Fintel reports resilient FY23, announces acquisitions of Owen James and Synaptic Software
Fintech specialist( ) issued a trading update for the year ended December 31, 2023. The company reported resilient performance, with full-year results expected to be in line with management expectations. Fintel also announced the successful post-period acquisitions of Owen James and Synaptic Software.
Adjusted EBITDA rose 6% to £20.5m from £19.4m in FY22 thanks to continued investment in Fintel's core SaaS products and services. The fintech provider ended the period with a strong balance sheet of £12.7m in cash and £69m of headroom in its £80m revolving credit facility. Net cash decreased to £1.7m from £12.8m in FY22 due to heavy investment, including the acquisition of 4 companies.
Core revenue was £56.6m from £56.4m last year, with a more meaningful increase on a like-for-like basis to £51.7m from £50.2m in FY22. Core SaaS and subscription revenue was up 2% to £37.6m and up 8% on a like-for-like basis to £33.0m excluding changed software reseller revenues and acquisitions. The combined core revenue from the 4 acquisitions completed during the period was £1.5m.
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Fintel showed resilience in FY23 with results in line with expectations, and an increased market footprint after the acquisition of 4 businesses to its platform - VouchedFor, AKG, Competent Adviser, and Micap. The company continued its strategy of consolidation in the fragmented market and enters FY24 with a very active M&A pipeline, having already finalised 2 further acquisitions post-period of Owen James Events and Synaptic Software.
Fintel's core SaaS and subscriptions business continued to perform well, growing 5.6% excluding volatility in mortgage-related commissions. While mortgage-related activities experienced a notable 21.2% revenue decline in FY23, the segment remained profitable and is well-positioned for a strong comeback as the UK housing market normalises. Combined with the core business, statutory revenue was down slightly to £64.9m from £66.5m last year.
It should be noted that Fintel's core revenue was impacted by a change to the accounting treatment of its largest software reseller agreement. While the EBITDA contribution from the contract remained at historical levels, the statutory accounting treatment applied since May 2023 now represents purely a net revenue and profitability position.
Fintel's aggressive M&A strategy continues to pay off, with revenues from its 4 acquisitions completed in FY23 coming in at £1.5m. A further 2 acquisitions were completed in January 2024 - Owen James and Synaptic Software. Fintel announced a £0.5m investment in Synaptic Software to integrate its products into the wider Fintel platform. Owen James will operate independently within Fintel IQ, while benefitting from Fintel's investment network. The acquisition of Owen James, funded entirely from cash reserves, should further extend Fintel's industry events programme through the former's strong market position in the segment.
Overall, Fintel continues to deliver solid results, with recent weakness in the UK housing market largely offset by growth in fintech software revenue and software license sales. With interest rates set to adjust positively in 2024, the company is well-positioned to benefit from a recovery in the mortgage market. With a strong balance sheet and comfortable credit headroom to support its ambitious M&A pipeline, Fintel is set for continued growth.
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