Eleco upbeat amid temporary 'softening' of revenue

Construction software specialist Eleco reported positive performance in the first four months of 2022 in an update on Wednesday, despite “challenging” market conditions.

The AIM-traded firm, which was holding its annual general meeting, said underlying demand for its products remained “strong”, as the construction industry moved to focus on sustainability, digitisation and productivity improvements.

Its unaudited accounts for the four months ended 30 April showed an 8% improvement in recurring revenue to £5.4m, making up about 60% of total revenue.

Total revenue in the period slipped to £8.9m from £9.3m, however, and was £9.2m at constant currency.

Eleco said its profitability remained in line with expectations, adding that it was “strongly” cash generative, with a net cash position of £11.3m, up from £10m on 31 December.

“As we implement the next stage of our strategy, we are focused on continued and sustainable growth,” said non-executive chairman Serena Lang.

“We are actively seeking acquisition opportunities that support our strategy and our transition to software-as-a-service, which we expect to be a key driver of future value.”

Lang said the company’s total reported revenue growth would temporarily soften during its transition to higher-value and predictable recurring revenue, as it had previously flagged.

“We are operating in a very exciting and attractive market and our software is key to meet the growing demands of the built environment, which is under pressure to deliver projects more efficiently and supporting the broader environmental, social and governance (ESG) agenda.

“The board remains confident in delivering results in line with market expectations for the full year.”

At 1139 BST, shares in Eleco were down 1.4% at 87.75p.

Reporting by Josh White at Sharecast.com.