- Stock tops FTSE All-Share leader board with near-17% jump
- Management talk up further margin gain
- Investors impressed by profit quality promise
Online reviews and analytics platform Trustpilot (TRST) surged on 19 September 2023 after telling investors it expects margin improvements to continue to flow through during the second half of the year (to 31 Dec).
Shares in the Denmark-based business jumped nearly 17% to 96.5p, their highest since March, after posting first half (to 30 June) adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of $5.7 million, or $3.4 million if you factor in the impact of capitalising sales commissions. That was 13% ahead of analyst projections, according to analysts at Megabuyte.
For the same period last year, Trustpilot ran-up a $5.4 million loss, while free cash flow of $6.2 million was a major step up from last year’s $13.1 million outflow.
MOVING IN THE RIGHT DIRECTION
In the six months, revenues grew 15% (18% at constant currencies) to $84.6 million, driven by strong regional performances and a 16% jump in bookings to $99.2 million, while ARR, or annual recurring revenue, increased 21% to $180 million.
What also grabbed investor attention was management talking up further operational efficiencies through the rest of 2023 that will strengthen the profitability profile of the business.
‘These results confirm the impressive journey back to profitability for Trustpilot, although bookings growth remains below that of late 2021 (high twenties %), which can be directly attributed to weaker macroeconomic conditions,’ said Megabuyte analyst Nathan Jackson.
That said, these results note some recovery in bookings growth in North America (up 11%) and a brightening demand environment, the analyst said.
Trustpilot listed in London in March 2021 with a market capitalisation of £1.08 billion, although this has since fallen to around £400 million after today’s spike.
