Brady, the trading, risk management and settlement software provider, hit the top line FY12 numbers it guided for in January (see Brady boosted by acquisitions). Prelims show revenue for the twelve months to 31 December up 47% to £28.1m. EBITDA excluding exceptional costs however were a nudge higher than the £5.2m forecast at £5.6m, giving Brady a healthy 20% margin vs. 19% last time.
The top line numbers are impressive, but we hoped to get a bit more colour this time on the underlying organic growth picture, however that wasn’t forthcoming. As Hot Views readers will know, Brady has been on an acquisition spree over the past year, buying up three companies energy trading suppliers Navita, syseca (see here) and most recently in November US-based recycling metals trading provider SAI (see here). Our analysis points to an additional £11m+ in revenue from these acquisitions in the year based on their prior revenues. Stripping this out would actually mean Brady declined c10% on an organic basis.
Nonetheless, the deals would appear to be delivering traction. Brady doubled its client base to c300 at the end of 2012, and this has helped drive a number of cross-sell deals. Brady is also embarked on moving over to a SaaS rental model for its software. However this has been slower than anticipated, with just 3 out of 20 significant deals signed in the year using this approach. It said this was because it had focused on completing on up-front licence deals basis ‘in line with our objective of delivering shareholder returns’. So does this mean that Brady believes SaaS won’t deliver shareholder returns?
The answer is apparently 'no'. Brady said the benefits from the rental model are an improved ability to forecast revenues with inherently lower licence revenue risk, ultimately higher visibility and quality of earnings and higher lifetime revenues from individual client contracts. Not sure we would agree with that analysis.