Trustpilot Group PLC (LSE:TRST) shares surged 9% after the online reviews group lifted its profit guidance and unveiled a £30 million buyback.
Peel Hunt said the results showed “everything is going in the right direction” and kept its buy rating with a 380p target price.
The company posted a 23% rise in half-year revenue to $123 million, with bookings, contracted sales that feed into future revenue, up 21% at constant exchange rates.
Operating profit, measured as earnings before interest, tax, depreciation and amortisation, rose 70% to $18 million, pushing the margin from 10.6% to 14.6%. Free cash flow more than doubled to $15 million, leaving Trustpilot with $67 million net cash.
Growth was strong across the board, led by Europe and the rest of the world, followed by North America and the UK. Customers are also spending more: net dollar retention ticked up from 101% to 103%.
The company stuck with its forecast of high-teens revenue growth for the year but nudged up profit guidance again, now aiming for a 14.6% margin. Peel Hunt estimates that points to a 4% upgrade to earnings.
There was one change in the boardroom, with chief financial officer Hanno Damm stepping down after ten years. A handover is underway while the company searches for his replacement.
Despite today’s rally, the shares are still down 35% this year, trading at around four times next year’s expected sales.
Peel Hunt argues that the combination of growth, improving profitability and a buyback could set the stage for a recovery.
The stock was up 17p at 17.6p.