Trakm8 - Half yearly results

Just a quick commentary about Trakm8's half-yearly results which were released this morning. Firstly, as anticipated, the results didn't disappoint and the outlook is very encouraging.

The headline figures are impressive with revenues up 38% at £11.7m, recurring revenues increasing 65% to almost £4m, EBITDA up 70% at £1.9m and adjusted profit up 89% at around £1.5m giving adjusted EPS at 5.08p.

The narrative of the report is highly encouraging with these comments of particular interest:-

"Recent contract wins and the stronger than budgeted start to the year mean we now believe that we will modestly exceed the current market expectations for the year as a whole."

"The installed base of devices reporting to our servers continues to increase rapidly and these recurring revenues are the core of Trakm8's business model and financial security."

"The value of new orders received during the period continued the good trend of recent years and were up by 21% (excluding DCS). This reinforces the confidence we have that strong organic growth can be maintained. "

 "Gross margin percentages have also benefited from the higher levels of service revenues."

"The data analytics from our data science team has been used to create service, driver risk scoring and FNOL (first notification of loss) algorithms that are proving to be of great interest to current and potential customers. We have also identified opportunities to sell some of our data in an anonymised format."

 "At the period end we had approximately 135,000 units reporting to our servers being an increase of 74% over last year. "

 "We have expanded our sales resource and as a result developed a good pipeline of opportunities, with a large number of significant trials in progress. We anticipate that revenues will continue to grow strongly in this area. "

"...we expect second half of the year revenues will be considerably ahead of the first six months."

These are just a few snippets that provide encouragement to investors for the short, medium and long term. Trakm8 have also made two acquisitions in the past two or three years which have been integrated effectively and quickly proved earnings enhancing. The narrative hints at further acquisitions being made in the not too distant future.

 "Now that DCS is operating to our satisfaction, we continue to assess further acquisition opportunities to enhance our organic growth."

Whilst the current forecast p/e ratio for this year and next come in at around 22 and 17 respectively, Trakm8 is making a habit of over-delivering. If the company were to make further strides in the USA or elsewhere overseas and/or announce a further earnings enhancing acquisition then the shares will look very good value at the current price of £2.60.

Just to reiterate, I have been a holder of shares in Trakm8 for some time.