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Research: TMT
1Spatial expects its FY24 results to be at least in line with our forecasts on revenue and EBITDA, driven by continued Enterprise strength, though higher rates and working capital swings affected PBT and net cash. Recent wins, including the €9m utility project, coupled with a robust pipeline and order book, underpin strong FY25 momentum. The transition to higher-margin recurring revenue models and rising SaaS adoption improved the sales mix. In the US, five new annual NG9-1-1 licences demonstrate execution by the new sales head, prompting a partner-led strategy to further accelerate demand. 1Streetworks is gaining traction after the UK Power Networks win and growing paid trial pipeline. Management believes expanding this flagship contract, leveraging efficiency and cost enhancements as a case study, could drive adoption across a potential £400m market opportunity.
Written by
1Spatial |
SaaS applications to build on Enterprise strength |
FY24 trading update |
Software and comp services |
11 March 2024 |
Share price performance
Business description
Analysts
1Spatial is a research client of Edison Investment Research Limited |
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1Spatial expects its FY24 results to be at least in line with our forecasts on revenue and EBITDA, driven by continued Enterprise strength, though higher rates and working capital swings affected PBT and net cash. Recent wins, including the €9m utility project, coupled with a robust pipeline and order book, underpin strong FY25 momentum. The transition to higher-margin recurring revenue models and rising SaaS adoption improved the sales mix. In the US, five new annual NG9-1-1 licences demonstrate execution by the new sales head, prompting a partner-led strategy to further accelerate demand. 1Streetworks is gaining traction after the UK Power Networks win and growing paid trial pipeline. Management believes expanding this flagship contract, leveraging efficiency and cost enhancements as a case study, could drive adoption across a potential £400m market opportunity.
Year end |
Revenue (£m) |
EBITDA* |
EBIT* |
EPS* |
EV/EBITDA |
P/E |
01/22 |
27.0 |
4.2 |
1.3 |
0.8 |
16.3 |
77.4 |
01/23 |
30.0 |
5.0 |
2.0 |
1.2 |
13.6 |
50.4 |
01/24e |
32.1 |
5.5 |
2.6 |
1.6 |
12.3 |
38.6 |
01/25e |
35.2 |
6.5 |
3.6 |
2.3 |
10.4 |
27.3 |
Note: *EBITDA, EBIT and EPS exclude amortisation of acquired intangibles, exceptional items and share-based payments.
For FY24, 1Spatial expects to report revenue of no less than £32.1m (+7% y-o-y) and adjusted EBITDA of at least £5.5m (+11% y-o-y), in line with our forecasts. The sales mix continues to improve, with recurring revenue up 5pp to 55% and software term licence revenue increasing by c 70% to £8.7m, driven by double-digit growth across the UK, US and Australia.
Reported PBT of £1m, below our £1.8m estimate, was affected by high interest rates and exceptional restructuring costs. The timing of significant working capital flows, which have since reversed, led to a lower net cash position of £1.1m versus our £2.5m forecast.
Both 1Streetworks and NG9-1-1 are innovative SaaS products in new markets, underpinning long sales cycles. However, with five annual NG9-1-1 licences secured in the US and the first 1Streetworks win, strong traction is building. A leading US partnership and expanding the UK Power Networks contract to create a key case study could drive stronger conversion and reduce sales cycles. Management is planning investments in 1Streetworks’ sales and marketing, which could further support growth in FY25 and beyond.
Delivering more wins across these higher-margin SaaS products, in addition to a robust Enterprise performance, underpins the substantial growth opportunity and potential for re-rating. We maintain our forecasts and plan to update them, including introducing FY26 numbers, following the full FY24 results on 24 April.
We note that 1Spatial is hosting a virtual insights session about 1Streetworks on 12 March, which will provide detail on how management is planning to execute on the c £400m addressable market opportunity.
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Research: Financials
JDC reported preliminary FY23 results that were broadly in line with estimates, implying an impressive EBITDA generation of €5m in Q4. JDC guides for FY24 revenue growth acceleration to 24% at the midpoint of guidance (€205–220m), compared to 10% revenue growth in 2023. This still seems conservative given the tailwinds from the market environment and the acquisition of Top Ten Financial Network, which will add around 10% of revenue growth alone. The EBITDA margin is also expected to increase based on a guided EBITDA range of €14.5–16.0m