Next Fifteen Communications Group PLC (AIM:NFC) “yet again outperformed market expectations” with its full-year results, Berenberg noted.
The “beat” on revenue was modest at just 1% of the market consensus but did come on the back of a series of upgrades to guidance in recent months.
The top line grew by 23% on an organic basis from the previous year, driven by the relatively new segments of Customer Delivery (40% organic growth) and Business Transformation (100% organic growth) as clients focused on maximising revenue growth in a digital-first environment.
The more established segments of Customer Insights (c19% organic growth) and Customer Engagement (c16% organic growth) also fared well, with an increase in revenues from existing customers, such as Google and Proctor & Gamble, and new customers.
“The high organic growth, and a pro-active management of the cost base improved the operating margin – up to 21.9% from 18.5% in the prior year, beating the consensus EBIT [earnings before interest and tax] and EPS [earnings per share] expectations by c6% and 2% respectively,” Berenberg noted.
The data and technology-led media and growth consultancy company will face tougher comparative figures this year but has got off to a strong start.
The broker has upgraded its revenue forecast by about 1%, its EBIT estimate by 4% and its EPS prediction by 7% for the current fiscal year but believes these upgrades could be conservative.
“Next15 has a very healthy balance sheet, which is net cash (£35.7mln) as of 31 January 2022 – versus $14mln [sic] at the same stage last year. With cash on the balance sheet and a strong M&A pipeline, we think that there will be further accretive bolt-on acquisitions during the year. The group has made more than 10 acquisitions since 2014 and has clearly done a great job deriving value from them,” Berenberg concluded.
The broker sticks with its ‘buy’ recommendation and 1,700p price target.
Shares in Next Fifteen were 1.8% in lunchtime trading at 1,450p.