- Full-year profit ahead of market
- Upgrade to 2025 outlook
- New £20 million share buyback
Shares in customer feedback platform Trustpilot (TRST) jumped 13% to 307p after the firm reported full-year profit ahead of expectations and upgraded its outlook alongside revealing a new £20 million share buyback programme.
The shares have surged almost 50% over the last year, comfortably ahead of the 4% advance in the FTSE 250 mid-cap index.
STRONG GROWTH
Revenue for the year to 31 December 2024 increased 18% in constant currencies to $210.7 million, driven by a 17% increase in average annual contract value to $8,798.
Bookings, or the annual contract value signed or renewed, increased 21% in constant currencies to a record $239 million, while the net dollar retention rate increased to 103% from 99%.
Strong operating leverage drove adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) up 55% to $24.1 million, ahead of consensus forecasts.
The company announced a new £20 million share buyback following the $42.9 million spent on buybacks in 2024, equal to 2% of the firm’s market capitalisation.
Looking ahead, the company said it expects high-teens percent constant currency growth with EBITDA growth ahead of market expectations and a 2% improvement in adjusted EBITDA margin.
WHAT DID THE COMPANY SAY?
Chief executive Adrian Blair commented: ‘We executed well in 2024, delivering record bookings, profitability and cash generation.
‘Product innovation is at the heart of our offering and in April we introduced new features which provide unique insights into consumer behaviour and market dynamics.
‘Taken together these have underpinned the significant improvement in last 12 months net dollar retention and driven bookings growth.’
Following the strong results and raised outlook, investment bank Berenberg increased its 2025 adjusted EBITDA forecast by 8% and the following two years by 6% apiece.
NETWORK EFFECTS
Investment director Russ Mould at AJ Bell commented: ‘Thousands of businesses now turn to Trustpilot for customer transparency and the underlying consumer data analytics it provides to clients.
‘This creates valuable network benefits. The more consumers that use the platform and share their own opinions, the richer the insights the company can offer.
‘Done well, this creates a virtuous circle where consumers feel drawn to Trustpilot because it is where meaningful services are listed and reviewed, and the more consumers who use Trustpilot, the more businesses will feel they can’t afford to not be on the platform.
‘In this context, the big increase in number of active reviews in 2024 is highly significant. The company is in the early stages of profitability – having just reported its first annual statutory profit – but a £20 million share buyback is a show of confidence in its future prospects along with the upgraded guidance for 2025.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Martin Gamble) and the editor of the article (Ian Conway) own shares in AJ Bell.
