Tracsis revenue, earnings rise in final results

Transport technology provider Tracsis reported revenue of £82m in its final results on Wednesday, up 19% year-on-year.

The AIM-traded firm said adjusted EBITDA reached £16m in the 12 months ended 31 July, reflecting 13% growth, albeit with an adjusted EBITDA margin of 19.4%, down by 120 basis points.

Its cash position stood at £15.3m, slightly lower than the prior year’s £17.2m, while adjusted diluted earnings per share increased 19% to 38.5p.

Operating profit surged 123% to £7.3m, and profit before tax saw a substantial 179% increase to £7.1m.

Basic earnings per share experienced a boost of 348% to 22.8p.

The board declared a final dividend per share up 9% to 1.2p, resulting in a total dividend per share of 2.2p, up by 10%.

Tracsis said it achieved strong revenue growth across both of its divisions.

Rail technology and services revenue increased 26% to £37.9m, while data, analytics, consultancy and events saw a 14% rise in revenue, reaching £44.1m from £38.8m in the previous year.

Rail technology and services also recorded a 9% increase in annual recurring and repeat revenue, rising to £23.1m from £21.1m in 2022.

The company reported a 10% organic revenue growth for the entire group, adding that the adjusted EBITDA margin reflected an investment of around £1m in enhancing capabilities and integrating the group’s activities.

Tracsis managed cash outflows of £9.6m for contingent and deferred acquisition considerations, with all material earn-outs now settled.

The firm said it maintained healthy cash generation and a solid debt-free balance sheet, positioning it well for further growth.

Tracsis reported continued growth in rail technology software licence usage and annual recurring revenue.

It successfully delivered three large multi-year software-as-a-service (SaaS) contracts and experienced high demand for remote condition monitoring solutions.

Additionally, it secured two new pay-as-you-go (PAYG) smart ticketing technology contracts, while Rail Technology North America also made a significant contribution with a growing pipeline of opportunities.

In Data, analytics, consultancy and events, Tracsis saw high activity levels, including benefits from new contract wins.

The company said it made progress in simplifying its organisational structure based on common operating models.

Looking ahead, Tracsis expected its performance in the 2024 financial year to align with market expectations.

The company anticipated continued organic growth in rail technology and services software revenue, with the financial performance of data, analytics, consultancy and events remaining at a similar level to 2023.

Growth in 2024 was likely to be weighted towards the year’s second half due to delivery timelines and the transition to SaaS for new contract wins in North America.

Tracsis said it was well-positioned to capitalise on future growth opportunities, particularly in the rail industry’s digital transformation, with a strong pipeline in all rail markets.

Furthermore, the confirmation of Network Rail CP7 funding of £43.1bn and government plans for rail reform, including PAYG ticketing across the UK, indicated favourable conditions for Tracsis’ business.

“This has been a year of significant financial and operational progress for Tracsis,” said chief executive officer Chris Barnes.

“We have delivered strong organic and earnings-accretive acquisitive growth, have completed the implementation of several large, complex enterprise software contracts, and have made further progress in integrating the group’s activities and enhancing our capabilities.

“The performance of our North American rail business has been particularly pleasing alongside the strong performance of all businesses within the data, analytics, consultancy and events division.”

Barnes said trading in the first quarter started in line with expectations, adding that the group was well-positioned to deliver further growth in the coming year.

“We have a strong order book and a fast-growing opportunity pipeline across both divisions.

“We expect 2024 growth to be weighted towards the second half given the impact uncertainty in UK rail has had on delivery timescales and the impact an expected software-as-a-service transition will have on the phasing of rail revenues in North America.

“Digital transformation will continue to play a significant role in the rail industry’s transition to a data-driven, customer-focused, safety-critical future.”

Chris Barnes said the breadth of Tracsis’ product offering and digital end-to-end solutions had a “clear alignment” to the growing needs of the rail industry and increased demands from a customer experience perspective.

“We are well placed to help the industry to increase passenger revenues whilst also delivering operational performance improvements and efficiency savings.

“We remain committed to implementing our overall strategic growth and investment plans, and will continue to pursue both organic and acquisitive growth supported by a strong balance sheet.”

At 1317 GMT, shares in Tracsis were up 3.48% at 739.9p.

Reporting by Josh White for Sharecast.com.