Currency in
Last close As at 17/03/2023
—
— 0.00 (0.00%)
Market capitalisation
4m
Research: TMT
Osirium has signed up many more new customers year-to-date compared with FY20, but lower average contract values mean that bookings and revenue for FY21 are likely to be flat year-on-year. We have revised down our FY21 forecasts accordingly. We continue to expect stronger bookings growth in FY22 supported by a higher level of the contract base due for renewal and the potential to sell more to the large number of customers won in FY21.
Osirium Technologies |
Trimming FY21 expectations |
Trading update |
Software & comp services |
30 November 2021 |
Share price performance
Business description
Next events
Analyst
Osirium Technologies is a research client of Edison Investment Research Limited |
Osirium has signed up many more new customers year-to-date compared with FY20, but lower average contract values mean that bookings and revenue for FY21 are likely to be flat year-on-year. We have revised down our FY21 forecasts accordingly. We continue to expect stronger bookings growth in FY22 supported by a higher level of the contract base due for renewal and the potential to sell more to the large number of customers won in FY21.
Year end |
Revenue (£m) |
EBITDA* |
EPS* |
DPS |
P/E |
EV/sales |
12/19 |
1.17 |
(2.15) |
(19.5) |
0.0 |
N/A |
5.0 |
12/20 |
1.43 |
(1.36) |
(12.9) |
0.0 |
N/A |
4.1 |
12/21e |
1.44 |
(1.67) |
(11.4) |
0.0 |
N/A |
4.1 |
12/22e |
1.64 |
(1.60) |
(10.4) |
0.0 |
N/A |
3.5 |
Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Slower bookings momentum in H221
Osirium expects to report bookings for FY21 at a similar level to the £1.57m achieved in FY20. We were forecasting 25% bookings growth for FY21 to £1.88m. Osirium has signed up many more new customers this year than last year (customer numbers now are 70% higher than at the end of CY20, implying at least 40 new customers so far this year compared to 16 for FY20), but these have been for smaller contract values and decision times have been longer. Revenue for FY21 is also expected to be at a similar level to FY20 (ie £1.44m versus our forecast of £1.60m). The company expects decision-making to normalise in FY22.
Revising estimates; still factoring in growth in FY22
Increasing awareness of the security risks inherent in remote working and high-profile ransomware attacks are driving demand for privileged access security software, providing a large addressable market for Osirium’s software. The company has seen 97% customer retention by value year-to-date, providing a strong base for its land and expand strategy, and is seeing a growing number of leads from its channel partners. It also has £1.5m of contracts up for renewal in FY22, providing a good bookings base for the year which should be augmented by expansion opportunities and new customer wins. We have revised our forecasts to reflect FY21 guidance and bookings/revenue growth of 28%/14% for FY22. Our EBITDA loss forecasts increase by £158k in FY21 and £259k in FY22.
Valuation: Bookings growth key to upside
At 4.1x FY21e sales, Osirium is trading at a discount to peers on an EV/sales basis (the UK software sector is trading at 5.4x calendar year sales). As it is an early-stage company several years from profitability, we have performed a reverse discounted cash flow to analyse the assumptions factored into the current share price, using a WACC of 9% and a terminal growth rate of 3%. We estimate the share price is discounting average bookings growth of 25% for FY23–30e, break-even EBITDA in FY26, average EBITDA margins of 4.9% for FY23–30e and a terminal EBITDA margin of 36%.
Changes to forecasts
Exhibit 1: Changes to estimates
£'k |
FY21e |
FY21e |
FY22e |
FY22e |
|||||
Old |
New |
Change |
y-o-y |
Old |
New |
Change |
y-o-y |
||
Bookings |
1,880.5 |
1,568.7 |
(16.6%) |
0.0% |
2,350.6 |
2,007.9 |
(14.6%) |
28.0% |
|
Revenues |
1,595.6 |
1,437.3 |
(9.9%) |
0.2% |
1,903.9 |
1,644.7 |
(13.6%) |
14.4% |
|
EBITDA |
(1,509.8) |
(1,668.1) |
10.5% |
22.3% |
(1,345.2) |
(1,604.4) |
19.3% |
(3.8%) |
|
EBITDA margin |
-94.6% |
-116.1% |
22.7% |
-70.7% |
-97.6% |
38.1% |
|||
Normalised operating profit |
(3,135.6) |
(3,293.9) |
5.0% |
14.7% |
(3,131.5) |
(3,390.7) |
8.3% |
2.9% |
|
Normalised operating margin |
-196.5% |
-229.2% |
(32.7%) |
-164.5% |
-206.2% |
(41.7%) |
|||
Reported operating profit |
(3,135.6) |
(3,293.9) |
5.0% |
14.7% |
(3,131.5) |
(3,390.7) |
8.3% |
2.9% |
|
Reported operating margin |
-196.5% |
-229.2% |
(32.7%) |
-164.5% |
-206.2% |
(41.7%) |
|||
Normalised PBT |
(3,346.1) |
(3,504.4) |
4.7% |
13.2% |
(3,342.0) |
(3,601.2) |
7.8% |
2.8% |
|
Reported PBT |
(3,346.1) |
(3,504.4) |
4.7% |
13.2% |
(3,342.0) |
(3,601.2) |
7.8% |
2.8% |
|
Normalised net income |
(2,844.2) |
(2,978.7) |
4.7% |
18.9% |
(2,840.7) |
(3,061.0) |
7.8% |
2.8% |
|
Reported net income |
(2,844.2) |
(2,978.7) |
4.7% |
18.9% |
(2,840.7) |
(3,061.0) |
7.8% |
2.8% |
|
Normalised basic EPS (p) |
(10.91) |
(11.43) |
4.7% |
(11.1%) |
(9.68) |
(10.43) |
7.8% |
(8.7%) |
|
Normalised diluted EPS (p) |
(10.91) |
(11.43) |
4.7% |
(11.1%) |
(9.68) |
(10.43) |
7.8% |
(8.7%) |
|
Reported basic EPS (p) |
(10.91) |
(11.43) |
4.7% |
(11.1%) |
(9.68) |
(10.43) |
7.8% |
(8.7%) |
|
Gross cash |
454.2 |
205.0 |
(54.9%) |
147.4 |
319.2 |
116.6% |
|||
Net debt/(cash) |
2,251.1 |
2,500.3 |
11.1% |
145.0% |
5,060.5 |
5,588.7 |
10.4% |
123.5% |
Source: Edison Investment Research
Exhibit 2: Financial summary
£'k |
2016 |
2017 |
2018 |
2019 |
2020 |
2021e |
2022e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||
Revenue |
|
|
477.6 |
647.6 |
957.5 |
1,171.6 |
1,434.9 |
1,437.3 |
1,644.7 |
EBITDA |
|
|
(1,136.7) |
(1,609.4) |
(1,767.3) |
(2,152.1) |
(1,363.5) |
(1,668.1) |
(1,604.4) |
Normalised operating profit |
|
|
(1,725.6) |
(2,296.8) |
(2,674.8) |
(3,399.7) |
(2,872.4) |
(3,293.9) |
(3,390.7) |
Amortisation of acquired intangibles |
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 |
||
Share-based payments |
(96.9) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Reported operating profit |
(1,822.5) |
(2,296.8) |
(2,674.8) |
(3,399.7) |
(2,872.4) |
(3,293.9) |
(3,390.7) |
||
Net Interest |
9.7 |
4.2 |
(0.6) |
(52.2) |
(222.3) |
(210.5) |
(210.5) |
||
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) |
|
|
(1,715.9) |
(2,292.6) |
(2,675.4) |
(3,451.9) |
(3,094.7) |
(3,504.4) |
(3,601.2) |
Profit Before Tax (reported) |
|
|
(1,812.8) |
(2,292.6) |
(2,675.4) |
(3,451.9) |
(3,094.7) |
(3,504.4) |
(3,601.2) |
Reported tax |
453.3 |
409.4 |
407.6 |
622.5 |
590.2 |
525.7 |
540.2 |
||
Profit After Tax (norm) |
(1,286.9) |
(1,883.2) |
(2,267.8) |
(2,829.4) |
(2,504.5) |
(2,978.7) |
(3,061.0) |
||
Profit After Tax (reported) |
(1,359.6) |
(1,883.2) |
(2,267.8) |
(2,829.4) |
(2,504.5) |
(2,978.7) |
(3,061.0) |
||
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
(1,286.9) |
(1,883.2) |
(2,267.8) |
(2,829.4) |
(2,504.5) |
(2,978.7) |
(3,061.0) |
||
Net income (reported) |
(1,359.6) |
(1,883.2) |
(2,267.8) |
(2,829.4) |
(2,504.5) |
(2,978.7) |
(3,061.0) |
||
Basic average number of shares outstanding (m) |
10 |
10 |
13 |
15 |
19 |
26 |
29 |
||
EPS - normalised (p) |
|
|
(12.38) |
(18.12) |
(18.14) |
(19.45) |
(12.85) |
(11.43) |
(10.43) |
EPS - normalised fully diluted (p) |
|
|
(12.38) |
(18.12) |
(18.14) |
(19.45) |
(12.85) |
(11.43) |
(10.43) |
EPS - basic reported (p) |
|
|
(13.08) |
(18.12) |
(18.14) |
(19.45) |
(12.85) |
(11.43) |
(10.43) |
Dividend (p) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
64.6 |
35.6 |
47.9 |
22.4 |
22.5 |
0.2 |
14.4 |
||
EBITDA Margin (%) |
-238.0 |
-248.5 |
-184.6 |
-183.7 |
-95.0 |
-116.1 |
-97.6 |
||
Normalised Operating Margin |
-361.3 |
-354.7 |
-279.4 |
-290.2 |
-200.2 |
-229.2 |
-206.2 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
1,178.8 |
1,812.1 |
2,360.2 |
3,124.4 |
3,487.3 |
3,967.4 |
4,326.9 |
Intangible Assets |
1,134.5 |
1,731.9 |
2,307.2 |
2,936.5 |
3,335.5 |
3,808.3 |
4,180.5 |
||
Tangible Assets |
44.3 |
80.2 |
52.9 |
187.9 |
151.9 |
159.1 |
146.4 |
||
Investments & other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Assets |
|
|
3,953.7 |
1,646.4 |
3,134.6 |
4,837.3 |
2,300.8 |
1,150.9 |
1,316.2 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
380.9 |
622.6 |
748.0 |
982.4 |
818.4 |
945.8 |
997.0 |
||
Cash & cash equivalents |
3,572.8 |
1,023.8 |
2,386.6 |
3,854.9 |
1,482.4 |
205.0 |
319.2 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(648.5) |
(857.7) |
(1,170.3) |
(1,923.0) |
(2,143.7) |
(2,314.4) |
(2,707.7) |
Creditors |
(648.5) |
(857.7) |
(1,170.3) |
(1,889.1) |
(2,088.7) |
(2,284.4) |
(2,677.7) |
||
Tax and social security |
0.0 |
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 |
0.0 |
0.0 |
(33.9) |
(55.0) |
(30.0) |
(30.0) |
||
Long Term Liabilities |
|
|
0.0 |
0.0 |
0.0 |
(2,422.4) |
(2,518.6) |
(2,731.1) |
(5,923.6) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
(2,345.4) |
(2,502.9) |
(2,705.4) |
(5,907.9) |
||
Other long term liabilities |
0.0 |
0.0 |
0.0 |
(77.0) |
(15.8) |
(25.8) |
(15.8) |
||
Net Assets |
|
|
4,483.9 |
2,600.8 |
4,324.5 |
3,616.3 |
1,125.8 |
72.8 |
(2,988.2) |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
4,483.9 |
2,600.8 |
4,324.5 |
3,616.3 |
1,125.8 |
72.8 |
(2,988.2) |
CASH FLOW |
|||||||||
Op Cash Flow before WC and tax |
(1,136.7) |
(1,609.4) |
(1,767.3) |
(2,152.1) |
(1,363.5) |
(1,668.1) |
(1,604.4) |
||
Working capital |
226.8 |
85.5 |
187.2 |
633.7 |
396.5 |
68.3 |
342.2 |
||
Exceptional & other |
0.0 |
0.0 |
0.0 |
0.0 |
14.0 |
0.0 |
0.0 |
||
Tax |
120.4 |
291.4 |
407.6 |
473.3 |
557.3 |
525.7 |
540.2 |
||
Net operating cash flow |
|
|
(789.4) |
(1,232.5) |
(1,172.5) |
(1,045.1) |
(395.7) |
(1,074.1) |
(722.1) |
Capex |
(968.0) |
(1,320.6) |
(1,455.7) |
(1,852.8) |
(1,875.1) |
(2,065.9) |
(2,125.8) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.4 |
3.3 |
0.0 |
0.0 |
||
Net interest |
9.7 |
4.2 |
(0.6) |
0.0 |
(56.5) |
(8.0) |
(8.0) |
||
Equity financing |
5,047.1 |
0.0 |
3,991.5 |
1,726.4 |
0.0 |
1,925.7 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.0 |
0.0 |
0.0 |
(60.6) |
(48.5) |
(55.0) |
(30.0) |
||
Net Cash Flow |
3,299.3 |
(2,549.0) |
1,362.8 |
(1,231.7) |
(2,372.5) |
(1,277.3) |
(2,885.9) |
||
Opening net (cash)/debt |
|
|
(273.5) |
(3,572.8) |
(1,023.8) |
(2,386.6) |
(1,509.5) |
1,020.5 |
2,500.3 |
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) |
354.6 |
(157.4) |
(202.5) |
(202.5) |
||
Closing net (cash)/debt |
|
|
(3,572.8) |
(1,023.8) |
(2,386.6) |
(1,509.5) |
1,020.5 |
2,500.3 |
5,588.7 |
Source: Osirium, Edison Investment Research
|
|
Research: Financials
Record’s H122 results showed benefits from its growth and diversification strategy. Its first new product, a sustainable fund, is increasing AUM and there is a pipeline of further opportunities with the potential to add further AUM and produce a richer fee mix. Board confidence in the outlook is evident in the step up in the ordinary dividend.
Get access to the very latest content matched to your personal investment style.