Aptitude Software Group PLC

Aptitude Software Group PLC (LON: APTD) provides financial management software to over 500 million end customers. It operates with six locations around the world.  

On 30^th June 2020, the group will announce its half yearly results.

Financial Highlights for the year ended on 31^st December 2019 (GBP Million)

(Source: Annual Report, Company Website)

During FY19, the group revenue surged 14% to £59.7m (FY18: £52.3m) while balance sheet looked strong with cash of £33.0m (2018: £29.2m) and net funds of £30.8m (FY18: £17.3m). The software and subscription revenue represented 48% of the total revenue in FY19. The strategic milestone was disposal of Microgen Financial Systems on 28 June 2019 for cash consideration of £51.4m. Consequently, a final dividend of 3.60 pence per share was recommended in FY19 (FY18: 4.40 pence), making a total ordinary dividend of 5.40 pence per share in FY19 (FY18: 6.60 pence).

Share Price Performance
 
Daily Chart as of March 27^th, 2020, after the market closed (Source: Thomson Reuters)

Aptitude Software Group’s shares closed trading session at GBX 360.00 on 27^th March 2020 and was up by 6.82% versus the previous day closing price. Stock's 52 weeks High is GBX 670.00 and Low is GBX 247.00.
Valuation Methodology
 

*Peers: Kainos Group PLC, GB Group PLC, SDL PLC, Atoss Software PLC, Innofactor PLC and Proactis Holdings PLC
 
Conclusion
 
During FY19, the group has shown significant performance along with transition into new business platforms including - Aptitude Insurance Calculation Engine, Aptitude Revenue Management and the Aptitude Accounting Hub. Moreover, the Group has started FY20 with a substantial subscription sale of Aptitude Revenue Management to a North American technology enterprise.
 
However, the performance of the company in long run is subject to several risk including – technological change and its ability to adapt it with new product offering, macroeconomic fluctuations and risk pertinent to client’s confidentiality, data security and compliance with regulatory policies.
 
Due to Covid-19 crisis, the group’s business would be negatively impacted since it required frequent international travel to tap international opportunities. Such travel bans would slow down the agreements and growth in the Group’s Annual Recurring Revenue.
 
Based on the valuation and factors highlighted above, we recommend investors to keep a “Watch” on the stock at the closing price of GBX 360.00 (as on 27^th March 2020), with support from new catalysts to be evaluated at a later stage.  
 
*All forecasted figures and Peers information has been taken from Thomson Reuters.

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