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Managed services firm, Redcentric, has released its interim results for the eight months ending September 2013. Revenue was £21m (67% annuity revenue) and adjusted EBITDA was £3.6m (slightly ahead of management expectations of £3.5m). These are the first set of results from the company since incorporation back in February and subsequent admission to AIM in April. We therefore can't make comparisons on last year.
Redcentric has followed a rapid path of evolution. lts life began in the current form following demerger from Redstone (see Redstone reconfigures ‘sum of the parts’) in February. Management then set about working quickly to gain scale and the company morphed again in November following the reverse takeover of InTechnology (see Redcentric to acquire InTechnology Managed Services).
The mid-market (Redcentric targets enterprieses with 200-5000 users) is a very broad and mixed environment and as such there are not typical ‘market leaders’. However, there are many IT services firms that have found ‘rich seams to mine’ by working in their own particular niches. In building scale (which we estimate equates to pro-forma revenues of c£90m following the InTechnology acquisition), Redcentric will have greater coverage of the market - and that should lead to plenty of cross-selling opportunities. Indeed, in today’s interim statement, management says “early signs are that the company is successfully winning further business from its existing customer base and new customers”.
We have written extensively about Redcentric this year, with the focus being on its creation and evolution. Next year, we would expect to see another gear change and hope to write more about contract wins and organic growth.
