In this fascinating interview, CEO Ian Strafford-Taylor of Equals Money takes me through today’s outstanding yearend trading update & upgraded expectations. Including:
What’s been driving the terrific top line growth. Start
Strong momentum with H2 up 22% vs H1. 02:40
New technology coming on stream. 05:30
Demand from new & existing clients. 07:25
Improving operating leverage. 9:40
Overseas growth and Roqqett integration. 12:50
Consumer demand. 15:00
Deploying the rising cash pile. 16:40
Outlook for 2023. 18:15
Future newsflow. 20:00
Analyst view
One trait of best-in-class businesses is that they consistently beat & sometimes even smash expectations. 12 months’ ago Equals – a B2B international payments & fintech platform - entered 2022 with consensus adjusted EBITDA forecasts sitting at £8.4m on £47.1m of turnover.
Four upgrades later, the firm said this morning that it had delivered FY22 sales & EBITDA of £69.7m (+59% YoY) & £12.0m (+79%) respectively. Demonstrating its robust momentum (H2 sales up 22% to £38.3m vs H1), rising revenues per day (+60% YoY) and positive operating leverage (18.7% H2 EBITDA margin vs 15.5%) - see chart.
Sure there was an uptick in client volumes in September, due to the exceptional forex volatility (eg £:$). Yet equally, this simply brought forward demand from Q4 into Q3, and by the end of December, the overall FY’22 effect was negligible.
In fact, the underlying YoY numbers were even better, as 2021 included £1.5m of ‘one-off’ revenues from a material trade (gross profits £0.8m).
So looking ahead, what does this mean for 2023?
Well alongside a healthy balance sheet (est £10m net cash/liquidity), I believe #EQLS will once again deliver another impressive top & bottom line performance. With turnover and adjusted EBITDA climbing 22% and 32% respectively to £85.0m and £15.9m. In turn putting the stock (at 92p) on modest EV/EBITDA & PEG multiples of 10.2x and 0.3x. Particularly when compared to my 160p/share valuation.
CEO Ian Strafford-Taylor commenting: “We have delivered a particularly strong financial performance in 2022 as the Group reaped significant benefits from operational gearing and economies of scale. This has been made possible as a result of prudent and sustained investments into the proposition, specifically technology and connectivity, since 2018.”
“That investment continued throughout 2022, supporting and enabling rapid growth, and will continue through 2023 as we target investment…
Love the content you’re producing Paul. Is it not possible for you to also publish in podcast form? It doesn’t bother me that images won’t be shown but can listen to podcasts all day whereas only 30 mins for videos.
