Instem PLC (LON:INST) saw underlying earnings (EBITDA) rise in 2020 and said it has good visibility for the current year with growing recurring revenues.
The provider of information technology solutions to the life sciences sector said revenue increased 10% to £28.2mln in 2020, or by 3% on a like-for-like basis, from £25.7mln in 2019.
Software-as-a-service (SaaS) revenues were 25% higher at £8.0mln (2019: £6.4mln) while recurring revenues, which include support fees, jumped 13% to £16.9mln from £14.9mln in 2019.
Adjusted EBITDA improved to £5.9mln in 2020 from £4.9mln the year before while the reported profit before tax was positive at £2.5mln versus a loss the previous year of £0.9mln. Adjusted profit before tax, which excludes one-off items and adjusts for foreign currency fluctuations, leapt to £4.0mln from £3.2mln the year before.
The cash balance at the end of 2020 stood at £26.7mln, up from £6.0mln in 2019, after the company raised £15.7mln in June of last year through a share placing.
READ Instem raises £15.75mln for acquisition opportunities
" The performance during the period highlighted our resilience - especially given the COVID-19 backdrop. Our proven model continues to generate strong cash flows while the combination of increasing demand for regulatory-backed solutions and a growing demand for artificial intelligence and in silico solutions in the drug discovery process underpins our confidence in further leveraging our product base. Importantly, we already have good visibility for the current year with growing SaaS revenues and a strong pipeline,” said Phil Reason, the chief executive officer of Instem.
"We are extremely pleased with our continued strong organic growth and increasing ability to cross-sell to existing and new clients. Furthermore, we are primed to build on this momentum, having strengthened our proposition post period end. The recent acquisitions of d-wise and The Edge highlight our ability to add scale and leverage existing customer relationships with a view to further enhancing earnings and profitability, while providing a strong platform for continued growth. In addition, we are continuing discussions with a number of other potential acquisition targets.
"Given the structural backdrop and opportunities within our existing client base, we are confident that we are well placed to continue growing recurring revenues, margins, and cash generation, and look forward to augmenting organic growth via our ongoing acquisition strategy,” Reason added.
Instem PLC (AIM: #INS, @Instemsoftware) Will announce Full Year results on Monday 12 April 2021. Investor presentation via @InvestorMeetCo to take place on afternoon of results at 4pm: https://t.co/F6S3TWGZej
— Walbrook PR (@WalbrookPR) March 30, 2021
Research house Progressive Equity Research said the results were as presaged in the company’s January trading statement.
“In our view, the two acquisitions made during the first half of 2021 have transformed the group. So, while the FY 20A results demonstrate Instem’s resilience in the face of COVID-19 driven challenges, they do not reflect the group’s significant potential incorporated in our unchanged FY 21E and 22E earnings estimates,” Progressive said.
“The group’s three business areas continue to report strong momentum, with each reporting EBITDA growth during the period. Operational highlights of FY 20A include a number of contract wins in both the Study Management and Regulatory Solutions businesses and another doubling of revenues in the In Silico Solutions unit,” Progressive added.
The research firm has published its forecasts for 2023, projecting revenues will have more than doubled from 2020’s levels to £60.9mln.
Progressive has pencilled in a figure of £13.5mln for adjusted EBITDA in 2023, up from a forecast £8.6mln this year and £11.3mln next year.
Shares in Instem were unchanged in early deals.
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