- Company is growing ahead of markets
- Recurring revenues and earnings ahead of target
- More earnings-enhancing acquisitions to come
Compliance services and software firm Marlowe (MRL:AIM) posted a sharp increase in revenues and earnings for the year to March.
The main contribution came from acquisitions, although organic sales growth was also respectable and the company says over 85% of revenues are now recurring.
The shares climbed as much as 4% to 845p in mid-morning trading.
STRONG GROWTH
Sales for the year increased by 65% to £316 million, while the current annualized revenue run-rate has jumped to £434 million.
The firm now expects to exceed its £500 million annual run-rate target ‘materially ahead’ of its original target of March 2024.
Meanwhile, EBITDA (earnings before interest, taxes, depreciation and amortisation) soared 90% to £54.4 million.
The current annual run-rate of EBITDA is already £77 million and the firm now expects to exceed its £100 million target ahead of its previous forecast.
One of the drivers of this growth is annual recurring revenue from software sales, or ARR. This jumped to £38 million and generated around 25% of the annualised EBITDA run rate.
Acquisitions have been key to Marlowe’s growth, with a total spend last year of £314 million across 20 deals, including the £135 million purchase of Optima Health, which has ‘transformed’ the scale of its occupational health offering, the company claims.
The firm said the integration of each business was on track and their performance was either in line or significantly ahead of expectations.
UPBEAT OUTLOOK
Chief executive Alex Dacre put the firm’s ability to deliver market-beating growth down to its ability to cross-sell services and software and its low rate of customer churn, due to high service levels.
‘We operate in highly attractive acyclical markets with strong structural tailwinds, and benefit from the business-critical requirements for our services, which are driven by increasingly stringent regulations, greater enforcement and increased ESG requirements,’ said Dacre.
‘We are delivering at pace on our vision of becoming a one-stop provider for our customers’ compliance needs. We have high visibility with over 85% recurring revenue from delivering our services through SaaS-based subscriptions and multi-year contracts,’ he added.
The group has made a positive start to the new financial year with ‘good levels of organic growth’ supplemented by six further acquisitions. The company also said that it has a ‘significant pipeline of earnings-enhancing service and software acquisitions’ in its sights.
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