Aquis Exchange confident despite loss of historic contract

Aquis Exchange updated the market on its recent trading on Wednesday, highlighting modest revenue growth, a strong cash position, and strategic investments aimed at expanding its technology division, although it warned of a £1m hit from the loss of a historic contract.

The AIM-traded firm said that for the first half, it saw a 3.5% increase in net revenue, reaching £10m, up from £9.7m in the same period last year.

Its cash and cash equivalents also grew to £14.5m as of 30 June, compared to £13.9m a year earlier.

Key business highlights included a rise in market share for Aquis Markets, which grew to 5.2% from 4.68% in the first half of 2023, with further product diversification expected in the second half.

Aquis Technologies, the division that licences exchange-related technology, saw its contract pipeline grow to the largest in its history.

In response, Aquis said it was accelerating its strategic investment in that division, planning to invest an additional £6.2m over the next three years to enhance product availability and competitive positioning.

The investment was expected to drive significant revenue and cash flow growth in the medium term.

Aquis Data also saw a strong performance, with revenue up 17% following the implementation of new member data charges in June.

The division remained focussed on the development of consolidated tapes in the UK and EU, which could provide substantial future revenue opportunities.

Despite a challenging environment for primary listings, Aquis Stock Exchange showed resilience with a 44% increase in trading value compared to the first half of 2023, and £87m raised through secondary fundraising in the first half.

However, the company faced a setback with the non-renewal of a historical contract for a start-up exchange, which would reduce expected net revenue and profit before tax by around £1m in 2024.

Despite that, Aquis said it was well-positioned to capitalise on its robust contract pipeline, as it explored growth opportunities supported by its strong cash reserves.

Looking ahead, Aquis said it expected the second half of 2024 to reflect the impact of the contract loss, but remained confident in its long-term strategy, driven by ongoing investments and a solid market position.

The company said it would provide further details on its strategic investments with its interim results announcement on 12 September, and at a capital markets day later in the year.

“Whilst it is disappointing that our near-term trading has been impacted by a single contract, I am pleased with the progress that we continue to make in establishing the foundations to deliver our strategic objectives,” said chief executive officer Alasdair Haynes.

“In particular, I am excited to announce to investors our strategic investment into our Aquis Technologies division.”

Haynes said the scale of the company’s technology contracts had grown substantially in recent years, adding that Aquis was now considered a “major and credible” global player in the provision of regulatory-grade exchange technology.

“In order for us to fully capitalise on the opportunities in front of us, we have decided to adopt a more proactive strategy, building out our product suite across asset classes and furthering our significant technology and competitive advantage.”

At 1142 BST, shares in Aquis Exchange were down 16.14% at 400p.

Reporting by Josh White for Sharecast.com.