Last close As at 05/08/2026
GBP0.19
— 0.00 (0.00%)
Market capitalisation
GBP21m
Research: TMT
Checkit made good progress in H124, growing annual recurring revenue (ARR) by 24% y-o-y and revenue by 19% y-o-y. Net revenue retention of 113% highlights the company’s ability to cross-sell and upsell, and the recent contract renewal with John Lewis and master service agreement with Compass provide further expansion opportunities. We maintain our forecasts.
Checkit |
Trading on track in tough environment |
H124 trading update |
Software and comp services |
10 August 2023 |
Share price performance
Business description
Next events
Analyst
Checkit is a research client of Edison Investment Research Limited |
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Checkit made good progress in H124, growing annual recurring revenue (ARR) by 24% y-o-y and revenue by 19% y-o-y. Net revenue retention of 113% highlights the company’s ability to cross-sell and upsell, and the recent contract renewal with John Lewis and master service agreement with Compass provide further expansion opportunities. We maintain our forecasts.
Year |
Revenue |
ARR |
PBT* |
EPS* |
DPS |
EV/sales |
01/22** |
8.4 |
9.0 |
(6.1) |
(9.0) |
0.0 |
1.5 |
01/23** |
10.3 |
11.5 |
(7.3) |
(6.9) |
0.0 |
1.2 |
01/24e |
12.5 |
13.3 |
(5.2) |
(4.9) |
0.0 |
1.0 |
01/25e |
14.6 |
15.9 |
(3.8) |
(3.5) |
0.0 |
0.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Continuing operations only.
Strong growth in revenue and ARR
In H124, Checkit reported 22% y-o-y growth in recurring revenue to £5.4m (95% of total revenue) and a 21% decline in non-recurring revenue to £0.3m, with total revenue growth of 19% y-o-y to £5.7m. Period-end ARR of £12.6m was 24% higher y-o-y and 10% higher h-o-h, with ARR from the US up 41% y-o-y to £3.2m (25% of total ARR). Net revenue retention for H124 was 113% with gross retention of 98%; upsell and cross-sell contributed more than 50% of ARR growth with the balance from new customers and pricing. End-H124 net cash was £12.8m, down from £15.6m at the end of FY23. We maintain our forecasts pending interim results on 14 September.
Renewal of major contracts
Checkit renewed its framework agreement (FA) with John Lewis, effective 1 August, to provide connected workflow management (CWM), automated asset monitoring (CAM) and digital building management solutions for a three-year period, with improved pricing. The FA and associated services have a total contract value of £6m over the three years. Checkit also signed a master service agreement with Compass Contract Services (UK) to provide CAM and CWM to its end users, mainly in the food services sector. Since signing, Checkit has entered three new contracts with Compass.
Valuation: Large discount to peers
On an EV/sales multiple of 1.0x for FY24e and 0.9x FY25e, Checkit trades at a material discount to the UK software sector (2.4x current year sales, 2.2x next year sales) and US SaaS peers (6.7x current year, 5.6x next year). If Checkit were to trade on the UK average for FY24e, it would be worth 39p per share and moving to trade in line with US SaaS peers would imply a valuation of 89p. Sustained ARR growth will be the key trigger for Checkit to attract a multiple more in line with SaaS peers, evidenced by customers signing up to use its software and existing customers expanding their usage. Faster movement towards break-even should also support the share price.
Exhibit 1: Financial summary
£'m |
2019 |
2020 |
2021 |
2022 |
2023 |
2024e |
2025e |
||
31-January |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||
Revenue |
|
|
1.0 |
9.8 |
13.2 |
8.4 |
10.3 |
12.5 |
14.6 |
Cost of Sales |
(1.0) |
(7.2) |
(6.7) |
(3.8) |
(3.8) |
(4.3) |
(4.6) |
||
Gross Profit |
0.0 |
2.6 |
6.5 |
4.6 |
6.5 |
8.2 |
10.0 |
||
EBITDA |
|
|
(2.3) |
(4.9) |
(2.5) |
(5.6) |
(6.4) |
(3.7) |
(2.3) |
Normalised operating profit |
|
|
(4.4) |
(6.5) |
(3.1) |
(6.1) |
(7.4) |
(5.2) |
(3.8) |
Amortisation of acquired intangibles |
(0.1) |
(1.0) |
(1.3) |
(1.4) |
(0.5) |
(0.1) |
0.0 |
||
Exceptionals |
0.0 |
(1.7) |
(0.9) |
(1.0) |
(4.3) |
0.0 |
0.0 |
||
Share-based payments |
0.0 |
0.0 |
0.0 |
0.0 |
(0.2) |
(0.1) |
(0.1) |
||
Reported operating profit |
(4.5) |
(9.2) |
(5.3) |
(8.5) |
(12.4) |
(5.4) |
(3.9) |
||
Net Interest |
0.0 |
0.1 |
0.0 |
0.0 |
0.1 |
0.0 |
0.0 |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
(4.4) |
(6.4) |
(3.1) |
(6.1) |
(7.3) |
(5.2) |
(3.8) |
Profit Before Tax (reported) |
|
|
(4.5) |
(9.1) |
(5.3) |
(8.5) |
(12.3) |
(5.4) |
(3.9) |
Reported tax |
0.0 |
0.1 |
0.3 |
0.3 |
0.3 |
0.0 |
0.0 |
||
Profit After Tax (norm) |
(4.4) |
(6.4) |
(3.1) |
(6.1) |
(7.5) |
(5.2) |
(3.8) |
||
Profit After Tax (reported) |
(4.5) |
(9.0) |
(5.0) |
(8.2) |
(12.0) |
(5.4) |
(3.9) |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
8.6 |
89.8 |
0.6 |
1.4 |
(0.3) |
0.0 |
0.0 |
||
Net income (normalised) |
(4.4) |
(6.4) |
(3.1) |
(6.1) |
(7.5) |
(5.2) |
(3.8) |
||
Net income (reported) |
4.1 |
80.8 |
(4.4) |
(6.8) |
(12.3) |
(5.4) |
(3.9) |
||
Basic average number of shares outstanding (m) |
178 |
161 |
62 |
68 |
108 |
108 |
108 |
||
EPS - basic normalised (p) |
|
|
(2.5) |
(4.0) |
(5.2) |
(9.0) |
(6.9) |
(4.9) |
(3.5) |
EPS - diluted normalised (p) |
|
|
(2.5) |
(4.0) |
(5.2) |
(9.0) |
(6.9) |
(4.9) |
(3.5) |
EPS - basic reported (p) |
|
|
2.3 |
50.2 |
(7.2) |
(10.0) |
(11.4) |
(5.0) |
(3.6) |
Dividend (p) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
N/A |
880.0 |
34.7 |
(-36.4) |
22.6 |
21.1 |
16.9 |
||
Gross Margin (%) |
0.0 |
26.5 |
49.2 |
54.8 |
63.1 |
65.5 |
68.5 |
||
EBITDA Margin (%) |
(230.0) |
(50.0) |
(18.9) |
(66.7) |
(62.1) |
(30.0) |
(15.7) |
||
Normalised Operating Margin |
(440.0) |
(66.3) |
(23.5) |
(72.6) |
(71.8) |
(42.1) |
(25.9) |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
5.0 |
8.5 |
6.8 |
8.3 |
4.9 |
5.9 |
7.0 |
Intangible Assets |
2.9 |
7.3 |
6.0 |
7.3 |
4.0 |
4.9 |
5.9 |
||
Tangible Assets |
1.7 |
1.2 |
0.8 |
1.0 |
0.9 |
1.0 |
1.1 |
||
Investments & other |
0.4 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Assets |
|
|
19.5 |
19.8 |
17.5 |
29.0 |
22.5 |
16.3 |
11.7 |
Stocks |
4.3 |
1.7 |
1.1 |
1.8 |
2.4 |
2.4 |
1.9 |
||
Debtors |
5.1 |
3.4 |
4.4 |
2.9 |
4.5 |
4.4 |
3.6 |
||
Cash & cash equivalents |
10.1 |
14.3 |
11.5 |
24.2 |
15.6 |
9.5 |
6.2 |
||
Other |
0.0 |
0.4 |
0.5 |
0.1 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(7.9) |
(5.6) |
(5.9) |
(5.7) |
(7.8) |
(7.9) |
(8.2) |
Creditors |
(7.6) |
(5.1) |
(5.6) |
(5.2) |
(7.5) |
(7.6) |
(7.9) |
||
Tax and social security |
(0.3) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.0 |
(0.5) |
(0.3) |
(0.5) |
(0.3) |
(0.3) |
(0.3) |
||
Long Term Liabilities |
|
|
(0.3) |
(1.3) |
(0.8) |
(0.6) |
(0.7) |
(0.7) |
(0.7) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other long term liabilities |
(0.3) |
(1.3) |
(0.8) |
(0.6) |
(0.7) |
(0.7) |
(0.7) |
||
Net Assets |
|
|
16.3 |
21.4 |
17.6 |
31.0 |
18.9 |
13.6 |
9.8 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
16.3 |
21.4 |
17.6 |
31.0 |
18.9 |
13.6 |
9.8 |
CASH FLOW |
|||||||||
Op Cash Flow before WC and tax |
(2.3) |
(4.9) |
(2.5) |
(5.6) |
(6.4) |
(3.7) |
(2.3) |
||
Working capital |
(0.5) |
(1.0) |
0.3 |
0.2 |
0.1 |
0.2 |
1.6 |
||
Exceptional & other |
9.1 |
5.3 |
(0.7) |
0.4 |
(0.2) |
0.0 |
0.0 |
||
Tax |
(0.5) |
(0.5) |
0.0 |
0.1 |
0.1 |
0.0 |
0.0 |
||
Net operating cash flow |
|
|
5.8 |
(1.1) |
(2.9) |
(4.9) |
(6.4) |
(3.5) |
(0.7) |
Capex |
(2.2) |
(0.3) |
(0.3) |
(2.3) |
(2.2) |
(2.3) |
(2.3) |
||
Acquisitions/disposals |
1.3 |
84.2 |
0.3 |
0.0 |
0.2 |
0.0 |
0.0 |
||
Net interest |
0.0 |
0.1 |
0.0 |
0.0 |
0.1 |
0.0 |
0.0 |
||
Equity financing |
0.0 |
(77.9) |
0.5 |
20.2 |
0.0 |
0.0 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.0 |
(0.8) |
(0.4) |
(0.3) |
(0.3) |
(0.3) |
(0.3) |
||
Net Cash Flow |
4.9 |
4.2 |
(2.8) |
12.7 |
(8.6) |
(6.1) |
(3.3) |
||
Opening net debt/(cash) |
|
|
(5.2) |
(10.1) |
(14.3) |
(11.5) |
(24.2) |
(15.6) |
(9.5) |
FX |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(10.1) |
(14.3) |
(11.5) |
(24.2) |
(15.6) |
(9.5) |
(6.2) |
Source: Checkit, Edison Investment Research
|
|
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