Microlise Group (SAAS) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 increased 15.4% year-over-year to £39.1 million, driven by strong recurring revenue, successful cross-selling, and contributions from recent acquisitions.

• Recurring revenue rose 21.5% to £26.6 million, now 68% of total revenue, with 10.8% organic growth and ARR run rate up to £54 million.

• Active subscriptions increased to 827,000 with a low churn rate of 0.5%, and 200+ new customers added, mainly in the mid-market segment.

• Major contract renewals and wins in the UK, Australia, New Zealand, and France, including a five-year extension with JCB and new deals with Woolworths, Foodstuffs, and STAF.

• Integration of recent acquisitions (ESS, Vita Software, K-Safe) enhanced the product suite and cross-sell opportunities.

Financial highlights

• Adjusted EBITDA increased 16.8% to £5.2 million, with margin up to 13.4%; gross margin improved to 65.5% from 60.5% year-over-year.

• Hardware revenue declined 10.7% to £8.5 million due to reduced OEM shipments, while software subscription and services revenue grew to £4.1 million.

• Adjusted profit before tax rose 8% to £2.8 million; adjusted EPS up to 2.18p, but reported profit before tax and EPS fell due to exceptional costs.

• Operating expenses increased 26% to £20.1 million, reflecting acquisitions and higher marketing and cybersecurity costs.

• Cash and cash equivalents at half-year were £8.9 million, with access to £40 million in total investment funds and net assets at £74.2 million.

Outlook and guidance

• Confident in meeting full-year 2024 forecasts, supported by a strong order backlog extending into 2025 and improved market conditions.

• Continued focus on international expansion, margin enhancement, and further M&A activity, with new product launches and a new Chief Revenue Officer appointed.

• Ongoing investment in R&D, product integration, cybersecurity, and sustainability initiatives.

• Interim dividend declared for 2024, maintaining a progressive dividend policy.