Cerillion plc (LON:CER) is poised for a strong second half, according to the latest research by Singer Capital Markets. Despite a year-on-year revenue decline in the first half of FY25, the telecoms software provider is expected to rebound significantly, underpinned by solid existing customer relationships and a robust expansion pipeline.
Singer Capital Markets highlights that Cerillion expects to report £20.9m in H1 revenue, compared to £22.5m the previous year. However, margins remain resilient with EBITDA of £10m at an impressive 48%. According to analyst Harold Evans, this outcome was made possible by “improved Services day-rates, which compensated for lower licence sales,” with renewals and expansions expected to be concentrated in H2.
A standout growth opportunity includes a significant expansion with a major European customer—believed to be Norlys following its acquisition of Telia Danmark. This deal could see Cerillion’s BSS/OSS platform manage nearly 1.9 million additional mobile customers, a boost that underscores the company’s strong positioning in the market.
“Consider that CER is well placed to meet (or even exceed) FY25 consensus EBITDA (£22.0m) even in the absence of a further new win,” Evans stated, pointing to the strength of Cerillion’s recurring revenue from existing clients. He notes that more than 85% of the company’s income typically comes from current customers, making its financial outlook notably stable.
The research further explains that fluctuations between half-year periods are not unusual for Cerillion, given the timing of revenue recognition on large contracts. Evans advises not to “over-obsess” over the H1 numbers, stressing that “growth has not been linear” and pointing to visible prospects for H2, including the $11.4m Ucom contract and two other major wins from FY24 expected to go live soon.
With shares currently trading at 1300p, Singer Capital Markets maintains a 12-month target price of 1900p—a potential upside of 46.2%. The stock is also trading at its lowest P/E multiple for five years, signalling what the broker sees as a strong buying opportunity.
On a Final Note, Cerillion’s continued focus on existing customer expansions, alongside a “very strong” new business pipeline, puts it in a solid position to deliver sustainable growth. Investors may find the current valuation compelling, particularly given the resilience shown in challenging half-year conditions.
