Hardware-related headwinds persist

Aferian on Friday provided an update on current trading, reaffirming the previous commentary around the FY22 outcome and describing strong early momentum in FY23 for the 24i (software) business. However, customer destocking in the Amino (devices) business has been more prolonged than previously expected and previously signalled. Management now expects FY23 revenue and adjusted EBITDA to be ‘substantially below its original expectations’. We withdraw our FY23 estimates in advance of further detail at the time of the FY22 results, which appear likely to be delayed as the group works with its banks to ensure compliance with future covenant tests. We note that the group ended FY22 with net cash of $4m, that cost savings of some $5m have been implemented, and that management still expects a ‘positive material adjusted EBITDA’ for FY23.

Hardware-related headwinds persist

Beeks Financial Cloud Group, the cloud computing, connectivity and analytics provider for financial markets, has delivered impressive H1 23 results, in our view. Revenue growth (+35% YoY) and margin expansion (underlying EBITDA +48% YoY) were highlights of the release, with financial performance benefitting from recent investment in the platform and product set. The group made strong operational progress during the half, and commentary on the outlook is positive. Overall, we believe the announcement will maintain confidence in the Beeks growth story.

Operational progress continues in H1 23

Instem has delivered a positive trading update for the year to 31 December 2022, reporting c.28% revenue growth and a £13.7m closing (gross) cash position. Profitability also saw a material improvement, with FY22 adjusted PBT expected to be in line with our £7.6m forecast (+53% YoY). The order book remains ‘strong’ and management commentary on the outlook is positive. We make no changes to estimates and believe the update will maintain confidence in the Instem growth story.

Impressive growth in FY22

Instem has announced a major contract extension with an existing customer for its Provantis study management software. The contract extension is worth $1.4m, of which some $1.2m is perpetual license fees (and historical usage charges) that will be recognised immediately. We make no changes to estimates, but clearly this revenue (which will carry a very high gross margin) provides material additional comfort around, and reduces risk within, our FY22E forecasts. The win emphasises the strong market position that Provantis commands; Instem’s core and long-standing software continues to deliver, and we have high hopes for the group in FY23 and beyond.

Major license fee underpins full-year result

Aferian has released a positive update on trading for the year ending November 2022. The group finished the year in line with the Board’s recently-lowered expectations, with FY22 revenue now expected to be approximately $91m, with record levels of ARR and a stronger-than-expected cash balance. Management reiterated its expectation of reporting adjusted EBIT in the $7.8m-$8.8m guidance range. We leave estimates unchanged ahead of the full results announcement due in February, and continue to believe the group remains well placed to capture growth from the ongoing structural shifts in global TV consumption.

A strong end to FY22

Aferian has this morning given a trading update for the year to 30 November 2022. Revenue and profit will both be impacted by a shortfall within the devices business as customers reduce inventory levels, ironically due to an easing of concerns over supply chain logistics. We reduce our estimates for both FY22E and FY23E following the announcement. The group has also announced that it has been in discussions around a ‘significant acquisition opportunity’, which has been aborted.

Customer de-stocking hits device shipments

Beeks Financial Cloud Group, the cloud computing, connectivity and analytics provider for financial markets, has delivered impressive FY22 results. Revenue (+57% YoY) and profit (underlying EBITDA +52% YoY) both grew strongly, which we view as a highly creditable performance given the material investment currently being made in the platform and new product development. The group made strong operational progress during the year and commentary on the outlook is positive. We leave underlying FY23E revenue and earnings estimates unchanged following the announcement and introduce FY24E forecasts.

Impressive FY22 results

Instem has once again delivered a strong set of interim results, in our view, with the outcome consistent with the August 2022 trading update. The growth story remains the key highlight, with all four divisions making a positive contribution. Earnings quality continues to improve, and the group’s financial position remains robust. Commentary on the outlook is positive, with price rises and stronger growth in high-margin software business expected to benefit second-half financial performance. We maintain FY22E-FY24E earnings estimates following the release.

Another positive period for Instem

Beeks has this morning published a short trading update for FY22 and, probably just as importantly, revealed the name of its first customer for the Exchange Cloud platform – ICE Global Network, a leading global exchange business and part of the group that owns the NYSE. We leave forecasts unchanged following the positive announcement but are delighted to see both the financial performance and the unveiling of the exchange customer.

Breaking the ICE

Instem has signed its largest ever single contract, a five-year $12m deal with a leading global contract research organisation (CRO). The group is deploying its new Aspire clinical trial acceleration solution to over 2,000 users worldwide. In our view, the contract win validates the group’s growth strategy and further demonstrates Instem’s inherent M&A ability. We leave forecasts unchanged following this positive news, anticipating that the deal will underpin our future projections.

Largest ever contract validates growth strategy

Aferian’s H1 22 results show a strong performance from the software business, plus signs that headwinds impacting the devices business may be abating. This performance was accompanied by record exit Annual Recurring Revenue (ARR), driving improved revenue quality and visibility. Both business units continue to report strong operational progress, and management commentary on the outlook for the second half is positive. We revise estimates following the announcement and continue to believe that the group is well-positioned to capture growth opportunities from the ongoing structural shifts towards IPTV and streaming video consumption.

Strong software performance, abating headwinds in devices

Instem’s update for the six months to 30 June 2022 (H1 22) confirms that the business continues to trade strongly, with revenue up c.39% YoY. The group continues to experience wage inflation, as was previously signalled in the FY21 results. However, this will, at least partially, be offset by price increases implemented in April 2022. The group’s financial position remains robust, and commentary on the outlook for H2 22E is positive. We make no changes to earnings estimates following the announcement.