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Globo goes for growth

Globo cashed in on strong enterprise demand and provided more clarity on its financials
October 2, 2015

Fears that political turmoil in Greece would weigh on Globo (GBO) proved unfounded as insatiable demand for enterprise mobility solutions fuelled a 41 per cent rise in first-half operating profits to €23.2m (£17.2m). The software group also bowed to market pressure by directly expensing research costs, and moved almost all of its cash reserves to safer banks. Investors sent its shares up 9 per cent on results day.

IC TIP: Buy at 38.3p

Robust renewals and new customers such as Vodafone and Coca-Cola drove sales of Globo's mobile solutions - GO!Enterprise, GO!Social and CitronGO! - up 65 per cent to €66.2m. The group also made inroads into the enormous US market, where sales leapt more than seven-fold to north of €15m. Improved cash generation fuelled a 71 per cent rise in free cash flow to €7.2m.

Management plans to secure further growth by launching add-ons to its platforms that tap into explosive markets such as the internet of things, wearable devices and machine-to-machine (M2M) communications. The company has also agreed to acquire a European specialist in 'bring your own device' and mobile-security software for €14m, and continues to sound out larger opportunities.

Broker Canaccord Genuity expects full-year pre-tax profits of €47.6m, giving EPS of 11¢ (FY 2014: €35.7m and 9¢).

GLOBO (GBO)
ORD PRICE:38.3pMARKET VALUE:£143m
TOUCH:38.0-38.5p12-MONTH HIGH:64pLOW: 25p
DIVIDEND YIELD:nilPE RATIO:5
NET ASSET VALUE:53¢*NET CASH:€47.4m

Half-year to 30 JunTurnover (€m)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (p)
201446.516.14.3nil
201572.422.04.9nil
% change+56+37+14-

*Includes intangible assets of €56.9m, or 15¢ a share

£1=€1.35