Tracsis confident despite weaker first half performance

24th Apr 2024 12:37

(Sharecast News) - Transport technology provider Tracsis reported first-half revenue of £36.6m on Wednesday, reflecting a decrease of 6.7% year-on-year.

The AIM-traded firm said its adjusted EBITDA for the six months ended 31 January stood at £5.7m, down 24%, with an adjusted EBITDA margin of 15.5%, which was 350 basis points lower than the same period a year earlier.

It recorded a slight decrease in cash reserves to £16.8m, from £17m in the first half of 2023, while adjusted diluted earnings per share dropped to 10.3p, representing a decline of 36.1%.

Tracsis declared an interim dividend of 1.1p per share, marking a 10% increase from the previous period.

The company's financial performance was in line with expectations, with notable growth seen in rail technology and services recurring and repeat revenue, which increased 12% to £12.1m.

Its total revenue decline was, however, put down to the non-repeat of first half 2023 perpetual rail technology software licences.

Tracsis said it expected revenue growth for the full year to be weighted towards the second half, reflecting milestone delivery timelines in the orderbook and software-as-a-service (SaaS) transition for new contract wins in North America.

Operationally, Tracsis said it had seen significant pipeline growth in major software opportunities in both the UK and North American markets.

The company said it had secured several new contracts, including the next phase of development work to expand RailHub, which were expected to contribute to revenue growth in the second half.

Additionally, Tracsis said it made further progress in expanding pay-as-you-go (PAYG) smart ticketing, with deployments at Transport for Wales and Merseyrail, and the rollout of the PAYG mobile app platform 'Hopsta' with a UK train operator.

Tracsis said it had also ventured into the US software market segment through the launch of a new computer-aided dispatch product with the Northern Indiana Commuter Transportation District (NICTD), scheduled to go live in May.

The company said the transformation of its operating model was proceeding as planned, aiming to create a scalable platform for accelerated growth.

Looking ahead, Tracsis reported an encouraging start to the second half of the year, with high activity levels across both divisions and further growth anticipated in the rail technology pipeline.

With several rail technology opportunities, particularly in North America, in the final stages of procurement, the firm said it expected its performance for the full year to be in line with market expectations.

"The programme of actions to transform the group's operating model is progressing to plan and we are beginning to see the benefit in the growth of our pipeline of major software opportunities," said chief executive officer Chris Barnes.

"Our financial performance for the period reflects this period of transition, with further growth anticipated in the second half and beyond.

"We have secured important new contract wins and made good progress in growing rail technology software licence usage and recurring revenue in the period."

Barnes said he was "particularly encouraged" by the company's success in North America, where it was soon to go live with an important new dispatch product.

"Our team has done a great job to deliver this, opening up a large new segment in this market.

"Digital transformation will continue to play a significant role in the rail industry's transition to a data-driven, customer-focused, safety-critical future and Tracsis' product offering aligns well with this."

Tracsis was confident in its growth prospects, Chris Barnes added, underpinned by recent contract wins and a fast-growing pipeline, as it continued to see significant long-term tailwinds in both the UK and North America.

"We therefore remain committed to our strategic growth and investment plans and will continue to pursue both organic and acquisitive growth supported by a strong balance sheet."

At 1213 BST, shares in Tracsis were down 3.61% at 814.5p.

Reporting by Josh White for Sharecast.com.