Gamma Communications (GAMA)

LONDON (ShareCast) - (Sharecast News) - Gamma Communications reported a strong set of first-half results on Tuesday, with revenue growing 10% to £282.5m and gross profit increasing 11% to £145.8m.
The AIM-traded company also posted an 11% rise in profit before tax, reaching £48.5m, while adjusted EBITDA grew 10% to £62.2m.

Adjusted earnings per share rose 13% to 42.5p, and the interim dividend increased 14% to 6.5p per share.

The board said the growth was driven by performance across all business units and bolstered by acquisitions, including Coolwave Communications, enhancing Gamma's offerings in international SMS and voice services, and BrightCloud, which strengthened its capabilities in the Cisco contact centre-as-a-service space.

Gamma was also planning to acquire Placetel, a leader in the German cloud PBX market, further expanding its presence in Europe.

Recurring revenue, which constituted 89% of the total, increased to £252.7m, and cash generation from operations rose 4% to £59.6m.

Gamma's net cash position grew 17% to £142.9m.

The company continued to buy back shares, acquiring over 1.9 million shares for £27.3m by September.

With a solid first-half financial performance, Gamma said it expected continued growth in the second half of 2024, with full-year adjusted EBITDA projected to be in the upper half of market expectations and adjusted earnings per share at the top of the range.

The company said it was also considering a potential move to the main market, with further updates expected early next year.

"Gamma has achieved another strong set of results, marked by robust revenue growth, stable margins, and strong cash generation," said chief executive officer Andrew Belshaw.

"Our broadened product set is resonating well with both Channel Partners and enterprise customers.

"As customers require more complex communications solutions, we continue to see opportunities to grow our revenues further."

Belshaw said the company was making progress in developing a common pan-European product set, expanding its enterprise offering while continuing to capitalise on "significant opportunities" within its SME customer base.

"The strength of Gamma's balance sheet has enabled us to expand our capabilities, through both product development and strategic acquisitions.

"We have recently broadened our enterprise offerings with two earnings enhancing acquisitions - Coolwave Communications and BrightCloud.

"Additionally, we have conditionally agreed with Cisco to acquire Placetel, a leading player in the German cloud PBX space."

The company continued to view mergers and acquisitions as a key tool to complement its organic growth, broaden its capabilities and expand its European presence, Andrew Belshaw added.

"With a strong pipeline of organic and inorganic opportunities, our resilient business model enables us to look forward with confidence."

At 1212 BST, shares in Gamma Communications were up 7.86% at 1,620p.

Reporting by Josh White for Sharecast.com.