ReadyTech (RDY) H2 2024 earnings summary

Executive summary

• Achieved 10.2% year-over-year revenue growth to $113.8 million, with recurring SaaS revenue up 13.1% to $95.4 million, now 83.8%–84% of total revenue.

• Signed 22 new enterprise contracts worth $12.5 million, expanding the enterprise pipeline to $31.8 million and increasing average revenue per new customer by 25% to $119.1k.

• Major wins in higher education, local government, and justice sectors, including the first university-wide student management system contract, unlocking a $240 million higher education market opportunity.

• Maintained strong net revenue retention at 104% and continued to displace incumbents in key markets.

• Focused on operating leverage, innovation (notably AI), and expanding into new verticals.

Financial highlights

• Underlying EBITDA grew 11.5% to $38.8 million, with margin at 34.1%; underlying cash EBITDA increased 20.2% to $20.2 million, margin up to 17.8%.

• Operating cash flow conversion reached 103.7%, up from 95.4% last year; cash flow from operating activities was $40.3 million.

• Expenses were $75 million, up 9.6% year-over-year, but flat half-on-half, aided by operational efficiency and AI-driven productivity.

• Available funds at year-end totaled $29.9 million, with net leverage at 0.5x.

• Total investment in R&D was 30% of revenue, and 7.1% of revenue was invested in sales and marketing.

Outlook and guidance

• FY25 revenue growth expected to accelerate to low-to-mid double digits, with EBITDA margin guidance of 34%–35% and cash EBITDA margin improvement of 100 bps.

• Medium-term (FY27) targets: revenue of $170 million and cash EBITDA margin above 20%.

• Strong enterprise pipeline of $31.8 million, with new opportunities in higher education and AI-enabled products.