Fintel earnings rise as it expands through acquisitions

19th Mar 2024 12:04

(Sharecast News) - Financial technology and support specialist Fintel reported a 5.6% increase in adjusted EBITDA in its 2023 results on Tuesday, to £20.5m, with a margin improvement to 31.5%.

The AIM-traded firm said the growth came amid substantial investments both organically and through mergers and acquisitions.

It said its core software-as-a-service (SaaS) and subscription revenue experienced a modest rise of 2.2% to £37.6m, but when adjusted for specific contractual changes and acquisitions, that revenue saw a more significant uptick of 11.8% on a like-for-like basis.

Overall core revenue edged up by 0.3% to £56.6m.

In 2023, Fintel completed four strategic acquisitions with an initial net cash outlay of £13.3m, contributing £1.5m in core revenue for the year.

Despite aggressive investment strategies, Fintel said it maintained a strong financial position with £12.7m in cash and significant credit facilities available for future investments.

Its net cash position stood at £1.7m, a decrease from the prior year due to the focus on business expansion and merger and acquisition activities.

Adjusted earnings per share remained steady at 12.2p, with a proposed final dividend increase of 6.2% to 3.45p per share.

Strategically, Fintel said it had concentrated on expanding its core activities, enhancing its technology and service platforms, and growing through acquisitions to augment its scale, intellectual property, and capabilities.

Notable growth was seen in SaaS and subscription revenues, fintech software, and distribution-as-a-service revenues.

The company also invested £4.8m organically into its technology and service platforms, launching new modules, and expanding its product offerings.

Fintel said the year's merger and acquisition activity aimed at increasing its scale and capabilities, and brought promising additions to the portfolio including MICAP, Competent Adviser, VouchedFor and AKG.

Since the period ended, it had acquired Owen James and Synaptic Software, alongside an investment in Plannr through Fintel Labs.

Looking ahead, Fintel's trading remained aligned with expectations, with the board expecting benefits from an improving mortgage market in 2024.

The company said it was well-prepared to capitalise on positive market dynamics, regulatory changes, and the growing demand for technology and data in financial services.

"2023 has been a defining year for Fintel - we have delivered a resilient financial performance and significant progress against our strategy, which balances growth across our core activities, organic investment and complementary mergers and acquisitions," said joint chief executive officer Matt Timmins.

"We are executing our strategy at pace, enhancing our service and technology platform, increasing our scale and reach, and strengthening our position at the heart of the UK retail financial services sector to inspire better outcomes for all."

Timmins said the cash-generative nature of Fintel's business, underpinned by its financial resources, positioned the firm well to capitalise on the favourable market conditions for mergers and acquisitions, while delivering further organic growth and value to stakeholders.

"In the new financial year to date, we are trading in line with expectations and remain well positioned to take advantage of opportunities in our market."

At 1056 GMT, Fintel shares were down 4.23% at 272p.

Reporting by Josh White for Sharecast.com.