REG - Microlise Group PLC - HY2024 Trading Update

MicroliseAnnouncement

30/07/2024 07:00

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RNS Number : 2898Y  Microlise Group PLC  30 July 2024

30 July 2024

 

Microlise Group plc

("Microlise", "the Group" or "the Company")

 

HY2024 Trading Update

Strong revenue and profit growth

 

Microlise Group plc (AIM: SAAS), a leading provider of transport management
software to fleet operators, is pleased to provide a half year update on
trading for the six months ended 30 June 2024 ("the Period"). The Group
expects to publish its interim results in late September 2024.

 

Financial Highlights (Un-Audited)

 

·    ARR(1) of £54.0m, growth of 20.6%, of which 11% is organic

·    Group revenue of £39.1m, growth of 15.4%

·    Recurring revenue growth of 21.5% of which 11% is organic

·    Adjusted EBITDA(2) of £5.2m, representing margins of 13.4%

·    Cash conversion(3) of 72% and net cash of £8.9m

 

 

Trading Update

Microlise has delivered a strong trading performance over the past six months
and secured a number of new direct customers, including GSF in the UK and STAF
in France.

The results for first half of the year, include a full six-month contribution
from the Vita acquisition, completed in March 2023, compared to three months
in the previous half year and a five-and-a-half-month contribution from the
acquisition of ESS, completed on 19 January 2024.

Revenue grew by 15.4% to £39.1m (H1 2023: £33.9m), driven by strong growth
in recurring revenues, which have grown 21.5% (11% organic) to £26.6m (H1
2023: £21.9m) following increased delivery into direct customers towards the
end of the prior year as new vehicle availability improved. ARR increased
20.6% (11% organic) to £54.0m (H1 2023: £44.8m).

Non-recurring revenues increased by 4.4% (1.9% organic) to £12.6m (H1 2023:
£12.0m) with OEM hardware sales expected to have a greater H2 weighting in
the year, with orderbooks for H2 showing growth expected over the full
financial year. In addition, localised vehicle availability constraints in
Australia temporarily slowed hardware and installation revenues on certain
project deliveries.  These are expected to be resolved in H2.

Adjusted EBITDA  grew by 17% to £5.2m (H1 2023: £4.5m), with margins
increasing to 13.4% (H1 2023: 13.2%), driven by strong recurring revenue
growth. In the period the Group has commenced several LEAN initiatives that
will impact H2 and FY25.

The Group's net cash position at 30 June 2024 was £8.9 million, after the
initial £7.65m cash payment relating to the acquisition of Enterprise
Software Systems and the Group's maiden ordinary dividend of £2.0m that was
paid on 28 June 2024. The cash conversion rate was 72% (H1 2023: 80%),
impacted by increased inventory levels due to the delayed rollout of certain
projects in Australia, and will normalise once these projects are fully
deployed.

Customers

During the period, the Group added 202 new customers (H1 2023: 250), securing
new business across all its target geographies and with significant wins with
LGV fleet operators. Microlise strengthened its position in the UK market,
both through new customers and cross-sales of recently acquired and developed
products. Notably, the Group signed a new 10-year contract with an existing
customer for the recently acquired TMS solution, replacing its incumbent TMS
provider.

 

Microlise's international business continues to grow with a number of material
contracts won in ANZ and the securing of its largest customer in France. In
ANZ, the Group won a £10.6m contract with Woolworths, as announced in March
2024 and a five-year contract with FSSI, the largest grocery retailer in the
South Island of New Zealand. Microlise now serves 3 of the 4 largest
supermarket chains in Australia and the 2 largest supermarkets chains in New
Zealand and continues to have a strong sales pipeline in the region.

In France, the Group won its largest contract to date in the region with STAF,
a leading company in the transport of mass distribution and agri-foods. This
achievement underscores the broad applicability of Microlise's product range
in wider markets within the region.

The Company has also maintained its excellent customer retention rate with
churn of just 0.5% during the six-month period, highlighting the quality and
importance of its product offerings to its customers.

 

 

Acquisition and Products

During the period, Microlise announced the acquisition of K-Safe, a developer
of road safety products such as the mobile app, Flare. Integration of this
acquisition has enhanced the Group's Driver Hazard Warning (DHW) product,
enabling it to alert drivers to dynamic hazards, such as cyclists within a
blind spot, as well as static hazards like low bridges. An existing UK
customer, Direct Sameday, implemented the Group's new DHW in the period and
leveraged its risk prevention benefits to negotiate lower insurance premiums
for its fleet.

Since the acquisition, Microlise has brought in new contracts to the Flare app
network including Just Eat and Deliveroo, making Microlise's product set truly
end-to-end, covering everything from the depot to the last mile.

Post-period-end the Company announced the launch of a Proximity Beacons
product, which can track all of a customer's assets, ensuring simple
traceability and preventing theft of high value cargo, by utilising the
Microlise mesh network created from existing telematics units. This is already
generating upselling and cross selling opportunities, with the Group already
having upsold the product into an existing OEM customer, as well as being in
advanced conversations with a number of other existing customers.

 

Outlook

The outlook for the Group is positive, with growing sales pipelines across all
regions bolstered by the ongoing expansion of Microlise's market-leading
product offering. Following the strong customer wins in H1, Microlise has a
strong order book of projects, either in delivery or for delivery in H2 2024,
giving it confidence in meeting full year expectations for 2024.

 

 

Nadeem Raza, CEO, Microlise said: "I am delighted to report strong performance
in the first half of the year, with significant recurring revenue growth
following a strong period of delivery in the second half of last year and with
new products from our successful acquisitions leading to an increase in cross
selling and upselling. In addition, we secured a significant number of new
clients, including strategically important contract wins in our international
markets.

"We continue to seek acquisitions that can further enhance our offering and
accelerate our growth within all regions. With superior market positioning,
favourable market conditions, and a strong pipeline, we are confident of
meeting expectations for the full year."

 

Notes:

All financials are based on unaudited figures.

1 Annual Recurring Revenue is calculated by multiplying the June 2024 monthly
recurring revenue by 12

2 Adjusted Earnings Before interest, tax, depreciation, amortisation, share
based payments and exceptional costs

3 Cash conversion is the % of cash generated from operating activities as a %
of adjusted EBITDA.

4 Analysts' revenue expectations for FY 2024 range from £83.0m to £83.5m.

5 Analysts' Adjusted EBITDA expectations for FY 2024 range from £10.8m to
£11.0m.

6 Analysts' net cash expectations for 31 December 2024 range from £9.5m to
£10.2m.

 

 

For further information, please contact:

 

 Microlise Group plc
 Nadeem Raza, CEO                                                   C/O SEC Newgate

 Nick Wightman, CFO

 Singer Capital Markets (Nominated Adviser & Broker)
 Steve Pearce / James Moat / Sam Butcher                            Tel: 020 7496 3000
 SEC Newgate (Financial Communications)
 Bob Huxford / Molly Gretton / Harry Handyside                      Microlise@secnewgate.co.uk

 

About Microlise

Microlise Group Plc is a leading provider of transport management software to
fleet operators helping them to improve efficiency, safety, and reduce
emissions. These improvements are delivered through reduced fuel use, reduced
mileage travelled, improved driver performance, fewer accidents, elimination
of paperwork and delivery of an enhanced customer experience.

 

Established in 1982, Microlise is an award-winning business with over 400
enterprise clients. With 463 employees based at the Group's headquarters in
Nottingham in the UK, the Company also has offices in France, Australia, and
India, with a total global staff base of over 750.

 

Microlise is listed on the AIM market of the London Stock Exchange (AIM: SAAS)
and qualifies for the London Stock Exchange's Green Economy Mark.

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