Demonstrating resilience and growth

Gamma has today delivered strong headline figures for FY25 with revenue and adjusted EBITDA growth of 11% and 13%, driven by Germany and underpinned by resilient organic performance. Germany is showing strong growth and is well positioned to gain from cloud adoption catch-up. Gamma remains a resilient and highly cash-generative business, with the one-off UK gross profit headwinds from PSTN switch-off and ethernet pricing pressure at renewals ending in FY27, and mitigated by the recent restructuring. Management anticipates FY26 in line with market expectations. We leave our FY26 forecasts materially unchanged and introduce FY27 estimates. The market valuation, a prospective PER of 9.3x, appears not to reflect the cash generation, resilience and growth opportunity within Gamma.

Demonstrating resilience and growth

Trade fears rise

We have adjusted the balance of our forecasts for FY25, while retaining the key adjusted EBITDA figure of £140.1m. We have also reassessed the prospects for FY26. The recent UK Budget has done little, if anything, to provide certainty to the UK SME market. The prospective PER of 10x appears too low given that the UK challenges merely hinder rather than impair the long-term technology adoption growth story.

Update on UK post budget prospects

Could the Fed cut by 50bps?

H1 results, released today, show a resilient performance in the UK and the German businesses delivering strong growth. Revenue increased 12% to £316.6m (vs £282.5m in H1 24), mainly due to the Starface and Placetel acquisitions. Organic growth was generated in Germany and the UK, despite the challenging macroeconomic backdrop, and it was into double digits on a proforma basis at Starface and Placetel. Adjusted EBITDA was £70.9m, up 14% on H1 24 and adj. FD EPS grew 13% to 47.9p. Cash generation was again impressive, at £63.7m, reflecting adjusted cash conversion of 90%. The shares trade on a forward PER of 11.6x, significantly below historical levels.

UK resilient and Germany delivering strong growth

Cerillion CEO, Louis Hall and CFO, Andrew Dickson present the business’s Interim results for the six months ended 31 March 2025, followed by a Q&A session.

Louis Hall, CEO
00:16 Introduction
01:14 Company background
01:50 Cerillion’s products
03:33 Business overview
03:58 H1 2025 highlights

Andrew Dickson, CFO
07:25 Performance against KPI’s
10:30 H1 2025 Financial highlights
12:48 Cash generation
14:02 Income statement
14:38 Balance sheet

Louis Hall, CEO
15:09 Summary & outlook

17:10 Q&A

Cerillion has a 25-year track record in providing mission-critical software for billing, charging and customer relationship management (“CRM”), mainly to the telecommunications sector but also to other markets, including utilities and financial services. The Company has c. 80 customer installations across c. 45 countries.

Headquartered in London, Cerillion also has operations in India and Bulgaria as well as a sales presence in the USA, Singapore and Australia.

The business was originally part of Logica plc before its management buyout, led by CEO, Louis Hall, in 1999. The Company joined AIM in March 2016.

Find out more about the company here.

Cerillion (CER) Interim Results Presentation – 28th May 2025

Lower than expected US inflation

The results for the year ended 31 December 2024 are in line with expectations, as reconfirmed in the January update. Revenue of £579.4m is 11%% above FY23 and gross profit of £300.3m is a 12% improvement. On an organic basis, the growth in revenue and gross profits is 5% and 6%, respectively. Gamma finished the year with net cash of £153.7m, up from £134.8m last year. UK operations showed good growth. Europe was mixed, with both Germany and Spain managing to deliver growth. Management expects satisfactory group organic growth and strong overall group growth in FY25. We are excited by Germany and how the recent acquisitions, most importantly STARFACE, translate into longer-term growth engines.

FY24 in-line, FY25 significant year for Germany

The year-end trading statement reconfirms that Gamma’s management expects to report FY24 results in line with market expectations. Gamma has also announced that it has agreed to acquire SF Technologies Holding GmbH (trading as STARFACE) for €196m (c.£165m). We believe the deal puts Gamma among the leading challengers in the German SME cloud communications market. Furthermore, the acquisition extends Gamma’s market reach and provides a product fitted to the market. We regard this as a good deal. But if Gamma can leverage its market position and if Germany’s transition to cloud PBX gains momentum and German market growth accelerates into double figures % pa, it has the potential to be a great deal.

Update and acquisition – good news x2

Pause in dollar rally provides relief

UK house prices rise strongly