Next Fifteen lifts full-year expectations again

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Next Fifteen Communications Group PLC (AIM:NFC, FRA:8LS) expects full-year results will be ahead of previous expectations after a strong second quarter.


Although organic growth is expected to moderate in the second half of the financial year (to end-January 2022), management said organic growth should be ahead of previous guidance. In June, when the marketing group last raised full-year expectations, it said like-for-like revenues should grow by a low double-digit percentage from the year before; the group now expects organic growth to be in the mid-to-high-teens.


The three months to the end of July saw revenues rise by 40% year-on-year, with organic growth of 29%. This meant revenue growth for the first half of the fiscal year improved to 31%, with organic growth of 23%.


Next Fifteen said it saw strong performance across all parts of its business in all parts of the world in which it operates.


Customer Delivery, which was the highest growth area last year, has remained the top performer and the group has also seen encouraging performances from the Business Transformation, Customer Insight and Customer Engagement segments. Meanwhile, the group’s most recent acquisition, Blueshirt Capital Advisors, has got off to a positive start as part of the group.


The operating profit of the Customer Delivery segment jumped to GBP15.2mln in the second quarter from GBP6.7mln the year before on revenue that surged to GBP59.3mln from GBP26.9mln.


The group’s biggest division, Customer Engagement, grew operating profit to GBP38.9mln from GBP16.4mln as revenue doubled to GBP202.0mln.


The Customer Insight segment’s operating profit tripled to GBP4.8mln on revenues that rose to GBP44.1mln from GBP20.2mln the year before, while the Business Transformation unit’s operating profit also tripled, to GBP3.9mln from GBP1.3mln, as revenues shot up to GBP18.3mln from GBP5.9mln the previous year.


Given the robust performance of the businesses, management intends to accelerate investment in “productising” a number of areas of the group and hire additional digital talent. While these investments will have a minor impact on margins this year, they are expected to help drive long-term organic growth, Next Fifteen said.


Net cash at the end of July stood at around GBP5mln following the recent acquisitions of Shopper Media Group and BCA.


The acquisitive group has added another string to its bow with the acquisition of MSI, a New Jersey-based market research agency.


Broker Peel Hunt reiterated its 900p target price and “hold” recommendation while nudging up its earnings per share forecast for the full year by around 3%. Based on the broker’s earnings forecast, the stock trades on a price/earnings ratio of 18.


Shares in Next 15 currently trade at 990p, up 5.3%.




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