FD Technologies hikes guidance after strong first half

FD Technologies reported a 15% improvement in revenue in its first half on Tuesday, to £147.4m, while its gross profit grew 116% year-on-year to £60.2m, as it hiked its revenue guidance for the full year.

The AIM-traded firm said it swung to a profit before tax of £1.1m in the six months to 31 August, from a loss of £1.6m in the first half of 2021.

Reported diluted earnings per share came in at 2.9p, compared to losses of 7.5p per share in the same period last year, while net debt was reduced by 37% to £7.4m.

Operationally, FD said growing momentum in KX was reflected in annual recurring revenue growth of 41%, and annual contract value signed of £11.4m, surpassing the £9.8m it recorded in the full 2022 financial year.

Its customer expansion strategy was also said to be delivering results, with net revenue retention increasing to 119% from 102% year-on-year.

Annual recurring revenue growth in the industry sector was 120%, led by new customer wins and expansion in healthcare, manufacturing and energy, while financial services delivered growth of 35% through new customer wins and upsells of existing customers to KX Insights.

FD said the growth was driven by 51 subscription deals signed, up from 41 in the same period a year ago, of which 21 were for KX Insights, up from six.

The board said the strategic agreement with Microsoft was progressing as planned, with joint marketing initiatives helping to build customer interest and pipeline ahead of general availability of KX Insights on Azure in the first half of 2023.

During the half, the company appointed Ashok Reddy as chief executive officer of KX to deliver product and commercial strategies that would accelerate growth.

Continued strong growth was also reported in First Derivative, ahead of expectations and building on the firm’s capability to assist clients with their strategic objectives.

There was a weaker demand environment at MRP, it also noted, with measures taken to restore adjusted EBITDA margin in the second half and building pipeline for Prelytix 3.0.

Finally, the directors increased its full-year group revenue guidance to at least £300m, while maintaining adjusted EBITDA guidance to reflect strong KX and First Derivative performance.

“The group has enjoyed a strong H1, growing revenue and profitability and laying the foundations for accelerated growth from here,” said chief executive officer Seamus Keating.

“In KX the momentum we have built since the launch of KX Insights is delivering results, as evidenced by the 41% growth in annual recurring revenue.

“The recent appointment of Ashok Reddy is already benefiting KX through his significant experience in scaling product-led enterprise technology businesses.”

Likewise, Keating said First Derivative maintained its strong growth, while the company had taken action to enable MRP to improve its performance in the second half despite the market conditions experienced there.

“These results demonstrate that our strategy of investing to accelerate growth is working.

“We have added significant value to the group during the first half as our investments in product, systems and people are delivering.

“We are very well placed to continue to create value, with major growth opportunities ahead.”

At 1100 BST, shares in FD Technologies were up 2.9% at 1,420p.

Reporting by Josh White at Sharecast.com.