Social housing solution provider Castleton Technology (LON:CTP) released preliminary full year results on Tuesday that revealed a 13% increase in revenue and 24% jump in adjusted EBITDA to £6.3 million.
Revenue growth was driven by a combination of both organic growth and a number of acquisitions. Organic revenue growth represented 7.3% as Castleton successfully cross-sold their suite of products to their some 591 housing association clients.
Castleton reported an increase to 50% from 40% in the number of the clients taking more than one product.
These agreements are typically providing multi-year revenue sources from ongoing service provision.
An example of this is a 4-year contract with Dumfries and Galloway Housing Partnership, worth £1.2m.
Key to revenue growth going forward will be the ability of Castleton to guide existing customers towards the sweet spot of customers taking eight or more of their products. Currently just 7% of clients are taking eight or more products providing significant cross-selling opportunities in 2020FY.
Acquisitions
Castleton are demonstrating a focus on delivering enhanced technology solutions with the acquisition of an Indian service provider who previously supplied the group with additional development capacity.
The Indian acquisition was one of three notable acquisitions in the period that included technologies for delivering financial modelling and communication tools.
Dean Dickinson, CEO of Castleton, said:
“It has been another year of significant progress for Castleton, delivering strong organic growth at both revenue and EBITDA level underpinned by healthy cash generation. This has not only resulted in the continued reduction in net debt, but it has also enabled operational growth through the acquisition of Deeplake, the perpetual licence for our modelling solution, the launch of new digital solutions and expanded development capabilities with Castleton India.”
“A number of milestone projects are now fully-live and operational with three early adopter sites for integrated solutions. These combined customer references have been a major contributor to us winning the new integrated solutions contract in January with Connect. The early adopters and this new contract demonstrate the strength of our proposition, our ability to cross-sell and the trust our customers have in our capabilities to deliver on their vision for complete digital transformation.”
finnCap issued a note following this morning’s results which forecast revenue of £28.5m for 2020, rising to £30.5m in 2021. finnCap have a 140p price target on Castleton.