Cerillion plc (LON:CER), a leading player in the Business and Operations Support Systems (BOSS) software market, continues to show impressive growth and profitability. According to the latest research from Panmure Liberum, authored by Andrew Ripper and Harvey Robinson, the company is comfortably ahead of consensus profit forecasts for FY24, reinforcing its position as one of the top performers in the UK-listed software sector.
Double-Digit Growth and Strong Margins
Cerillion has maintained a remarkable track record of consistent double-digit revenue growth. Over the past five years, the company has grown organically at an 18% CAGR, well above the industry average. In addition to this, Cerillion boasts an enviable EBITDA margin in the range of 40-45%, highlighting its efficient operations and profitability.
As Andrew Ripper and Harvey Robinson note, “Cerillion offers investors consistent double-digit revenue growth and an EBITDA margin in the range of 40-45%, the combination of which place it top of the UK-listed software peer group.” This blend of strong growth and high margins makes Cerillion a compelling investment opportunity.
Record Orders and Profit Upgrade
Cerillion’s latest trading update signals even greater things to come. The company reported record new orders, further strengthening its momentum heading into the next financial year. The report highlights a 12% revenue increase for FY24, including a robust 14% growth in the second half of the year. This performance has led Panmure Liberum to revise its profit before tax (PBT) estimate for FY24 from £18 million to £19 million.
Furthermore, Andrew Ripper and Harvey Robinson assert that Cerillion’s profits are expected to be “comfortably ahead of consensus”, further enhancing investor confidence in the company’s outlook.
High-Profile Client Wins
Cerillion’s growing roster of high-profile clients has also bolstered its reputation. A notable win is the €12 million contract with Virgin Media Ireland, announced last November. This deal includes a significant portion of Cerillion’s core software offerings, replacing legacy systems from a larger vendor. As Ripper and Robinson point out, this contract represents a major step forward, with the potential for further expansion.
“Our view is that this contract could be a game-changer in terms of helping to establish Cerillion’s credentials and expanding its serviceable market with Tier-1 operators,” they emphasise. Cerillion’s continued success with tier-1 operators like Virgin Media Ireland opens doors for further opportunities, setting the stage for long-term growth.
Positive Financial Outlook
Looking ahead, Panmure Liberum has increased its target price for Cerillion from 1700p to 1850p, underpinned by the company’s strong financial performance and promising pipeline. Net cash at the end of FY24 is expected to be £29.8 million, providing a solid financial foundation for future investments and growth initiatives.
Final Thoughts
Cerillion plc’s sustained growth trajectory, supported by its industry-leading profit margins and high-profile client wins, makes it a standout in the UK software market. With an upgraded profit forecast for FY24 and strong momentum in new orders, the company is well-positioned to continue delivering excellent returns for its shareholders. As the analysts at Panmure Liberum reiterate, Cerillion remains a “Buy” for those seeking long-duration growth driven by market share gains and consistent profitability.
