GB Group set to report higher first-half revenue

Identity technology company GB Group said on Thursday that total revenue for its first half was expected to be about £109m, representing an increase of 5.3% year-on-year.

The AIM-traded firm said that was before adjusting for exits from its marketing services and employment screening businesses, which gave an increase of 12.4% on an organic constant currency basis.

In its identity operation, GB Group had expected the revenue comparison for the first six months to be “challenging”, given the substantial benefit derived from a one-off project related to the United States federal government's financial stimulus activity last year.

However, it said on Thursday that the project continued into the current financial year at higher-than-expected volumes, generating additional revenue of about £3m.

It said it also benefited from the increased transaction volumes across cryptocurrencies experienced in the final quarter of the last financial year, continuing into April and May.

That generated a further £4m of additional consumption revenue in the first half.

In both cases, consumption volumes had now settled at normalised run rates, and the firm said it expected those would remain at those levels through the second half.

GB Group’s location business, meanwhile, continued to experience good demand across a range of sectors, driven by a continuing consumer shift to greater online activity.

As expected, the company’s fraud business unit experienced “strong” year-on-year growth as a result of restarting more on-premise deployment activity, new contracts and strong renewals.

As a result, adjusted operating profit for the first half was expected to be approximately £27.5m, an increase of 3% on last year, and an adjusted operating profit margin of about 25.2%.

That was “marginally higher” than the firm had expected due to the noted one-off revenue impacts.

Because of the market opportunity available to the firm, the board said it was continuing to increase investment in its people, technology and channel-to-market capacity.

GB Group’s balance sheet and cash conversion remained strong, with net cash and treasury deposits of £39.5m as at 30 September.

The firm also had an unused revolving credit facility of £110m.

Looking ahead, the directors said they remained positive over the company’s long-term prospects, with its markets featuring positive structural growth drivers.

The board confirmed that the outlook for the second half remained in line with its expectations.

“We are pleased with the financial and operational performance over the past six months, particularly considering the conditions many of our customers and teams around the world continue to experience,” said chief executive officer Chris Clark.

“We have made excellent progress against our growth strategy and have continued to support our customers throughout.

“GB Group remains excellently positioned at the forefront of the digital identity software industry.”