After a terrible start to the year, Kofax (KFX) has managed to repair some of the damage to its profits. Software license revenue returned to growth during the second half and momentum has continued into the new financial year. A small drop in adjusted cash profit to $46.3m (£29.8m) was flagged up in July, so the City's reaction has been muted, but further revenue growth is likely now that management has sorted out its sales team.
Indeed, much of the improvement is attributed to a shake-up on the sales side. Kofax is now less dependent on large, lumpy contracts and software license revenue generated almost double-digit growth in constant currency terms during the second half. Much of that has come from the banking sector, government welfare schemes both here and in the US, and non-governmental health work. A recent deal to capture and extract data from US benefit claims, worth $7.6m (£4.9m), is Kofax's biggest ever software sale - which should help meet forecasts of mid-to-high teen revenue growth this year. Still, the recent acquisition of Kapow (think Batman) will mean some "short-term pain". Accounting rules state that revenue from its sizeable license agreements must be spread over the term of a contract, which means lots of deferred revenue and a "substantial loss" there this year.
Broker Panmure Gordon expects full-year adjusted EPS of 34.5¢ (from 31¢ in 2013).
KOFAX (KFX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 350p | MARKET VALUE: | £314m | |
| TOUCH: | 345-350p | 12-MONTH HIGH: | 360p | LOW: 260p |
| DIVIDEND YIELD: | nil | PE RATIO: | 46 | |
| NET ASSET VALUE | 264¢* | NET CASH: | $93.4m | |
| Year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 298 | 12.0 | 10.0 | nil |
| 2010 | 342 | 16.3 | 9.30 | nil |
| 2011 | 244 | 26.0 | 21.0 | nil |
| 2012 | 262 | 27.4 | 21.0 | nil |
| 2013 | 266 | 18.2 | 12.0 | nil |
| % change | +2 | -34 | -43 | - |
*Includes intangible assets of $189.8m, or 212¢ a share £1=$1.56 | ||||
