Rapid growth robotic process automation (RPA) specialist Blue Prism (PRSM:AIM) has again told the market it will beat revenue expectations.
‘Momentum has continued to build with 151 new software deals secured in the five months to 31 March 2017, of which 87 were new customers and 60 were upsells across 40 existing customers,’ the company update tells us today.
Interestingly, all new customers were secured indirectly via Blue Prism’s channel partners, blue-chip global organisations such as Accenture, Deloitte, Capgemini, Hewlett Packard Enterprise and IBM.
MULTIPLE UPGRADES
That’s the sixth time since its March 2016 IPO at 78p that the company has said forecasts were too low. That tells us two important things. First, there is clearly pent-up demand for this type of labour freeing, money saving workforce automation.
Secondly, even management finds it difficult to predict the market appetite and pace of take-up, let alone analysts.
Today’s news sees Roger Phillips, analyst at the firm’s broker Investec, up his 2017 revenue estimate to £20m. As recently as January he was anticipating just £13.05m.
PLENTY OF RED INK, BUT...
It’s worth noting that investors should expect plenty of red ink on the bottom line for some time despite the upgrades. According to Phillips, Blue Prism is likely to run up an £8m deficit on an earnings before interest, tax, depreciation and amortisation (EBITDA) basis this year, and roughly the same sized loss at a pre-tax level.
Losses are also predicted for 2018 and 2019, of £5.5m and £3m respectively on the EBITDA line.
But those figures are based on fairly conservative top line growth. Investec’s Phillip’s is pencilling in just £25m and £28m revenue for 2018 and 2019 respectively, or 25% and 12% growth, presumably taking the hint from management to err on the side of caution at this early stage.
We suspect that this is seriously underestimating growth and today’s record 555p share price (up 16% on Thursday) may in time look cheap.
