Pinewood Technologies Reports Strong FY24 Results with 15.1% Revenue Growth
Why we think this is good
The company has demonstrated robust performance with 15.1% revenue growth and a high recurring revenue rate of 86.5%. The increase in total users, major customer wins, and low churn rate of 1.1% indicate strong market position and customer satisfaction. While profit growth hasn't kept pace with revenue growth, the company maintains a healthy underlying EBITDA margin of 44.9%. The outlook is positive, with guidance for FY27 underlying EBITDA increased. However, the high valuation and slight H2 revenue dip compared to H1 warrant some caution. Overall, the strong fundamentals and positive outlook outweigh the potential risks.
Key Points
- Revenue up 15.1% to £31.2m
- Recurring revenue at 86.5% of total revenue
- Total users increased to 35,200, up 6.3%
- Major contracts signed with Marshall Motor Group and Global Auto Holdings
- Low churn rate of 1.1% in FY24
- Underlying EBITDA up 6.9% to £14.0m
- FY27 underlying EBITDA guidance increased to 'mid to high £30 millions'
- Acquisition of Seez to enhance AI capabilities
- High valuation with price-to-sales ratio of about 10.4
- Potential execution risks with new customer implementations and geographic expansion
Summary
Pinewood Technologies Group PLC reported strong FY24 results with revenue growth of 15.1% to £31.2m and recurring revenue of 86.5%. The company saw an increase in total users to 35,200, up 6.3% from the previous year. Notable achievements include signing major contracts with Marshall Motor Group and Global Auto Holdings, demonstrating market expansion. The company maintained a low churn rate of 1.1%, indicating high customer satisfaction. While underlying profit before tax remained flat at £8.5m, underlying EBITDA increased by 6.9% to £14.0m. The outlook remains positive, with the company increasing its FY27 underlying EBITDA guidance to 'mid to high £30 millions'. The acquisition of Seez is expected to enhance AI capabilities and be significantly earnings accretive by FY26. Despite the strong performance, investors should note the high valuation with a price-to-sales ratio of about 10.4 and potential execution risks associated with new customer implementations and geographic expansion.