Gamma Communications (GAMA) H1 2024 earnings summary

Executive summary

• Achieved 10% revenue growth to £282.5m in H1 2024, with all business units growing at both gross profit and EBITDA levels, driven by organic expansion and strategic acquisitions including Satisnet, Pragma, Coolwave, BrightCloud, and a conditional agreement to acquire Placetel in Germany.

• Reached 1 million UK cloud seats, adding 48,000 new seats in H1, and continued investment in a unified portal to enhance customer experience and operational efficiency.

• High recurring revenue (89%) and strong cash reserves underpin business stability and support a robust balance sheet.

• Interim dividend increased 14% to 6.5p per share, with a completed share buyback programme (£27.3m spent).

• The Board is considering a move to the Main Market, with an update expected in January 2025.

Financial highlights

• Revenue up 10% year-over-year to £282.5m; adjusted EBITDA up 10% to £62.2m; adjusted EPS up 16% to 42.5p (constant tax basis), and adjusted PBT up 16% to £56.0m.

• Gross profit up 11% to £145.8m; gross margin improved to 52% (from 51% in H1 2023); EBITDA margin at 22%.

• Operating cash conversion at 100%, with £59.6m cash generated from operations and a net cash position of £142.9m at period end.

• Dividend increased 14% to 6.5p; recurring revenue at £252.7m, 89% of total revenue.

• CapEx for H1 down to £7.8m due to lower R&D capitalization and tech team restructure.

Outlook and guidance

• Guiding to the top half of the adjusted EBITDA range (£120.9m–£127.4m) and top end of EPS range (78.4p–84.0p) for full year 2024.

• CapEx guidance reduced to £18m–£21m for the year, with operating cash conversion expected to remain above 90%.

• Continued focus on organic growth, strategic acquisitions, and further expansion in Germany and Europe.

• Enhanced product set and recent acquisitions expected to drive further growth into 2025 and beyond.

• Share buyback programme expired and will not be extended.