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Microlise revenue jumps after listing

The revenue performance was robust in these maiden post-IPO results, although the shares are still trading below the listing price
Microlise revenue jumps after listing
  • Revenue soars across categories
  • Exceptional IPO charges contribute to loss

Microlise (SAAS) announced solid growth across its revenue streams in its first full-year results as a listed company. But the business, which floated on Aim in July 2021 and provides transport management software to fleet operators, is feeling the impact of the microchip shortages that are causing havoc for the transport and logistics sector, and consequently recorded a loss as exceptional costs took a chunk out of the income statement.  

Recurring revenue was up by 9 per cent to £37mn, aided by the renewal of major partnerships – biggest customer JCB gave the green light to a new five-year contract – and fresh contract wins. The most significant contracts have inflation clauses, providing some crucial relief in the current outlook.

The company’s non-recurring revenue was up by almost a third, to £24mn, as hardware was installed both for new customers and for those who had shuttered their factory doors in the comparative period due to the pandemic.

Without the exceptional costs in the year, being £3.4mn of charges relating to the IPO, these revenue spikes would’ve helped the company into the black. The float raised £17.6mn of net proceeds – management’s hope is that the company can now push for greater growth and prove that listing was the right move. While these results pushed the shares up by over 12 per cent, they are still below their listing price.  

Post-period trading for the 2022 financial year is thus far in line with expectations. And a robust order book and strong pipeline visibility are reasons to cheer.

Saying that, there is no escaping from the headwinds around issues such as chip shortages, driver shortages, and soaring fuel costs. Management is confident that the outlook will improve as this year progresses, at least on the chip side of things.  

Nadeem Raza, chief executive, said that “while we have been dealing with chip shortages for the past 18 months, the industry opinion is that from Q3 2022, the situation will improve and return to pre-pandemic levels by Q3 2023, which will enable us to meet our customer demand".

Analysts from house broker Singer Capital Markets said that “investment into the mid market, where Microlise’s market share leaves opportunity for growth” is being boosted. Singer has the shares trading on 32 times forward earnings for the 2023 financial year, and forecasts that revenue will continue to climb steadily over the next few years. With solid free cash flow generation, of £6.4mn this time around, the company is certainly one to watch. Hold.

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MICROLISE (SAAS)   
ORD PRICE:136pMARKET VALUE:£158mn
TOUCH:135-145p12-MONTH HIGH:254pLOW: 121p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:62p*NET CASH:£11.5mn
Year to 30 JuneTurnover (£mn)Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p)
2018 ^48.84.1215.9nil
2019 ^45.43.1614.0nil
2020 ^50.00.711.40nil
18 months to 31 DecTurnover (£mn)Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p)
202188.2-0.01-2.09nil
% change+76---
Ex-div:-   
Payment:-   
*Includes intangible assets of £76mn, or 66p a share  ^pre-IPO results