Last checked at 11 Jan 2024 07:00
11 January 2024
Gresham Technologies plc
FY23 Trading Update and Notice of Results
Growth in strategic subscription business driving recurring revenues and enhanced profitability
Gresham Technologies plc (LSE: "GHT", "Gresham", "Group", "Company"), the leading software and services company that specialises in providing solutions for data integrity and control, banking integration, payments and cash management, is pleased to provide a trading update for the financial year ended 31 December 2023 ("FY23").
The Board is pleased to report a strong close to the year. In December, contracts for initial deployments with two new Control customers were signed including a Tier 1 global investment bank and one of the world's largest sovereign wealth funds. In addition, an agreement has been reached with two recently merged tier one bank customers for the adoption of Control as standard across the combined business operations providing a high level of certainty over existing recurring revenues.
The Group expects to report:
· | Group revenues of £49.0 million up 1%, or 3% on a constant currency basis over FY22 |
· | Clareti revenues of £37.8 million up 6%, or 8% on a constant currency basis over FY22 |
· | Clareti recurring revenues of £29.6 million up 8%, or 10% on a constant currency basis over FY22 |
· | Group Adjusted EBITDA1 and Group cash EBITDA2 at least in line with current market expectations3 with margins improving over the prior year |
· | Forward-looking Clareti Annualised Recurring Revenue ("ARR") as at 31 December 2023 of £29.5 million (up 5% on FY22) or £30.4 million on a constant currency basis (up 8% on FY22) |
· | Cash and cash equivalents at 31 December 2023 of £4.8 million with no debt (FY22: £6.3 million) ahead of market expecations3 |
The Group continues to see growing demand for its strategic Clareti business. Forward-looking Clareti ARR grew from £28.1 million at the end of the prior year to £30.4 million on a constant currency basis, standing at £29.5 million on an actual currency basis as at 31 December 2023. New sales and improving ARR net retention rates generated constant currency net increases to ARR totalling £2.3 million, which was offset by £0.9 million of foreign exchange movements.
In line with plans announced on 17 November 2023, at the end of FY23 the Group exited the vast majority of its legacy Australian IT services sub-contracting business. This further accelerates the Group's transformation to a pure-play SaaS company focussed on higher margin cash-generative Clareti solutions.
The Group finished the year with net cash and cash equivalents of £4.8 million and no debt, ahead of market expecations3. This is after the payment of £3.8 million for the final deferred consideration in relation to the acquisition of Electra, and a one-off working capital movement due to cessation of the legacy IT services sub-contracting business of £1.8 million.
The North American business made a particularly strong contribution during the year with Clareti growth from new customers and upsell and cross-sell into the existing installed base. The European business was slower than expected during the first half of the year with momentum building in the second half driving a much-improved pipeline into 2024.
The Board is pleased the Company was able to navigate the challenging global macroeconomic conditions affecting the financial services sector, and FX headwinds, to deliver Group revenue and earnings in line with, and cash ahead of, market expectations. The business starts the year with over £38 million of Group revenues already under contract and a strong pipeline of opportunities. The Board is confident in the Company's ability to deliver planned growth which, supported by cost reduction initiatives during FY24, will further accelerate the business towards its objective of best-in-class EBITDA margins and cash generation in FY25, and beyond.
Notice of Results
The Group expects that its audited results for FY23 will be announced on Tuesday, 16 April 2024.
Ian Manocha, CEO, commented:
"We are pleased to report another year of growth for the Clareti business with the committed margin improvements coming through to deliver enhanced cash profitability in line with plans. We also improved upon all gross and net revenue retention measures within our installed base and signed eight new logo customers evidencing the value of our differentiated technology.
There is good momentum coming into the year with a strong pipeline of opportunities at varying stages of negotiation. This, alongside other growth and cost management initiatives, provides us with a high degree of confidence in delivering further profitable growth in the coming years."
1 Earnings Before Interest, Taxation, Depreciation and Amortisation adjusted to add back share-based payment charges and exceptional items and including continuing operations only.
2 Group Adjusted EBITDA less capitalised development spend and any IFRS 16 lease related cash payments.
3 The Company believes that current market expectations for the year ending 31 December 2023 are Group revenues of £50.2m, Group adjusted EBITDA of £11.0m and Group cash EBITDA of £4.6m.
Enquiries
Gresham Technologies plc | +44 (0) 207 653 0200 |
Ian Manocha / Tom Mullan | |
| |
Singer Capital Markets (Financial Adviser and Broker) | +44 (0) 207 496 3000 |
Shaun Dobson / Tom Salvesen / Jen Boorer | |
Alma Strategic Communications | +44 (0) 203 405 0205 |
Josh Royston / Hilary Buchanan / Matthew Young |
Inside information
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
Note to editors
Gresham Technologies plc is a leading software and services company that specialises in providing real-time solutions for data integrity and control, banking integration, payments and cash management. Listed on the main market of the London Stock Exchange (GHT.L) and headquartered in the City of London, its customers include some of the world's largest financial institutions and corporates, all of whom are served locally from offices located in the UK, Europe, North America and Asia Pacific.
Gresham's award-winning Clareti software platform is a highly flexible and scalable platform, available on-site or in the cloud, designed to address today's most challenging financial control, risk management, data governance and regulatory compliance problems. Learn more at www.greshamtech.com.