Business Overview
D4t4 Solutions PLC (LON: D4T4) is a Sunbury-on-Thames, United Kingdom-based group, which is focused on solutions that enable clients to get the most from their data. It includes providing data collection, management, and analytics solutions, with a focus on providing end-to-end management of the entire data lifecycle. D4t4 Solutions has more than thirty years of experience in delivering the importance of data in business.

The company will release its full-year results in June 2020.

Trading Update (for the year ended 31 March 2020)
The group revenue is expected to be £21.7 million in FY20. The adjusted pre-tax profit for the financial year 2020 will be approximately £5.0 million.During the year to March 2019, the amount of recurring revenue increased from 29.6% to 46% of the total Group revenue, representing a growth of 31% in absolute terms on the prior year, with further scope to grow this crucial metric. On 31^st March 2020, the cash increased from £11 million in 2019 to approximately £12.7 million. Despite the current uncertainty created by the outbreak of COVID-19, the company made further substantial commercial progress in Q4 FY20, with several new contracts win in both new and existing clients. The company wins three major new contracts: two within the banking and financial services sector in the Americas, and one with an international telecommunications company headquartered in APAC. D4t4 has been taking several appropriate actions to mitigate the impact of Coronavirus. Regarding the current events, the company is reviewing both market guidance for FY 2020-21 and the full-year dividend payment for 2019-20.

Share Price Performance

Daily Chart as of April 17^th, 2020, before the market close (Source: Thomson Reuters)

D4t4 Solutions PLC’s shares were trading at GBX 175 at the time of writing before the market close (at 12.30 PM GMT) on 17^th April 2020, up by 7.69% versus the previous day closing price. Stock's 52 weeks High is GBX 281.99 and Low is GBX 120.00.

Valuation Methodology


*Peers: Eckoh PLC, 1Spatial PLC, Castleton Technology PLC, and Panoply Holdings PLC.
Conclusion
The market size is expected to grow at a growth rate of 13.2 per cent until 2022 from USD 189 billion (current) to USD 274 billion in 2022.The company has ended the year strongly despite the current unprecedented crisis, securing several notable wins with multinational clients - significantly a number were for multi-year services. The group also has a solid cash position; the other notable financial metric was the jump in the recurring revenues to approximately 46% from 29.6% of total revenue. This shift the business from providing the products on capital or perpetual based sales model to providing them as a service, with the associated upsurge in forwarding visibility.The company continues to drive stated strategic initiative to earn high margin, recurring revenues by building the data platform solutions and developing its innovative customer data platform software. Despite the backdrop, the business is upbeat about the prospects.  D4T4 continue to see good levels of sales activity amongst both existing and potential new corporate clients.

The revenue of the company grew to GBP 25.24 million in FY2019 from GBP 12.84 million in FY2015, reflecting a growth of 18.41 per cent on a CAGR basis.


Based on the above rationale and supported by valuation done using the above method, we have given a “Speculative Buy” recommendation at the current price of GBX 160.75 (as on 17^th April 2020, before the market close at 8:23 AM GMT) with lower double-digit upside potential based on 17.33x NTM Price/Earnings (approx.) on FY20E earnings per share (approx.).
 
 
*All forecasted figures and peers have been taken from Thomson Reuters.

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