Altitude Group (ALT) , a provider of technology and SaaS services to the promotional products, print, and clothing industries, issued a pre-close trading update for FY24 ended March 31, 2024 and FY25 thus far.
Altitude said it expects to "at least meet consensus expectations" for FY24 after another strong year of trading and entrance into the Collegiate market. ALT reported accelerated growth over the past 2 years, with both revenue and adjusted EBITDA growing by at least 100% over the period. Cash at year-end was £1.3m from £1.2m a year ago, and US credit facilities increased to £3.3m from £1.7m, and were undrawn at year-end.
Momentum was also strong into the first month of FY25, with new Gear Shop contracts worth US$12m in estimated revenue over their 5-8 year terms, and a strong graduation season reported by existing Gear Shops. ALT expects more contracts imminently from its pipeline that typically tapers in June. Furthermore, the group's affiliate programme saw 23% growth in recruitment for its Merchanting division in March, supporting a strong start to FY25.
Based on the strong momentum into FY25, Altitude expressed confidence in meeting market consensus for FY25.
View from Vox
Another successful year for Altitude, showcasing continued scale, growth, and momentum, augmented by its entrance into the large Collegiate market. Revenues and EBITDA more than doubled over the past 2 years without incurring debt, and a strong pipeline of new Gear Shop opportunities provides good visibility and confidence in meeting FY25 consensus. Momentum has been strong across all divisions for over 3 years, and is continuing into FY25. Markets reacted well to the positive update, driving ALT shares 16% higher on Wednesday.
Altitude reported strong growth across all verticals, with Merchanting continuing to experience rapid scale, and the Services division continuing steady YOY growth, outperforming the wider promotional product industry. The group's diversified position places it well to outperform the promotional market, which remains fragmented with ample opportunities for growth among the more efficient players, such as ALT. The group has demonstrated significant potential to disrupt the incumbent campus store operators in the US.
Broker Zeus maintained its forecast of 38.9% revenue growth in FY24, underpinned by strong performance in the Merchanting division thanks to the US Gear Shops and increased numbers of sales affiliates. This translates to adjusted PBT growth of 29.45% to £1.2m on the FY24 estimate. The broker forecast a similar 36.6% revenue increase for FY25. ALT's comfortable cash position of £1.3m, plus undrawn facilities of £3.3m, can fund future expansion. Zeus sees significant upside with a 57.8p target valuation, 83% higher than ALT's last closing price.
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