TPXimpact ends third quarter in line with expectations

TPXimpact reported a positive performance in the December quarter in a trading update on Monday, aligned with its financial targets for the current financial year.

The AIM-traded firm said in the third quarter, revenues jumped 32% to £20.2m compared to the same period last year, contributing to a year-to-date revenue increase of 25% to £61.8m.

New business acquisitions in the first nine months of the 2024 financial year totalled £130m, with £25m secured in the third quarter.

The company's project pipeline for new endeavours remained robust, promising further growth.

TPXimpact said net debt excluding lease liabilities narrowed to £10.7m by 31 December, down from £12.8m on 30 September.

The board said the reduction reflected its focus on optimising working capital, while its net debt-to-adjusted EBITDA ratio, calculated on a rolling 12-month basis, dropped below 3.0x, ensuring compliance with banking covenants.

TPXimpact said it had streamlined its operations by introducing its digital transformation platform, consolidating the expertise of its consulting, data and insights, and RedCortex teams.

The official launch of Digital Transformation was scheduled for 1 April, with the move set to restructure TPXimpact into three distinct businesses - Digital Transformation, Digital Experience, and KITS, in a bid to enhance focus, efficiency, and client accessibility.

Looking ahead to the rest of the current financial year, the firm’s management said it was aiming for revenue between £80m and £85m, representing like-for-like revenue growth of 15% to 20%, and adjusted EBITDA in the £4m to £5m range, with an adjusted EBITDA margin of 5% to 6%.

Furthermore, the company targeted a net debt excluding lease liabilities of £11m by 31 March, translating to a net debt-to-adjusted EBITDA ratio of less than 2.5x by the year-end or shortly thereafter.

Looking to the 2025 financial year, TPXimpact said it was currently undergoing budgeting processes.

Although specific guidance for the new year would be provided later, the board said it was maintaining targets of like-for-like revenue growth of 10% to 15% and further margin improvements of 2% to 3% over 2024 levels.

Committed revenues for 2025 stood at about £65m, representing a substantial 30% increase from the same period last year for 2024, bolstering confidence for the upcoming fiscal financial year, despite potential disruptions from external factors like a general election.

“I am pleased by the progress in executing our strategy in the third quarter, and the continuing improvement in the financial performance of the business,” said chief executive officer Bjorn Conway.

“We remain on track to meet our targets for the current financial year.

“I was also delighted by our certification as a B Corporation announced on 9 January, reinforcing our commitment to being a responsible and sustainable business, as well as a profitable one.”

Conway said that although the company’s budgeting process was is still underway, the extent of committed revenues for the next year provided a solid foundation for achieving next year's targets as they currently stood, building on its new win rate and the successful execution of its strategy and three-year plan.

“The outlook remains positive, irrespective of the short-term uncertainty that may occur due to a general election, and I am grateful to all our people for their efforts and commitment to our goals and values.”

At 1217 GMT, shares in TPXimpact Holdings were down 2.53% at 38.5p.

Reporting by Josh White for Sharecast.com.