Results for the year ended 29 February 2024

FD Technologies plc

(“FD Technologies” or the “Group”)

Results for the year ended 29 February 2024

FD Technologies (AIM: FDP.L, Euronext Growth: FDP.I) announces its results for the year ended 29 February 2024.

Business highlights

Strategic progress despite short-term challenges, led by KX advancing its position in core markets and developing its AI opportunity

KX:

• Delivered constant currency annual recurring revenue (ARR) growth of 12% to £73m; recurring revenue increased by 19% and now represents 86% of KX revenue (FY23: 81%)
• Performance was impacted by lower pipeline conversion rates and lengthened sales cycles, resulting from a combination of having fewer repeatable use cases in newer markets and macroeconomic headwinds
• Annual contract value added of £14m, of which more than 80% was derived from repeatable use cases in our core markets of financial services and aerospace and defence; 19 new logos signed (FY23: 16)
• Launched KDB.AI, our vector database for real-time contextual AI, with initial sales during the period and a number of key technical wins with major existing and potential customers demonstrating its ability to drive growth
• Launch of kdb Insights offerings with Microsoft, AWS, GCP, Databricks and Snowflake providing reduced time to value and cost to operate, as well as signing partnerships with leading industry partners including McLaren Applied and SRC
• Release of kdb+ 4.1, which has redefined the high-performance analytical database landscape, marking a major step forward in our core technology and the first major release in four years
• Completed the KX leadership team with senior appointments including a Chief Revenue Officer, Chief Marketing Officer and Chief Product & Engineering Officer to drive the next growth phase of KX.

First Derivative:

• Revenue declined by 8% to £170m due to increased spending caution among customers, with measures taken to control costs and improve efficiency, enabling adjusted EBITDA margin to be maintained
• Areas of demand for our domain and technology skills mitigating lower spending on general technology skills within our customer base and leaving us well positioned when demand improves
• Improvement in bookings in Q4 FY24 but market remains cautious.

Group structure review

In October 2023 the Board announced a review of the optimal organisational structure and allocation of capital to best position the Group to drive value for shareholders. In March 2024 the Board announced that it had unanimously concluded that the separation of its three businesses was in the best interests of all shareholders.

As a first step, it was also announced in March 2024 that the Group had agreed an all-share merger of MRP with CONTENTgine, a provider of B2B technology buyer insights and lead generation. FD Technologies owns 49% of the merged entity, which is reported as discontinued operations in FY24 and will be reported as an associate investment in future years. FY23 has been restated to remove MRP to enable year-on-year comparison in performance.

The final step in the process is the separation of KX and First Derivative, with a measured and thoughtful process under way to ensure that any transaction reflects the value of First Derivative. Advisers on the process have been appointed and further updates will be provided as appropriate.

Seamus Keating, CEO of FD Technologies, commented: “FY24 presented challenges within our businesses but we made significant strategic progress and we enter FY25 with clarity and focus on the exciting opportunities ahead. While KX’s ARR growth was below our expectations for the year, we have addressed the operational challenges and are well placed to execute on the enormous addressable market in the industries we are targeting. First Derivative managed its cost base to ensure that despite the caution in its customer spending, it maintained margins. In the early months of FY25, the market has remained subdued but with stable activity levels.

Looking to FY25, the conclusion of the structure review provides a clear path to value creation for shareholders while the operational improvements, focus on repeatable use cases and growing opportunity in AI provide confidence that KX will deliver stronger, sustainable growth.”

Financial summary

Financial highlights

• Group revenue down 2% to £249m (FY23: £255m) with gross profit flat as gross margins increased in KX due to increased software revenue, offsetting a decline in First Derivative gross margin from lower utilisation
• KX revenue growth of 12% to £79m (FY23: £71m), led by recurring revenue up 19% to represent 86% of total KX revenue (FY23: 81%) Note that £9m of services revenue has been restated from KX to First Derivative in the year, with FY23 restated by £9m to enable a like-for-like comparison. Further details are provided in the Financial review
• First Derivative revenue of £170m, down 8% (FY23: £184m), driven by continued customer caution resulting from lower investment banking revenues
• Adjusted EBITDA down 31% to £23m (FY23: £33m) as a result of accelerated investment in KX and lower revenue in First Derivative
• Net debt £14.4m (FY23: £3.7m)

Read the full RNS release here