vlg Finncap
SOPHEON (SPE): CORP Positive end to 2021 leads to promising start for 2022 too After the positive December trading update accompanying the acquisition of ROI Blueprints, today’s update gives detail of 2021 outperformance in both revenue & EBITDA, with net cash at year end of $24.1m vs $21.9m, even after the acquisition. Revenue of over $34m (>+3% vs $33mE) delivered 14% growth vs FY20, and returned EBITDA over $6.0m, +35% vs. expectations and +2% vs FY20, at a margin of 18% instead of 14%E. In addition to revenue outperformance, deployment of planned increased costs was deferred by the well-known challenges to IT recruitment experienced across the industry, with positive consequences for profitability and cash (+10% vs $21.9mE) – nevertheless, the group continues to invest in sales, marketing, product & expanded resources, an increased pace of Accolade releases, and expanded market initiatives to build the pipeline. Importantly, the group’s KPIs in ARR and retention continued to demonstrate improving earnings quality, with ARR +14% at $20.5m (vs $18.0m in FY20 and $19.0m at 1H21), and 95% gross retention (vs 91.5% FY20). Combined with contracted consulting revenue due for recognition within the year, the group has once again set a record for full-year visibility by this stage of the year at a total of $23.4m (vs $22.0m at FY21). We leave forecasts unchanged, while nudging up our target price to 1250p (1200p), leaving plenty of capacity for outperformance as the world opens up during the year.