Netcall (LON:NET), a leading provider of intelligent automation and customer engagement software, will announce its 2024 Final Results next month.
They should be good and point to even better profitability in the current year.
The Business
The UK-based enterprise software company helps organisations achieve digital transformation.
The group’s Liberty software platform, with its Intelligent Automation and Customer Engagement solutions, helps organisations to digitally transform their businesses faster and more efficiently, while empowering them to create a leaner, more customer-centric business.
Its AI-driven tools enable users to transform at speed, it can automate processes and streamline workflows while making the managing of tasks and customer engagement easier, quicker and more productive.
Netcall’s customers span the enterprise, healthcare and government sectors, including two-thirds of the NHS Acute Health Trusts and leading corporates including the BBC, Legal and General, NCP, Lloyds Banking Group, Nationwide, Aon and Santander.
Latest Trading Update
On 18th July the company issued a Trading Update for the year to end-June, it confirmed strong trading, with results expected to be in-line with market expectations.
Revenue is anticipated to increase by 9% to £39.1m (£36.0m), including revenue from Cloud customers up 19%, with group adjusted EBITDA growth of 5% to £8.4m (£8.0m).
The company reported that its Cloud momentum remained strong, including robust demand from new customers, with Cloud annual contract value growing 23% to £22.3m, contributing to total ACV growth of 15% to £32.2m.
Ahead of expectations, the group generated strong cash flow in the last trading year, resulting in an improved year-end cash position of £34.0m (£24.8m).
CEO James Ormondroyd stated that:
“This year has been another period of strong trading for the Group.
The increasing demand for our Cloud offerings has resulted in double-digit growth in both underlying revenues and ACV.
Our growing base of subscription revenues and strong cash generation enable us to continue driving growth through innovation, with several new developments in our product roadmap.
The successful integration of the recent acquisition of Skore Labs has expanded our market opportunity and provided increased cross-sell potential, which are pivotal to our growth strategy.
Looking ahead, favourable market drivers, a growing customer base, and our strong balance sheet underpins the Board’s confidence in the Group’s continued success.”
Analyst Views
Netcall believes that consensus market expectations for the year ended 30 June 2024 are for revenue of £39.1m, with adjusted EBITDA of £8.1m and net cash of £28.9m.
Analysts James Musker and Harold Evans at Singer Capital Markets rate the group’s shares as a Buy, with a 140p Price Objective.
For the year to end-June they look for revenues to have risen to £39.1m (£36.0m) with adjusted pre-tax profits of £7.0m (£6.6m), lifting earnings up to 3.2p (3.1p) and the dividend to 0.84p (0.83p) per share.
For the year now underway, they see £46.3m sales, £7.5m profits, 3.5p earnings and a 0.90p dividend.
At Canaccord Genuity Capital Markets its analysts also rate the group’s shares as a Buy, with a 130p Price Objective.
The broker also estimates the year to end-June 2024 could have seen £39.1m revenues, with £7.2m profits, 3.3p earnings and a 0.9p dividend per share.
For the 2025 year, they have pencilled in £46.5m in revenues, £7.7m profits, 3.6p earnings and a 0.9p dividend.
In My View
Last year the group declared its Finals in early October, with its AGM held in late December, so we have a good newsflow over the next few months.
Despite very high ratings for the group’s shares, some 25 times current year earnings, I believe that in the medium-term they will look cheap at the latest 92p market price.
At that level, the company is capitalised at only £152m, of which some £31m is in cash – which helps it to expand by way of strategic acquisitions using both cash and shares.