The UK has just emerged from a 6-month technical recession. Yet despite this headwind, international B2B payments and fintech platform EQLS (EQLS) today reported YTD'24 revenues up an impressive 30% to £31.9m after posting +37% in FY23 (£95.7m).
Here YTD growth has been delivered across all product lines with special mention to Solutions (+74% to £13.2m) which supports larger corporate clients. Elsewhere, sales per working day jumped 27% to £443k vs LY and 5% higher than Q4'23. Just think what EQLS might achieve when the economic climate improves.
Better still, this top line momentum is generating economies of scale with adjusted FY23 EBITDA margins widening 4.1% to 21.5% - representing a 'drop through' rate of 23.5% - even after major investments in new services, headcount, compliance and geographical expansion.
Interestingly too, gross margins also climbed sequentially to 57% in H2'23 vs 47% H1'22, 49% H2'22 and 52% H1'23, leaving the group with plenty of firepower for potential strategic M&A (where necessary) and future dividends (1.5p/share) with cash balances closing 12th Apr'24 at £21.6m vs £18.7m in Dec'23.
So how does this YTD performance compare to current FY24 consensus?
Well to me, the 30% top line growth appears to be 'at least' in line with analyst FY'24 turnover estimates of £112m (+17%). Indeed, assuming the UK economy continues to recover, then I'd say there’s a decent chance of upgrades as the year progresses.
Nonetheless, most investors' eyes are presently focused on the ongoing Strategic Review, where the next PUSU deadline ends tomorrow at 5pm. My fair value for the stock remains at a conservative 165p/share (Canaccord Genuity 176p) until new guidance is available.
CEO Ian Strafford Taylor, commenting: "The outlook for the business remains strong. In addition, the addressable market is now significantly greater with our expansion into Europe and increased distribution channels. Equals has created a payments platform comprising international and domestic payments, card payments and current account services underpinned by exceptional technology and direct connections to multiple payment network."
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