Source - Alliance News

Aveva Group PLC on Wednesday said annual earnings were in line with market forecasts, but top-line growth going forward will be hampered by the timing of revenue recognition.

Aveva shares were down 12% at 2,017.00 pence each in London early Wednesday morning, the worst large-cap performer. The stock had fallen to 1,800.00p at the open.

The industrial software firm said revenue in the final quarter ended March 31 climbed 18% annually on a pro forma organic constant currency basis, a gauge adjusted to include results from OSIsoft. Aveva sealed the acquisition of the data management software provider back in March 2021.

For the whole of financial 2022, pro forma organic constant currency revenue growth was 7%, the company said.

‘The group expects adjusted [earnings before interest and tax] margin to be consistent with the previous year pro forma results at just below 30%. These factors will result in an overall adjusted Ebit performance that is in-line with market expectations,’ Aveva added.

However, it warned that revenue growth in the new financial year is expected to slow and margins are set to reduce amid cost pressures.

Aveva aims to drive an acceleration in annual recurring revenue growth in the recently commenced financial year to a level of 15% to 20%.

As ARR accelerates, it cautioned, reported revenue will be impacted by the timing of revenue recognition.

In addition to this, revenue will be knocked by the war in Ukraine and sanctions on Russia - though Aveva noted that Russia is a ‘relatively small’ market for the group.

Adjusted earnings before interest and tax in the current financial year will be pressured by additional costs, including wage inflation, increased travel and event costs post-Covid and investment, the company said.

Revenue growth in financial 2023 is expected to be slower than the prior year. Its adjusted Ebit margin will reduce, before resuming growth in financial 2024.

Aveva will announce full annual results on June 8.

Copyright 2022 Alliance News Limited. All Rights Reserved.

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJBell logo

Related Charts