Challenger consultancy Elixirr reports record revenue

‘Challenger” management consultancy Elixirr (ELIX) has reported double-digit sales and profit growth after a strong six months of trading.

The group, which joined Aim in 2020, grew revenue by 23 per cent to £41.1mn in the first half of the year, which translated into a 19 per cent rise in adjusted Ebitda to £12.3mn. Underlying organic revenue growth was 14 per cent, made up of fees from existing clients and a sizeable inflow of new customers.

Elixirr is still tiny compared with consulting giants such as McKinsey, Boston Consulting Group and Bain. However, trading is remarkably robust. Revenue per partner – a key metric for the company, which relies on a small group of expert consultants – rose by 24 per cent in the period, and these lucrative fee earners are growing in number. Client retention is also strong, and the number of accounts worth over £1mn and £2mn is rising. 

The big challenge for Elixirr is how to expand. The group recently bought iOLAP, a US consultancy specialising in data and analytics, and has just announced the acquisition of Responsum, an American artificial intelligence firm. These purchases make strategic sense, and should bolster Elixirr’s presence in the world’s biggest consultancy market.

At this early stage of growth, there is always a worry that management could make an expensive mistake. Ultimately, however, we like Elixirr’s strong momentum, capital-light business model and blue-chip client base. Plus, a forward price/earnings ratio of 16 doesn’t seem to reflect its growth potential. Buy.

Last IC View: Buy, 550p, 7 Sep 2023