Although not exactly imbued with social etiquette, my 'hat tipping' skills have certainly improved since buying shares in international and fintech platform Equals Group (EQLS) nearly 4 years ago.
Not because of a lobotomy or change of character. But simply as a consequence of the company's strategic execution and performance.
Indeed, today in an impressive year-end trading update, EQLS posted in-line FY23 revenues, up 37% to £95.5m from £69.7m in FY22, alongside continued strong growth in adjusted EBITDA (est £19.8m vs. £12.1m in FY22) and cashflow. Here cash at the bank closed December at a healthy £18.3m (est net £17m) with a further £2.3m in-transit - having disbursed £7.0m in 2023 relating to acquisitions, earn-outs, and a maiden dividend.
But that’s not all.
2H23 sales tipped £50m (see chart below) - equivalent to an annualised run-rate of more than £100m for the first time ever - another major milestone ticked off. While 2H EBITDA margins (est 19.9%) dipped slightly compared to 1H (21.8%), this was likely a reflection of ongoing investment in the tech platform and overseas expansion (e.g. Belgium acquisition in June).
All in all, boding well too with respect to the ongoing strategic review. Here I believe a fair take-out price (say by Madison Dearborn) would be in the region of 155p-175p/share vs. my fair value of 170p and Canaccord’s 176p.
To me, EQLS is a trophy asset in the UK/European B2B international payments and fintech space - meaning either way shareholders should win - long term via continued business expansion, or sooner in the event of an agreed takeover.
Time to be patient.
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