AIM identity data intelligence company GB Group (GBG:AIM) saw full year revenues jump 39% to £199 million in the year to 31 March 2020. That included a very decent 11% rise in organic sales, which strip out currency fluctuations and the boost from acquisitions.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) came in at £51.7 million for a 26% margin, while cash conversion remained typically strong.

MISSION CRITICAL APPLICATIONS

GB provides identity data intelligence, essentially giving primarily business to consumer customers and governmental organisations the information required to decide who to trade with, block and employ. The business roughly splits into Identity, Fraud, and Location.

GB’s applications are often mission critical for customers, particularly as more consumer interactions move online due to Covid-19. It has also seen some customers accelerate their digitalisation roadmaps, yet enough uncertainty persists to prevent management offering 2021 growth guidance currently.

Consensus forecasts for the year to 31 March 2021 currently call for revenue of £180 million and adjusted EBITDA of £37.1 million, down around 10% and 28% respectively, demonstrating the impact the pandemic is anticipated to exert on business performance this year.

DRAWING OUT KEY INFORMATION

‘We note the significant growth in Loqate volumes since the lockdown and the likely continuation of IDology new win traction given the catalysts,’ said Peel Hunt, which include datasets in new countries and the California Consumer Privacy Act enforcement in the US, for example.

Something investors should watch is the shift from licences to transactional revenues. These tend to be more risky, ‘particularly in hard-hit industries, such as sports betting, which would have seen significant declines as events stopped,’ said Megabuyte’s Devun Mistry.

DRIVEN BY SHIFT ONLINE

Numis analysts assume a rough 10% decline in revenues and margins falling to 18% in the current year, ‘reflecting lower business activity and also bearing in mind the strong year-on-year comparators,’ the broker said.

‘GB is exposed to strong structural trends and its track record of execution is one of the strongest in the sector,’ said Numis analyst Tintin Stormont.

‘We believe its medium-term growth prospects remain strong,’ the analyst said, but stressed limited near-term catalysts for the premium-rated share price.

The stock trades on a 2021 price to earnings multiple of 53, after today’s near 4% fall to 648p.

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Issue Date: 30 Jun 2020