Cerillion PLC (LSE: CER)

Cerillion PLC (LSE: CER) a UK-based software provider listed on the FTSE AIM 100, specializes in billing, charging, and customer relationship management (CRM) software. The firm's core activity is the design and delivery of telecommunications software solutions and related equipment. Cerillion’s operations are organized into four key segments: Services, Software, Software-as-a-Service (SaaS) & Others. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 1,500.00

• Revenue and Profitability Decline Suggest Some Short-Term Headwinds - While the company notes that the shift in licence renewals/extensions toward the second half of the year was expected, the 7% decline in revenue and 12% drop in adjusted profit before tax during H1 FY25 may suggest some sensitivity in the revenue model to timing of contract signings. This could potentially indicate a degree of volatility or lumpiness in earnings, which might make short-term forecasting more challenging for stakeholders.
• New Order Intake Slightly Down Despite Growing Pipeline - Although the new customer pipeline grew by 3%, actual new orders decreased by 3% year-on-year during H1 FY25. This may point to slower conversion of opportunities into signed contracts, which, if it persists, could affect the company's ability to sustain consistent top-line growth. It may also suggest longer sales cycles or increased competition in the market.
• Heavy Reliance on Existing Customer Base Could Limit Diversification - 98% of revenue came from existing customers in H1 FY25, compared to 89% in the prior year. While this reflects decent customer retention, it may also imply limited expansion into new customer segments during the period. A continued high dependence on a concentrated client base might pose a risk to revenue diversification, especially if any major customer reduces or delays spending.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

CER Daily Technical Chart, Source - Refinitiv

Conclusion

CER is expected to trade at a discount, considering New Order Intake Slightly Down Despite Growing Pipeline, and fears of global slowdown. For conducting the valuation, the following peers have been considered - dotDigital Group PLC (LSE: DOTD), accesso Technology Group PLC (LSE: ACSO) and others.

Given its current trading levels, Heavy Reliance on Existing Customer Base Could Limit Diversification, recent rally in the share price, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the Current Market Price of GBX 1,500.00 as of 30 September 2025 at 10:25 AM GMT+1.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 30 September 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.