Agreed - I was looking for ACV of 39-40mm and they were bang in the middle. EBITDA was 5.7mm I think. Covers 57% of FY brokers' forecasts so another small beat is likely IMHO.
Cash flat at 15% mkt cap after allowing for acquisition payments but last year was boosted by a big working capital inflow which was to reverse this year.
ACV growing nicely to 39.4mm which I make as +14% organic with cloud ACV LFL+20%. Bodes well for further increases in the LFL sales growth rate going forward.
Good news that they've cross sold their first Liberty platform to a Govtech client. Also, I note Govtech are doing very well with 3 more Councils announced today in their X feed.
PE is 27 but will be 23 come July before any further acquisitions. Compared to the sector, I'd say that's relatively cheap given the long runway ahead and their good execution so far. |
 Trading update to Dec 24 bang on time and generally pretty good I thought.
Organic revenue +12% (better than last year), including acquisitions revenues were +22% at £23mn.
Adjusted EBITDA +18% at £5.3mn which trails the revenue growth. The statutory operating profit might be rather less impressive depending on transaction costs and any additional amotisation of goodwill linked to the acquisitions. We will know that on March 5th.
But we do know that Govtech was aquired in August 2024 for £9.6mn (x3 revenues, including £1.5mn on the bs) and is strong in local government systems automation. And Parble, a Belgian document processing specialist, in September 2024 for an initial Eu4.7mn - both acquisitions have substantial further earn-out pipeline payments. These transactions are reflected in a drop in cash by £12mn to £22mn (no debt) against market cap of £163mn.
It seems to me that the company is executing pretty well, is fairly understated but probably fairly valued on what we know now? Shares are very illiquid though there were two large trades (inclding sells from directors) in January - Gresham House (now privately held) has a 25% stake. |
Bang also sold some for estate planning. He's 66 and non-exec so it probably makes sense.
I note the new LTIP stretch target is 240p. |
Share volume yesterday of 6.598 million shares.
Volume rise usually precedes stock rise-which is now happening. |
Jackson selling a few more to provide liquidity as he's been doing for a while. He's 74 so I suspect he will be retiring as a non-exec this year. |
I have added to my small position on the basis that the share price movement may be signalling decent news. Last year there was an interim trading update on Jan 23rd prior to the release of December interims in early March. I reminded myself that whilst current ratings don't look especially tempting there is a solid cash-backed balance sheet (net cash last June was close t0 20% of current maket cap), free cash flow has been excellent and I believe there is a clear path of travel. |
Breaking out at last! |
1.895 million shares traded this am. A fund?
Is Net starting to break out from 100p resistance level? |
Hopefully it was better judgement :-) |
perhaps against my better judgement - I had my worst day ever in UK small caps yesterday - I decided to initiate with a very small poaition in Netcall after looking at their 10 year record, and briefly their business model and balance sheet. UK small caps have been an absolute graveyard for investors over the past few years (just look at an Aim chart) but there are aways a few bucking the trend. Let's see - and study - if this can continue to be one of them. |
These recent comments are all very interesting, thank you. I first got into NET after noting Michael Greensmith - a solicitor, local to me - is the Company Secretary. {of his 28 appointments, currently just 3 all in NET). As others have said, the share price was little changed for years so I sold long ago. On Monday this week, I decided to dump my holdings in property companies and focus instead on cloud-oriented companies of which, since I have only 3 companies I buy into, of which one is a long-term core holding, leaves NET and IDOX. Since then, NET has risen above my buy price while IDOX is still bobbing up and less down.
EKOH having been acquired by Bridgepoint and similar to NET as was leaves NET exposed to the possibility of a bid which I think would be a pity. I often wonder why NET and IDOX don't team up as they have much in common. |
Exactly. So why not a news release that confirms: 'in the last x number of months contracts over 1.5mm have accumulated' and giving a brief statement of the contracts?
(Banks, insurance companies, NHS and other government facilities etc- it would look good and be revealing of the breadth of Netcall) |
No but it's worth doing it. Clearly they'll announce any material contracts (their threshold seems ARR>1.5mm) but it's the build up of the smaller ones (NRR 117%) that makes them a very attractive investment. |
Are you suggesting the general investing public will monitor these results as you explain? |
You can monitor contract news on X, their newsroom and the public sector contract awards. Ones under frameworks (most NHS) are harder to find.
It does seem the pace of awards has accelerated this FY vs last FY. |
Just read in the latest Inv Chronicle an article on Netcall.
It is very positive making all the points we know. The IC includes an interview with Gresham House which is a big holder of the shares.
The Gresham person makes the argument that I keep repeating here ad nauseam : that the company has been around for a long time, and is now completely changed in the last few years. However the market seems to be unaware of this as the share price is unchanged for the past two years. He speculates that private equity could come in and make a move. This would not be possible without the acceptance of his firm and for a much higher price?!
There have been two recent takeovers, one based in Europe. We assume new contracts will be flowing. If there are no news releases about all of this exciting activity the investment world will remain indifferent. |
Now that the results have appeared and time moves on, Net returns to its semi-
comatose share performance.
I think (as others have mentioned) that only a large contract as happened before, will move the needle on the share price.
Still having owned the stock for more than a decade, it is pleasing to know that the yield for me is 3.1%. |
Thanks Simon - that's a very useful substack and I'm now a subscriber.
I could argue he's a bit late to the party but given the share price is where it was 3 years ago, he could argue I was too early.
At least we're on the same page now :-) |
 The Long and Short of IT - 10/10/24
Netcall: Finals Out from the bushel & into the light
Netcall (sells intelligent automation and customer engagement software) was long dismissed as a lifestyle business – our view was wrong. FY results (to 30 June) were a delight. FY revenue £39.1m +9% Y/Y, ACV, £32.2m, +15% Y/Y, Adj EBITDA £8.4m, +5% Y/Y, Cash £34.0m, +37% Y/Y.
Rather than being a rest home (as we incorrectly concluded), the company has been on a cloud migration path. Liberty cloud solutions now account for 90% of new bookings, with cloud subscriptions 76% of recurring revenues. A sparkling cloud NRR 117%, was 113%. (Note this is ahead of the cohort dashboard). More momentum in the wings as the company added a brace of acquisitions after the balance sheet date; Govtech and Parble “both of which are expected to be immediately earnings enhancing with substantial potential for cross-selling”. Two data points we like: (i) Operating cash +23% to £13.8m, and (ii) R&D +14% Y/Y £5.66m.
Our niggle:
Dismissing Netcall for the past number of years was the wrong view. We will have a deeper look at the company and prospects and put it into our models. |
Yes Simon. I like the recycling of the large cash generation into earnings enhancing acquisitions whose products they can integrate into the Liberty Platform. Once the Budget IHT uncertainty is out of the way, there should be every prospect of a rerating. |
W,
The new CEO seems dynamic and forward-thinking and wants to share the story.
That balance sheet gives them a lot of opportunity for growth.
Good to see! |
Glad they've listened to their shareholders and started doing investor presentations. A lot of good info in the piworld one above. Thank you Netcall. |
Netcall (NET) Full Year 2024 results presentation - October 2024
Netcall CEO, James Ormondroyd and CFO, Richard Hughes present the group’s results for the year ended 30 June 2024.
Watch the video here:
Or listen to the podcast here: |
I agree with WJCC concerning Netcall's full steam ahead results.
But my usual gripe: there are few news releases for the continual new contracts.
There is some detail (very good) about this in the final year report, but we
don't hear much about these event when they transpire. I think Netcall is not on the
radar for investors. The stock price response so far today is anaemic albeit on
large volume :PE is coming down and dividend is raised. |
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