Given the challenging macro-economic backdrop, superlatives are rarely used these days to describe a company’s results.
However, one exception is Equals EQLS , a leading B2B international e-payments & fintech platform – which this morning reported some of the finest numbers I’ve seen this year.
Here H1'22 adjusted EBITDA more than tripled to £4.9m, on revenues up +86% LFL to £31.1m vs £16.9m LY, reflecting standout performances from Solutions, forex and white label services, augmented by a recovery in travel.
Sequentially the story was even better with Q2’22 sales (see chart) climbing +21% to £17.2m vs Q1’22 (£14.2m) – alongside generating quarterly EBITDA up 72% to £3.1m vs £1.8m Q1 thanks to positive operating leverage.
Importantly too, this momentum has provided a major springboard into Q3, where turnover is already up 55% LFL to £13.3m between 1st July & 5th Sept. In total, delivering YTD sales of £44.7m vs £44.1m for the whole of FY’21.
Not only a marvelous achievement, but also substantially derisking Canaccord’s FY’22 turnover & adjusted EBITDA forecasts of £65.0m & £10.8m respectively.
Elsewhere (dependent on product mix), gross margins appear to be stabilising within the 47%-49% range, or 58% excluding ‘white label’.
Whilst net cash closed June at a healthy £12.8m (7p/share). Offering ample liquidity for a £1.8m CBILS loan to be repaid in Aug’22, on top of funding future internal investments (eg technology, international expansion, compliance, etc), possible bolt-on acquisitions &/or the payment of a maiden dividend.
CEO Ian Strafford-Taylor commenting: “This is an outstanding set of results with record revenue & EBITDA, cementing our extremely successful transition into cash generation and statutory profitability. Trading in Q3’22 has continued to be robust, despite global economic uncertainty & inflationary pressures, with strong growth over the same period last year. [Hence], we look to the future with increased confidence and remain in line with expectations for the full year."
View from Vox
Well as an external investor/analyst, this looks to me like a classic case of ‘run your winners’. Particularly in light of the >65% potential upside vs my 152p/share valuation & Canaccord’s 144p target price. In fact, I suspect we might even both need to upgrade our numbers later in 2022.