In a brief trading update, NetDimensions Holdings (LON:NETD) said that both revenue and invoiced sales for Q316 were slightly ahead of Q315. This is after the group reported a 1% decline in revenue in H1. We are maintaining our forecasts, which imply a 9% revenue growth in H2 and hence a strong performance in the traditionally busy Q4. In early October, NetDimensions said it has had an unsolicited approach that “may or may not lead to an offer being made for the entire issued share capital of the company”. We note the group has a healthy net cash position ($11.2m as at 30 June or c 16.5p per share), attractive growth profile, a cash-generative business model and, despite the recent gains, the shares trade on an FY17e EV/sales rating at just 0.9x.
Q3 Trading
The company says that revenue and invoiced sales for Q3 were both slightly ahead of the comparable period for the previous year. The revenue from the group’s global hosted secure SaaS offering increased by 5% and the revenue from licences (onsite rental) increased by 13% in the quarter. Management says the full year outlook will depend on Q4 sales and it says it will continue to focus on generating new business and controlling operating expenses. We note that in H1, group revenue slipped by 1% to $10.5m but costs fell, enabling the group to reduce its EBITDA loss by 58% to $0.8m. While our maintained forecasts imply 9% revenue growth in H2, our cost forecasts are conservative at 13% growth.
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