Software Circle PLC on Thursday said annual profitability surged, driven by acquisitions and margin expansion, despite mixed organic revenue performance across its portfolio.

The UK and Ireland-focused vertical market software investor said operating earnings before interest, tax, depreciation, and amortisation for the financial year ended March 31 jumped 71% to £4.8 million from £2.8 million a year earlier, as the group’s operating Ebitda margin improved to 26% from 17%.

However, shares in Software Circle were down 4.0% at 28.60 pence in London on Thursday afternoon.

Adjusted Ebitda, which accounts for central administration costs, rose 88% to £3.2 million from £1.7 million, with the margin up to 17% from 10%, hitting the firm‘s target of exceeding 15%.

Revenue rose 13% to £18.3 million from £16.2 million. Organic revenue grew 5% excluding print software unit Nettl Systems, but fell 7% including it due to weaker non-recurring income.

The company made three acquisitions during the year - Bethebrand, LinkMaker and Total Drive - bringing the group total to nine businesses. It ended the year with annualised revenue of just over £20 million and a run-rate adjusted Ebitda margin of around 20%.

Software Circle said its main financial priority remains maximising operating cash flow per share, which declined to 0.5 pence from 0.6p, reflecting a capital raise in September 2023.

The group had £8.2 million in cash and a £10 million available debt facility at year-end. It said it intends to release full-year results in July.

‘We believe [operating cash flow per share] is the clearest long-term indicator of shareholder value creation,’ the company said.

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