CLBS Celebrus Technologies Plc

03 December 2024

Celebrus Technologies plc

Half-year results for the six months to 30 September 2024

Celebrus Technologies plc (AIM: CLBS, "the Group", "Celebrus"), the AIM-listed data solutions provider, announces its half year results for the six months to 30 September 2024 ("H1 FY25" or the "Period").

On 9 July 2024 the Group announced that from the beginning of the current financial year it would be changing the currency in which it presents its financial results from UK pounds sterling ("Sterling") to US dollars ("Dollars").  Accordingly, the reported results for the six months ended 30 September 2024 and comparatives are shown in Dollars.

Financial highlights

 ·     Annual recurring revenue ("ARR") increased to $26.2m (H1 FY24: $21.3m, FY24: $25.5m)*

·     Total Revenue of $17.2m (H1 FY24: $16.2m, FY24: $40.9m)

·     Software Revenue (excluding third-party hardware) up 22.6% to $11.2m (H1 FY24: $9.1m, FY24: $27.7m)

·    Gross profit margin of 48.0% (H1 FY24: 37.0%, FY24: 52.9%) due to a lower proportion of low margin third-party hardware compared to the prior period

·     Adjusted profit before tax** of $1.0m (H1 FY24: $0.1m, FY24: $7.6 m), and statutory profit before tax of $0.3m (H1 FY24: $0.2m, FY24: $7.0m)

·     Adjusted diluted EPS of 2.55 cents (H1 FY24: 0.40 cents, FY24: 13.76 cents) and diluted basic EPS of 0.61 cents (H1 FY24: 0.47 cents, FY24: 12.27 cents)

·      Cash position of $25.9m (H1 FY24: $17.9m: FY24: $38.8m) with no debt

·      Interim dividend of 0.95p per share, up 3.3% (H1 FY24: 0.92p)

Operational highlights

·    Key wins both during and after the Period include a healthy mix of new logos and upsells of existing customers, which included a large global airline, a UK energy company, a US financial institution, an existing European retail customer, a bank in Poland, and an expansion within a healthcare customer in the US.

·    We continue to innovate the Celebrus platform, which now includes significant enhancements to PII protection, the launch of a self-service analytics platform, and cross-device continuance as a patent extension to our existing digital identity capabilities.

·    We continue to innovate our marketing approach and have launched several new campaigns for both awareness and lead generation. We are moving towards more focused Account Based Marketing campaigns for the next financial year.

·     We continue to invest in ensuring our security certifications and processes are consistently enhanced year on year.

·     Celebrus Cloud, our single-tenant private cloud offering, continues to be prominent in our key wins and pipeline.

·   We have migrated away from multiple datacenters to a single site as part of our transformation to being a cloud business. The new infrastructure includes several enhancements to how we onboard and support our customers.

Outlook

After some slowing down of customer decision making in the past couple of months reflecting the uncertain global geopolitical situation, we are seeing more positive movement in recent weeks. Year to date progress on growing the pipeline and the high visibility of opportunities expected to close in the second half underpin the Board's confidence in achieving full year expectations*** and continuing to drive the ongoing growth in ARR.

Bill Bruno, CEO of Celebrus, commented:

"We are grateful for the team's efforts in the first half of this fiscal year to set our organization up for success both this year and in future years. We have been on quite a journey as a business over the past few years, and it has been energizing to see the fruits of that labor starting to be realized across the business and with our customers. We continue to focus on how best to deliver value for our customers, while ensuring that our Sales, Delivery, and Customer Success teams are in lockstep across our key accounts. We have also continued to explore potential acquisition targets to enhance the Celebrus platform while continuing to invest in our organic growth initiatives."

* ARR (Annual Recurring Revenue) is the amount of revenue at a point in time that is expected to recur within the next twelve months.

** Adjusted profit before tax and EPS are calculated before amortisation of intangibles, one-off restructuring costs, foreign exchange gains/(losses) and share based payment charges.

 
^***For the purpose of this announcement, the Group believes market consensus for FY25 to be revenue of £34.8m ($44.2 m), and adjusted profit before tax of £6.4m ($8.1 m).

Inside Information: This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.  Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

About Celebrus Technologies plc

As a disruptive data technology platform, Celebrus is focused on improving the relationships between brands and consumers via better data. Celebrus redefines what digital identity verification means to power both next-level marketing and fraud prevention use cases. Deployed across 30+ countries throughout the financial services, healthcare, retail, travel, and telecommunications sectors, Celebrus automatically captures, contextualizes, and activates consumer behavioral data in live-time across all digital channels. Through the addition of behavioral biometrics and AI, Celebrus empowers brands to detect and prevent fraud before it occurs. To ensure that brands can begin to improve those relationships quickly, Celebrus Cloud activates the Celebrus platform efficiently for brands in a single-tenant, private cloud capacity.

The Group has offices in the UK, USA, and India with key talent in all markets to drive the growth of the business. Celebrus is fully compliant with all major data privacy regulations and the Group is accredited to ISO27001: Information Security Management. For more information, please see www.celebrus.com .

Operational review

Our Values

As a business, we focus on four key values in how we operate both internally and externally. These values form the basis by which we evaluate each tactic in our business planning for each financial year.

·      Integrity

We are honest and straightforward, and we do our best to communicate clearly and effectively. We don't use vendor terminology to confuse customers, and we trust each other to deliver on our goals. When we make promises, or set goals, internally or externally, we deliver upon them and hold ourselves accountable. We respect each other and work together to achieve the common goals of the business.

·      Customer-First Mentality

We put the customer first and go the extra mile for them. We live our mission to improve the relationships between brands and consumers via better data and we do that with our people, our technology, and our services. We aim to simplify their lives and deliver value.

·      Innovation

We do not rest, because complacency in the software space signals failure. But it's not just about our technology. It's about innovating everything we do, always questioning our processes and how we work, and looking for ways to improve in every facet of our business.

·      Simplicity

We use simple and effective communication. Arranging purpose-driven meetings, providing explanations to customers that are easy to comprehend, placing messaging in the marketplace that anyone can understand, and focusing on being efficient in our actions. 

Strategy

The mission for our business is to improve the relationships between brands and consumers via better data. Better data, from our perspective, is compliant, complete, timely, and usable in real-time. We have continued to innovate and build solutions for some of the most difficult challenges that organizations face today in digital. This has included enhancements to our digital identity capabilities, the further rollout of more analytics options for brands, and furthered PII protection to name a few.

We explain the Celebrus platform by likening it to a smartphone. The platform supports many capabilities and use cases, but what we sell to customers are applications that sit on top of the platform. Use cases range from marketing to customer experience (CX) to fraud, and this allows us to continue to focus on the "land and expand" approach to sales. What this creates is two funnels for the business: a sales funnel and an upsell funnel, which are managed by Sales and Customer Success respectively. We have continued to sell across many verticals and have established key wins over the past couple of years in financial services, travel and hospitality, retail, healthcare (US), and telecommunications. These wins have come from both our direct sales staff as well as partner-influenced opportunities.

We are continuing to evaluate potential acquisition targets as mentioned in our interim results this time last year. This discovery process is framed by a profile agreed at the Board level. While nothing is imminent at this time, our clear goal is to find proven technology that can be bolted on to the Celebrus platform providing us with an immediate ability to cross-sell to our customer base by way of a value-driven integration working similarly to our engagement with technology partners over the years. We will continue to innovate our platform regardless of the results of this search, but we believe it is prudent to continue reviewing options.

In the market, we have several "tailwinds" such as the rapidly declining digital identity capabilities of our competitors, browser changes and regulations, increased privacy awareness around the globe, and general frustration with tagging-based solutions and analytics platforms based on poor data structures. Our largest "headwind" tends to be organizations that have a fear of change and choose to remain with the status quo despite the acknowledgment that their data is not fit for purpose.

Contract wins

ARR increased to $26.2m (H1 FY24: $21.3m; FY24: $25.5m).

Key wins both during and after the Period include a healthy mix of new logos and upsells of existing customers, which included a large global airline, a UK energy company, a financial institution in the US, an existing European retail customer, a bank in Poland, and an expansion within a healthcare customer in the US.

We have evolved our usage of Hubspot further for both CRM and marketing automation, and we have combined that with our recent expansion of Celebrus Analytics' capabilities to ensure we are consistently measuring our pipeline, the impact of our marketing and sales investments, and the success of our outreach in our business development team. This continues to give us strong data to evaluate our pipeline and to continue to innovate our approach and improve our ability to close deals effectively and find new opportunities.

Partnerships

Our approach to partnerships continues to evolve over time. During the Period, we have furthered our engagement with several solution integrator partners and have developed new offerings with a few of our longer-standing consulting partners. This is critical to ensuring our ability to scale and leverage the business consulting expertise in these partner organizations to help guide our customers in their ability to gain more value from Celebrus.

We have also continued to extend and grow our technology partnerships, which are largely now focused on the sharing of joint customers and a value story from those customers to drive our messaging and joint-value proposition in the market. Some examples of this include our newer partnerships with Braze, Optimizely, and others, as well as our long-standing technology partners including Pegasystems and Teradata.

People

We are very fortunate to have our global team continually driving our business forward and working to ensure that we are always customer-first in our thinking and actions. We have seen great results from much of the restructuring completed in the prior financial year which has streamlined decisions, innovation, and created the opportunity for more accountability across the business.

We have rolled out an internal training platform to ensure our people have access to training for topics and skills required to add more value to our customers, and we will continue to focus on professional and personal development in the coming years. This has also included the launch of an apprenticeship program.

We have worked as a Management Team to put even more effort into our culture and bring people together from our various teams in meaningful ways, especially as we have continued to support hybrid working. This also includes finding ways to celebrate key wins within the business and with our customers to recognize the great efforts being put in by our people.

Current Trading & Outlook

After some slowing down of customer decisions in the past couple of months, which we believe was largely attributed to the uncertain global geopolitical situation, we are seeing more positive progress in our pipeline in recent weeks. Year to date progress on growing the pipeline and the high visibility of opportunities expected to close in the second half underpin the Board's confidence in achieving full year expectations and our target of continuing to drive the ongoing growth in ARR.

Financial review

Revenue and Gross Margin 

Total revenue for the Period was $17.2m (H1 FY24: $16.2 m) with a gross profit of $8.3m (H1 FY24: $6.0 m). License revenue increased to $3.8m (H1 FY24: $3.1 m), with total Software revenue (Revenue excluding third party hardware) up 22.6% to $11.2m (H1 FY24: $9.1 m) reflecting the impact of new logo wins and customer upsell in the Period. The gross margin on Software revenue was 66.3% (H1 FY24: 56.2%).

Annual Recurring Revenue

Annual recurring revenue increased during the Period to $26.2m (H1 FY24: $21.3 m, FY24: $25.5 m). The Board is confident of further growth in ARR in the second half as a result of the signing of new contracts either already signed in the second half or currently under negotiation.

Administration expenses and Profit before Tax

Administration expenses increased to $8.7m (H1 FY24: $6.2 m). Excluding items such as net foreign exchange differences and share-based payments, Operating expenses were $7.9m (H1 FY24: $6.2 m). The increased expense reflects further ongoing investment into customer-facing roles in the first half of FY25, as well as increased marketing activity.

Profit before tax was $0.3m (H1 FY24: $0.1m), and the Adjusted Profit before tax was $1.0m (H1 FY24: $0.1 m). The adjustments include a share-based payment charge of $0.6m (H1 FY24: $0.4 m).

Interest income

The Group continues to have a strong focus on maximizing interest income from cash holdings and in the Period earned interest income of $0.7m (H1 FY24: $0.4 m).

Balance Sheet

Property, plant and equipment of $2.0m reflects the IFRS16 lifetime value of property leases entered into in the UK and India during FY24 for new office space, along with the cost of leasehold improvements to those offices.

Trade debtors and other receivables (current) were $6.4m (H1 FY24: $21.2 m; FY24: $11.0 m) with good billing and collection in the Period, and no bad debts. The decrease in trade debtors reflects in part the timing of sales of third party hardware during the Period.

Cash balance and cash flows 

Net cash from operating activities was an outflow of $11.0m (H1 FY24: $2.0 m) due to the high level of creditors for customer-related hardware purchases at the start of the Period. Net cash used in financing activities was $1.4m (H1 FY24: $1.3 m) with the majority comprised of the final dividend payment for the prior year. The total decrease in cash and cash equivalents was $12.2m resulting in a closing cash balance of $25.9m (H1 FY24: $17.9 m; FY24: $38.8 m), the bulk of which is now held as Dollars. The Group remains debt-free.

Dividend

The Board continually monitors the balance between delivering on a progressive dividend policy whilst at the same time balancing investment in the business for future growth, both organic and by acquisition.

During the Period, the Group paid a final dividend of 2.23p per share. For this current half year, the Board is pleased to declare an interim dividend of 0.95p per share, a 3.2% increase over the comparative period last year. The interim dividend will be paid on 17 January 2025 to shareholders on the Register as at 13 December 2024. The shares will become ex-dividend on 12 December 2024.

Consolidated income statement
for the period ended 30 September 2024 (unaudited)

Consolidated statement of comprehensive income
for the period ended 30 September 2024 (unaudited)

Consolidated statement of changes in equity attributable to Equity Holders of the Parent
for the period ended 30 September 2024 (unaudited)

Consolidated statement of financial position
as at 30 September 2024 (unaudited)

Consolidated cash flow statement
for the period ended 30 September 2024 (unaudited)

Notes to the financial statements

1. Basis of preparation

These consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the UK and on a historical basis, using the accounting policies which are consistent with those set out in the Group's annual report and accounts for the year ended 31 March 2024. The interim financial information for the six months to 30 September 2024, which complies with IAS 34 'Interim Financial Reporting', has been approved by the Board of Directors on 03 December 2024.

The unaudited interim financial information for the period ended 30 September 2024 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The comparative figures for the year ended 31 March 2024 are extracted from the statutory financial statements which have been filed with the Registrar of Companies and contain an unqualified audit report and did not contain statements under Section 498 to 502 of the Companies Act 2006.

2. Change in currency

On 9 July 2024 the Group announced that from the beginning of the current financial year it would be changing the currency in which it presents its financial results from UK pounds sterling ("Sterling") to US dollars ("Dollars").  Accordingly, the reported results for the six months ended 30 September 2024 and comparatives are shown in Dollars. A change in presentation currency represents a change in accounting policy which is accounted for retrospectively. At the same time, the UK company changed its functional currency from Sterling to Dollars.

3. Business and geographical segments

The Group operates as a single business with no separation into divisions or allocation or people or assets to a particular division or product group. The management team is responsible for all products with no individual having responsibility for a particular product or product group. This is consistent with the internal reporting for management purposes. Management does however monitor revenues by revenue type due to the differing margins of each revenue type.

The revenue analysis set out below is consistent with that provided to the Board of Directors.

3. Business and geographical segments (continued)

The geographical revenue segment is determined by the domicile of the customer.

4.  Administration expenses

5.  Adjusted profit before tax

6. Earnings per share

7. Trade and other receivables

8.  Trade and other payables

9. Dividends (in GBP)

An interim dividend of 0.95p per share will be paid on 17 January 2025 to Members on the Register as at 13 December 2024. The shares will become ex-dividend on 12 December 2024.

10. Investor presentation

The investor presentation will be available on the company's investor website https://investors.celebrus.com/ later today.

Bill Bruno (CEO) and Ash Mehta (CFO) will host a live presentation of the results via the Investor Meet Company platform later today at 2.00pm GMT.

Investors can sign up to Investor Meet Company for free and add to meet Celebrus via:

https://www.investormeetcompany.com/celebrus-technologies-plc/register-investor