TXT (MI:TXTS) reported strong organic revenue growth in Q117, with 14% growth for TXT Retail and 8% growth for TXT Next. Our forecasts are substantially unchanged. TXT continues to internationalise both businesses and we believe it could make further bolt-on acquisitions in the TXT Next business. In Italy, the recently introduced individual savings account scheme (PIR) is driving up demand for TXT’s shares, and in our view this is the main driver of the share price outperformance year-to-date.
Q1 results show good organic growth
TXT reported Q1 revenue growth of 25% y-o-y, of which 11% was organic. TXT Retail grew 14% y-o-y, with software revenues +20% and services revenues +11%. TXT Next grew 38% or 8% excluding the €1.9m contributed by PACE. International revenues made up 59.0% of the total, up from 51.5% a year ago and flat versus Q416. Adjusted EBITDA of €1.6m was 11.5% higher than a year ago, with a margin of 8.8%. The company ended Q117 with net cash of €8.8m (end FY16 €5.4m). TXT Retail continues to make good progress in North America and Asia, with a significant licence sale in the US to The Finish Line (a sports retailer) and a contract with a Hong Kong retailer.
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