Fintel (FNTL ), a provider of fintech and support services to the UK retail financial services sector, has announced audited full-year results for the year ended 31 December 2022 (FY22). It reported core revenue growth of 8% to £56.4m, underpinned by significant growth in its Fintech and Research divisions. SaaS and subscription revenue grew 7% to £36.8m.
Adjusted EBITDA margin was 29.1%, up 50bps from FY21. Statutory EBITDA was £16.7m, compared to £25m in FY21, and statutory EPS was 9.5p/share, compared to 15.7p in FY21. FY21 results benefited from one off exceptional gains of £7.8m.
Fintel reported a much improved net cash position of £12.8m compared to £2.6m in FY21, with a revolving credit facility fully repaid and undrawn since June 2022, driven by strong operating cash conversion of 118%. A new and increased 4-year £80m revolving credit facility was completed in December 2022 on more favourable terms to fund new growth opportunities.
Fintel proposed a final dividend of 2.25p/share, resulting in a full-year dividend of 3.25p/share, an increase of 8% year-on-year.
Strategic highlights
Fintel noted significant growth in conversion to distribution as a service (DaaS) of c.70% compared to its target of 60%. The company identified several growth drivers, including the extension of its core compliance offering in response to FCA Consumer Duty regulation, and continued expansion of Defaqto's research platform to help meet growing regulatory requirements.
The company said it implemented major upgrades to its proprietary financial planning technology. Partner Portal phase two is to launch in 2023, streamlining access to itss platform. Fintel also introduced the Fintel Labs incubator to support innovation across the market.
Fintel expects its M&A pipeline to enhance growth in the medium-term, underpinned by its larger cash position and cashflow conversion.
Joint CEO, Matt Timmins commented: "Fintel continues to deliver on its strategic plan of accelerating growth, digitisation and service expansion. During 2022 we delivered another set of strong financial results, while continuing to invest in our technology and services platform.
We have started 2023 with real momentum, continuing to trade in line with expectations and progress our strategy at pace, forging multi-year strategic partnerships and developing our unique technology and service platform."
View from Vox
Fintel starts FY23 with a strong balance sheet and good momentum. The company delivered strong core revenue growth of 8% to £56.4m in FY22, ahead of its medium-term target. Earnings quality improved across all 3 operating divisions, with 7% revenue growth in the SaaS & Subscription category to £36.8m. Overall FY22 performance was in line with management expectations.
Alongside the improved revenue was solid adjusted EBITDA growth of 6% to £19.4m, in line with management expectations, while adjusted core EBITDA grew 9% to £18.6m. As a result, adjusted EPS increased 16% to 12.2p, and Fintel increased its dividend per share by 8% to 3.25p.
Fintel's net cash position increased 5-fold year-on-year to £12.8m. The company secured a new and increased 4-year £80m revolving credit facility, completed in December 2022, on more favourable terms, to fund new growth opportunities.
We expect Fintel's core revenue growth to continue in FY23 and beyond, in line with its 5-7% medium-term goal, driven by ongoing DaaS adoption across its membership base, increased financial technology penetration, and growing regulatory demands, including FCA Consumer Duty. Fintel's business model is based on strong recurring and repeatable income, giving it good revenue visibility.
Furthermore, Fintel's M&A pipeline should enhance growth in the medium-term, facilitated by its strong net cash position and new RCF. Fintel has already demonstrated an effective M&A strategy - it acquired Defaqto in 2019 for £74.3m (of which ~50% was borrowed), and has since doubled Defaqto's profits and repaid all borrowed cash.
Additionally, Fintel has solid ESG credentials, as discussed in our ESG roundup from last year. Fintel's ESG strategy was shortlisted for "ESG Initiative of the Year" by the 2023 ICA Compliance Awards, with further commitments outlined via launch of the company's "2023 Better Outcomes Plan".
Follow News & Updates from Fintel: