FD Technologies reports mixed first half
By Josh White
Date: Tuesday 26 Nov 2024
(Sharecast News) - FD Technologies reported mixed half-year results on Tuesday, as revenue from its KX platform grew 5% to £39.5m, helping to offset a 12% decline in revenue from its First Derivative division.
The AIM-traded firm said group revenue declined 7% over the six months ended 31 August, to £118.2m, which it put down to challenging market conditions, particularly in First Derivative.
Adjusted EBITDA fell to £10.5m from £14.2m year-on-year, due to increased investment in KX's growth initiatives.
KX, the group's data analytics and decision-making platform, recorded an 8% increase in annual recurring revenue to £74.6m, or 10% at constant currency.
Annual contract value additions reached £7.4m, within the expected range of £6m to £8m.
Net revenue retention stood at 112% at constant currency.
The group said it was undergoing a significant transformation with the planned divestment of First Derivative for £230m, expected to close on 2 December.
Following the sale, FD Technologies said it would be exclusively focussed on KX as its core business.
From the net divestment proceeds of £205m, £54m would be retained to fund KX's growth, while £120m would be returned to shareholders through a tender offer and potentially a special dividend.
The divestment was aligned with the group's strategy to enhance KX's position as a leading provider of real-time analytics in sectors such as capital markets, aerospace and defense, and semiconductor manufacturing.
FD Technologies said it aimed to accelerate annual recurring revenue growth to about 25% annually, and achieve positive cash EBITDA for KX by the 2027 financial year.
For 2025, the board said it expected KX to add £16m to £18m in ACV and achieve annual recurring revenue growth of 11% to 15%.
"We have made significant strategic and operational progress in the first half, with the divestment of First Derivative and strong execution in KX," said chief executive officer Seamus Keating.
"Following the completion of the sale of First Derivative, we expect to return cash to shareholders, in line with our disciplined approach to capital allocation, and KX will be a pure-play, high-growth software business; fully funded and well-positioned to capitalise on the significant and growing global market opportunity."
At 1352 GMT, shares in FD Technologies were up 8.92% at 1,954p.
Reporting by Josh White for Sharecast.com.
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