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Published on: May 31, 2023

FY22 progress despite global tech sell-off

Tern has delivered further progress in FY22 against a challenging backdrop. KPIs demonstrate that repeat revenues are growing and headcount is increasing, supporting our view that the portfolio is gaining commercial traction and turning configuration work into recurring revenue. However, valuations across the global technology landscape have been challenged for several quarters due to interest rates, risk appetite and long-term value expectations. Therefore, despite the significant improvement in metrics across its portfolio companies, Tern has reported an £8.4m reduction in fair value, reversing the uplifts in value achieved in H1 22. While the reversal of the recent uplift in NAV is disappointing, we see significant value creation from Tern’s hybrid VC model and organic growth potential. Tern’s funding-to-exit model requires patience: we see recurring revenue growth attracting additional strategic interest and look forward to positive newsflow.

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