ReadyTech (RDY) H2 2024 earnings summary

Executive summary

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

• Secured 22 new enterprise contracts worth $12.5m, expanding the enterprise pipeline to $31.8m, with average deal value per new customer rising 25% to $119.1k.

• Major contract wins in higher education, local government, and justice sectors, including the first university-wide student management system contract and expansion in TAFE, unlocking a $240m 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 $38.8m, with a margin of 34.1%; underlying cash EBITDA rose 20.2% to $20.2m, margin improving to 17.8%.

• Operating cash flow conversion reached 103.7%, up from 95.4% last year.

• Net revenue retention improved to 104%, with gross revenue retention above 96%.

• Expenses were $75m, up 9.6% year-over-year, but flat half-on-half.

• Adjusted net debt reduced to $20.1m, with net leverage at 0.5x.

Outlook and guidance

• FY25 revenue growth expected to accelerate to low to mid-teens percentage.

• Targeting EBITDA margin of 34%-35% and cash EBITDA margin improvement of 100 bps.

• Medium-term revenue target of $170m for FY27, requiring mid-teens growth in coming years.

• Cash EBITDA margin expected to exceed 20% by FY27.