivered H1 19% organic revenue growth with cash EBITDA margins rising to 8% from 6% and adj. FD EPS up 74% yoy as organic leverage and accretion from Electra kicks in. Clareti ARR has risen 18% organic with $ denominated revenues helping protect against £ weakness. H1 revenues of £23m leave a comfortable £19m to do in H2 and H1 adj. EBITDA of £4.5m is tracking at least in line with our FY22 forecast of £9.2m. Bigger picture, Gresham estimates that the marginal cash EBITDA margin on

Strong H1 underpins high teens FY22 organic growth

Gresham reports that positive trading has continued in H1 with group revenues up 19% organic to £23.1m. Clareti ARR grew an impressive 17% organic to £25.9 and continues to be the engine of growth. There was also strong trading from non-Clareti revenues which has the potential to continue in H2 depending on some material Contracting revenues renewals. As such Gresham expects FY22 results to be at least in line with expectations. We make no changes to forecasts at this time, though further positi

£6.3m contract win expands market share

Gresham has announced a landmark win with a key Tier 1 existing banking customer worth up to £6.3m over a minimum of c. 5 years. Building on an initial 3 year contract signed in June 2020 worth £1.7m over 3 years, the scope of work has materially expanded with Clareti being chosen as the customer’s single enterprise platform across its whole UK business, covering retail accounts, cards, payments and as well commercial banking. Clareti will replace manual processes and, of particular note, legacy

Strong year confirmed, prospects very strong

Highlights from FY21 results are 20% organic growth for Clareti, a significant improvement in cash EBITDA, comments from the company that it could generate double the revenues from the installed base, general optimism and specific optimism on further margin improvement. We really urge investors to look at this company as we suspect it has prospects beyond our immediate 220p price target.

Strong end to the year beats by 8% on EBITDA

Highlights of FY21 are 28% organic revenue growth at Clareti, group EBITDA 8% ahead of our forecasts and net cash nearly £4m ahead of our expectations on “very strong” cash collections and lower than expected acquisition costs. Our unchanged FY22 forecasts are well underpinned by 88% contracted revenues. We forecast ARR will grow a further 17% organic in FY22, which is one of the fastest growth rates in our universe. We introduce a Buy recommendation and 220p price target.

Contract extension and upgrades

Gresham has won an extension and expansion deal with a long-standing Tier 1 investment bank customer as it continues to standardise on the Clareti platform. Including this and other deals, current ARR rises to £23.3m, a 5% organic uplift from end June. Clareti/Electra are trading in line, though Gresham flags potential for further new business in FY21 and an “encouraging pipeline” for FY22. Non-Clareti revenues are performing ahead of expectations leading us to upgrade FY21 revenues and adj. EBI

Contract extension adds significant visibility

A renewal and extension worth c. A$30m over the coming year at ANZ takes FY21 revenue visibility to c.100% with a quarter to go. Q4 wins would mean upside. ANZ will grow its Clareti revenues 35% yoy to A$14m. It is this type of growth in excess of opex growth that is pushing Clareti into positive FCF generation. We think the market is missing the substantial operational gearing that a SaaS company experiences as it goes through b/e and can see Clareti generating FCF of up to £6m in short order a

Continued strong growth in H1

Gresham has delivered a strong H1 with Clareti revenues up 22% lfl to £9.6m and Electra off to a good start. We note group cash EBITDA margins of 6% vs. PY 3% and expect continued margin improvements to drive earnings growth faster than revenue growth over the coming years. Electra cash EBITDA margins of 14% are also tracking ahead of our forecast 9%. With Clareti/Electra expected to break-even on this basis over the next 12 months, the operational gearing of the SaaS model continues to kick in.

H1 update – well positioned for the full year

Gresham has issued a half year trading update and provided further commentary on recently acquired Electra. First half trading is comfortably in-line with our expectations with Group revenues of £14.5m (H1’20: £12.2m) +14% on a like-for-like basis (or +19% reported). Clareti revenues jumped 22% like-for-like, driven by 13 new or incremental licence agreements, including three new banks in Europe and one of the world’s largest professional services firms. This strong growth is reflecting in Clare

Success in US market delivers strong H1

Bango has reported strong H1’23 results with 88% revenue growth (we estimate c.25%+ organic), ARR increasing 63% yoy, and a further $8m of annualised cost savings executed with Bango on track to deliver a transformational H2 profit performance. Bango’s Digital Vending Machine (‘DVM’) secured 2 new US wins, including 1 of the top 5 US operators (now working with 3 of the 5), providing access to 200m+ US consumers. Given these operators are currently on the bottom tier of license revenue (we estim

Record H1'23 with continued momentum into H2

Hybridan Small Cap Feast - 11 Sep 23

11th September 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment ob

Hybridan Small Cap Feast - 14 September 23

14th September 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment ob

Journeo - New Acquisition Gives MultiQle Growth Opportunities

Journeo has announced the acquisition of MultiQ, a leading Denmark-based provider of information systems and technical services to transport operators and local authorities. The Acquisition fits nicely with Journeo’s existing business and provides a number of benefits including a greater Scandinavian footprint, cross-selling opportunities and cost synergies. The €2.5m purchase is entirely cash-funded using existing balance sheet cash and therefore EPS-accretive. In FY24E we have upgraded our PAT

Artificial intelligence in UK biopharma and healthcare 11/09/2023

Artificial intelligence (AI) continues to accelerate at full speed, first by imitating the workings of a human brain and now it is drawing concepts of evolution, sometimes with synthetic data, artificially manufactured for training purposes or for privacy protection, and sometimes not even with human intervention. In this note, we examine how AI is being developed and applied by the NHS and UK mid/small cap companies for the benefit of human health and wellbeing. AI in drug discovery and devel

Allenby Capital TMT Update - 25.09.23 - SPSY.L, BIRD.L, TRAK.L, ENET.L

Please find below our weekly update covering themes that we feel that are of interest to investors and participants in the small and mid-cap TMT sector as well as commentary on recent newsflow.

Morning Note – 20 September 2023

Taking the Upper Brand: Brands Sector Overview

The earliest dated brand has long been contested; the majority point to Kongō Gumi, a family run construction company that specialised in Buddhist temples in Japan; its documented record of ownership goes back to 578 AD. Like Kongō Gumi, several different brands have withstood the test of time, albeit without then same degree of longevity. The term brand originates from the 1500s and means "to burn" in Ancient Norse and was initially used to mark cattle for ownership. This practice can be consid

Cenkos: Rosslyn Data Technologies Plc -- Capital raise – accelerating growth strategy

Rosslyn Data Technologies, the procurement analytics solutions specialist, has announced a conditional placing to raise £3.3m (gross) which includes £0.6m of credit linked notes. The funding will be used to accelerate its growth strategy and expand its platform innovation, whilst also providing general working capital. The procurement analytics market is anticipated to grow rapidly, fuelled by pandemic related tailwinds, corporate governance requirements and the increasing awareness of cloud-bas

Fonix Mobile - Robust progress in FY23, EFCF and DPS +6% and +3% ahead

In today’s FY23 results, Fonix has announced gross profit and adjusted EBITDA in line with the +4-5% upgrades at the trading update in July, underlying EFCF +6% ahead of our previous forecast, FY23 DPS +3% ahead, and FY24 trading in line with expectations. FY23 TPV of £268.1m reflects robust double-digit yoy growth from commercial customers, and gross profit as a % of TPV has increased to 5.6% from 5.1% in FY22. New customer wins include Channel 4, Bauer Ireland, RTÉ and Wireless Radio Ireland,

Allenby Capital - Trakm8 Holdings (TRAK.L) - Update

The AGM trading update from Trakm8 (TRAK.L), the global telematics and data insight provider, indicates that whilst there has been growth in Fleet and Optimisation, Insurance is below last year - in line with the Annual Report’s outlook statement. As a result, H1 revenue is likely to be slightly below H1 FY23. The issues around capacity constraints in the insurance markets, first identified April’s update, have persisted and this market has also been hit by the large increases in insurance premi

Morning Note – 6 September 2023

Morning Note – 12 September 2023

Hybridan Small Cap Feast - 12 Sep 23

12th September 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment ob