Aptitude Software Group – AI Autonomous Finance Developer Sees Profits Rise – H1 Trading Update Set to Release in Days

declared by Aptitude Software (LON:APTD) – should be positive and help investors see the potential increase in the company’s value.

The company recently reported annual recurring revenue of 71.5%, with 55% of its sales coming from the UK and 45% from the rest of the world.

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Business

Investors with good memories probably remember the company under its original name of Microgen, which went public in 1983.

In 2019, the company changed its name to Aptitude Software.

It provides software solutions that enable fully autonomous financing, enabling clients to increase growth, efficiency and sustainability.

Fynapse, Aptitude’s intelligent financial data management and accounting platform, is designed to increase productivity and reduce costs for finance teams around the world.

The platform delivers a comprehensive view of financial and business data, unmatched performance and automation, faster and better insights, user-friendly functionality, and market-leading total cost of ownership.

Statement of the General Meeting

CEO Ivan Martin said the group’s results in 2024 would be in line with expectations.

At the same time, it is important to note that the ongoing organizational changes are bringing positive progress across all functions, accelerating Fynapse’s readiness and implementation, which is supported by the platform’s strategic partnerships.

The number of potential customers continues to grow and key opportunities, including new leads and customer migration, are progressing successfully.

Particular business successes were achieved in the area of the company’s compliance management and subscription management suite, including the sale of Aptitude Insurance Calculation Engine to a major Canadian insurer and eSuite to a UK video production company.

The Board is confident that ongoing work across all aspects of the business continues to position Aptitude well enough to capitalise on the significant growth opportunity presented by Fynapse.

Equity capital

There are approximately 56.97 million shares outstanding.

Former Microgen CEO Patrick Barbour owns 5.15% of the shares.

Other large holders of the shares include Long Path Partners (15.53%), Schroder Investment Management (13.07%), Mission Trail Capital Management (7.87%), Invesco Asset Management (6.63%), Canaccord Genuity Wealth (6.57%), Herald Investment Management (4.31%), Soros Fund Management (3.90%), Norges Bank Investment Management (2.69%) and BennBridge (2.17%).

Analyst View

Three analysts from Canaccord Genuity Capital Markets – Kai Korschelt, Hayley Palmer and Minal Patel – have given the group’s shares a Buy rating, expecting a price of 470 pence per share in the near future.

Current estimates put December-end sales at £71.0m (£74.7m), while adjusted pre-tax profit could be £10.6m (£9.6m) and earnings per share at 15.7p (15.0p).

Next year, sales are forecast at £74.4m, with profit at £12.3m and earnings at 18.0p.

For 2026, the amounts planned are £80.3 million, £13.4 million and 19.6 pence respectively.

Analysts concluded that

“With an attractive commercial proposition and a clear strategy and roadmap for Fynapse, we are increasingly confident that the company will return to growth in 2025.

In our view, CY25E stock multiples of 2.5x EV/Sales and 20x P/E (17.7x net of cash) undervalue the company, given its high-potential customers, margins in the teens, and ~75% recurring revenues, and UK financial software peers at 25x P/E.

My view

This company is acquiring new customers, including from very well-known brands, which inspires the trust of both new customers and investors.

The shares, which were trading at almost 700p three years ago, fell to 224p in October last year.

Since then, the stock has risen steadily, reaching 389p at the end of May – it now stands at just 370p, valuing the group at £212m. The group’s shares look set to respond positively to further good news.