Tracsis (TRCS) H2 2024 earnings summary

Executive summary

• Achieved 10% growth in recurring revenue and strong cash flow, with no debt, following significant operational transformation and new senior leadership.

• Rail software pipeline increased by 200% across the UK and North America, with a new North American train dispatch product launched.

• Launched new train dispatch product in North America and expanded smart ticketing deployments in the UK, including the first contactless solution outside London.

• Missed FY24 financial targets due to UK election timing and slower North American pipeline conversion, but performance was in line with revised guidance.

• Defined a carbon reduction plan targeting carbon neutrality by 2030.

Financial highlights

• FY24 revenue was £81.0m, down 1% year-over-year, impacted by a £2m loss from the UK election and £4m of non-repeat revenue from FY23.

• Adjusted EBITDA was £12.8m, down 20%, affected by lower margins in data analytics consultancy and £3m in exceptional transformation costs.

• Adjusted profit was £10.4m, down 25%; statutory operating profit £1.0m, down 87%.

• Operating cost base reduced by 2% year-over-year; cash increased by £4.5m to £19.8m, with no debt and all material earn-outs paid.

• Underlying business growth exceeded 6.5%, with record revenue in Traffic Data and Events.

Outlook and guidance

• Margins expected to remain at FY24 levels in H1 FY25, with targets to return to FY23 margin levels for the full year and a long-term goal of EBITDA margin above 20%.

• FY25 priorities include converting the large North American Train Dispatch pipeline, growing UK PAYG smart ticketing, expanding RailHub, and completing at least one acquisition.

• Focus on organic growth, international expansion (especially North America), and margin-accretive M&A.

• Short-term UK headwinds anticipated, but long-term growth drivers in both UK and North America remain strong, with a 200% increase in multi-year software pipeline.