BEEKS FINANCIAL CLOUD GROUP
SOFTWARE AND COMPUTER SERVICES
6 September 2023
BKS.L
97p
Market Cap: £63.6m
SHARE PRICE (p)
190 |
140 |
90 |
40 |
12m high/low | 166p/97p |
Source: LSE Data (priced as at prior close)
KEY DATA
Net (debt)/cash | £4.4m (at 30/06/23) |
Enterprise value | £59.2m |
Index/market | AIM |
Next news | FY23 results, October |
Shares in issue (m) | 65.6 |
Chairman | Mark Cubitt |
CEO | Gordon McArthur |
CFO | Fraser McDonald |
COMPANY DESCRIPTION
Beeks provides low-latencyInfrastructure-as-a-Service (IaaS) for automated trading of financial products.
www.beeksgroup.com
PERLPARA
BEEKS FINANCIAL CLOUD GROUP IS A RESEARCH CLIENT OF PROGRESSIVE
ANALYSTS
Blaine Tatum
+44 (0) 20 7781 5309 btatum@progressive-research.com
Gareth Evans
+44 (0) 20 7781 5301 gevans@progressive-research.com
www.progressive-research.com
Growth in FY23, strong start to FY24
Beeks' FY23 trading update (12 months to 30 June) confirms that the group delivered impressive growth in revenue and profits during the year (revenue +20% YoY, underlying EBITDA +35%). Although this outcome is ahead of our forecast at the EBITDA level, we understand revenue progression was impacted by the shifting of certain Exchange Cloud revenues into FY24. The release signals a 'strong' start to FY24, with record ACMRR of over £25m and good visibility on FY24 revenue. Cash performance during FY23 was solid, with the group delivering positive free cash flow in H2 23 and closing the year with a £4.4m net cash balance.
- FY23: Double-digit growth across key measures. The update signals FY23 YoY growth in revenue, underlying EBITDA and underlying PBT of 20%, 35% and 10%, respectively. We believe that delivering double-digitgrowth across all three measures is a solid performance, and note that the implied underlying EBITDA of c.£8.5m is ahead of our £8.4m forecast (suggesting impressive margin expansion). However, FY23 revenue growth of +20% implies sales of £22m, behind our £24.5m forecast. We understand FY23 revenue progression was stifled by the shifting of certain revenues from Exchange Cloud, which typically have long sales cycles, into FY24.
- A 'strong' start to FY24, with good visibility. Beeks closed FY23 with (a then record) Annualised Committed Monthly Recurring Revenue (ACMRR) of £23.8m, which has now risen to over £25m as at 31 August 23. The release signals that the group has made a 'strong' start to FY24, and has a significant and growing pipeline of opportunities for each of its offerings. We note that £25m ACMRR represents over 85% of our FY24E revenue forecast. With initial revenues from the JSE deployment expected in the coming weeks, ACMRR, and by extension revenue visibility, should further improve.
- Solid financial position. Beeks delivered positive free cash flow in H2 23 and closed the period with an (unaudited) net cash balance of £4.41m (H1 23: £3.35m, FY22: £7.86m). With a net cash balance equating to roughly 7% of the current market capitalisation, we believe the group's financial position remains solid.
- Forecasts unchanged. We leave our estimates unaltered, as below, and will reflect FY23 results once fully detailed by the company in October.
FYE JUN (£M) | 2020 | 2021 | 2022 | 2023E | 2024E |
Revenue | 9.4 | 11.6 | 18.3 | 24.5 | 29.1 |
Adj EBITDA | 3.3 | 4.1 | 6.3 | 8.4 | 10.8 |
Fully Adj PBT | 1.4 | 1.6 | 2.1 | 3.2 | 3.7 |
Fully Adj EPS (p) | 2.5 | 3.0 | 4.2 | 4.2 | 4.9 |
EV/Sales (x) | 6.3 | 5.1 | 3.2 | 2.4 | 2.0 |
EV/EBITDA (x) | 17.8 | 14.3 | 9.4 | 7.1 | 5.5 |
PER (x) | 39.6 | 32.4 | 23.1 | 23.0 | 19.8 |
Source: Company Information and Progressive Equity Research estimates.
This publication should not be seen as an inducement under MiFID II regulations.
Please refer to important disclosures at the end of the document.
6 September 2023
Financial Summary: Beeks Financial Cloud Group
Year end: June (£m unless shown) | |||||
PROFIT & LOSS | 2020 | 2021 | 2022 | 2023E | 2024E |
Revenue | 9.36 | 11.62 | 18.29 | 24.47 | 29.12 |
Adj EBITDA | 3.33 | 4.14 | 6.31 | 8.36 | 10.85 |
Adj EBIT | 1.18 | 1.67 | 2.36 | 3.59 | 4.29 |
Reported PBT | 0.68 | 1.26 | 0.07 | 2.89 | 3.41 |
Fully Adj PBT | 1.43 | 1.61 | 2.06 | 3.23 | 3.75 |
NOPAT | 1.29 | 1.84 | 2.50 | 3.95 | 5.15 |
Reported EPS (p) | 1.13 | 3.07 | 1.43 | 3.99 | 4.75 |
Fully Adj EPS (p) | 2.45 | 2.99 | 4.19 | 4.22 | 4.90 |
Dividend per share (p) | 0.20 | 0.00 | 0.00 | 0.00 | 0.00 |
CASH FLOW & BALANCE SHEET | 2020 | 2021 | 2022 | 2023E | 2024E |
Operating cash flow | 3.26 | 3.26 | 4.70 | 6.99 | 8.00 |
Free Cash flow | (0.67) | (3.80) | (7.68) | (0.81) | (0.76) |
FCF per share (p) | (1.02) | (5.80) | (11.70) | (1.24) | (1.16) |
Acquisitions | (0.75) | (1.02) | 0.00 | 0.00 | 0.00 |
Capex | (3.54) | (6.75) | (12.09) | (6.86) | (7.96) |
Shares issued | 0.00 | 5.01 | 14.76 | 0.00 | 0.00 |
Net cash flow | (0.91) | (0.31) | 6.79 | (0.81) | (0.76) |
Overdrafts / borrowings | (2.18) | (1.49) | (2.30) | (2.30) | (2.30) |
Cash & equivalents | 1.43 | 3.37 | 10.16 | 9.35 | 8.59 |
Net (Debt)/Cash | (0.75) | 1.89 | 7.86 | 7.05 | 6.29 |
NAV AND RETURNS | 2020 | 2021 | 2022 | 2023E | 2024E |
Net asset value | 6.72 | 13.77 | 30.77 | 35.08 | 41.83 |
NAV/share (p) | 10.24 | 20.99 | 46.92 | 53.50 | 63.80 |
Net Tangible Asset Value | 6.76 | 10.39 | 16.27 | 17.91 | 19.17 |
NTAV/share (p) | 10.30 | 15.85 | 24.81 | 27.32 | 29.24 |
Average equity | 6.17 | 10.24 | 22.26 | 32.32 | 35.25 |
Post-tax ROE (%) | 23.2% | 15.7% | 9.2% | 10.0% | 10.6% |
METRICS | 2020 | 2021 | 2022 | 2023E | 2024E |
Revenue growth | 24.1% | 57.5% | 33.8% | 19.0% | |
Adj EBITDA growth | 24.3% | 52.4% | 32.5% | 29.8% | |
Adj EBIT growth | 42.1% | 41.1% | 52.3% | 19.6% | |
Adj PBT growth | N/A | 27.9% | 56.8% | 16.1% | |
Adj EPS growth | N/A | 40.2% | 0.6% | 16.1% | |
Dividend growth | N/A | N/A | N/A | N/A | |
Adj EBIT margin | 12.6% | 14.4% | 12.9% | 14.7% | 14.7% |
VALUATION | 2020 | 2021 | 2022 | 2023E | 2024E |
EV/Sales (x) | 6.3 | 5.1 | 3.2 | 2.4 | 2.0 |
EV/EBITDA (x) | 17.8 | 14.3 | 9.4 | 7.1 | 5.5 |
EV/NOPAT (x) | 45.8 | 32.2 | 23.7 | 15.0 | 11.5 |
PER (x) | 39.6 | 32.4 | 23.1 | 23.0 | 19.8 |
Dividend yield | 0.2% | N/A | N/A | N/A | N/A |
FCF yield | (1.1%) | (6.0%) | (12.1%) | (1.3%) | (1.2%) |
Source: Company information and Progressive Equity Research estimates
2
6 September 2023
Disclaimers and Disclosures
Copyright 2023 Progressive Equity Research Limited ("PERL"). All rights reserved. Progressive's research is commissioned by the subject company under contract and is freely available to the public and all institutional investors. Progressive does not offer investors the ability to trade securities. Our publications should not, therefore, be considered an inducement under MiFID II regulations. PERL provides professional equity research services, and the companies researched pay a fee in order for this research to be made available. This report has been commissioned by the subject company and prepared and issued by PERL for publication in the United Kingdom only. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable; however, PERL does not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of PERL at the time of publication, and any estimates are those of PERL and not of the companies concerned unless specifically sourced otherwise. PERL is authorised and regulated by the Financial Conduct Authority (FCA) of the United Kingdom (registration number 697355).
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Beeks Financial Cloud Group plc published this content on 06 September 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 September 2023 17:23:04 UTC.