Elixirr International PLC (ELXXF) (Q2 2024) Earnings Conference Call Transcript: Record Revenues …

Release Date: September 23, 2024

For a complete transcript of the financial results conference call, please see the complete transcript of the financial results conference call.

Positive points

Elixirr International PLC (ELXXF) reported record first-half revenues of £53 million, up 28% on an absolute basis and 14% organically compared to the previous year.
The company achieved adjusted EBITDA of GBP 15.1 million with a margin of 29%, indicating strong profitability.
Elixirr International PLC (ELXXF) has been named to Forbes’ 2024 list of the World’s Best Management Consulting Firms for the first time.
Successful integration of acquisitions such as Insigniam and the renaming of iOLAP to Elixirr Digital have broadened the company’s service offerings and strengthened its market presence.
The Company has recorded a significant increase in free cash flow, reaching GBP 7 million in H1 2024, double the level in H1 2023.

Negative points

The increase in UK corporation tax from 19% to 25% resulted in a higher effective tax rate, which increased adjusted diluted earnings per share.
Despite strong revenue growth, adjusted diluted earnings per share of 21.5p were only 16% up on the first half of 2023, lagging the growth in pre-tax profit.
The company’s ambitious growth strategy, which aims to reach a value of $1 billion, may make it difficult to maintain its current growth trajectory.
There are potential risks associated with integrating acquired entities and ensuring consistent performance of newly acquired entities.
A company’s focus on cybersecurity as a key area of future growth may require significant investment and resources, which may impact short-term profitability.

Highlights of the Q&A session

Q: Can you provide more details about the financial results for the first half of 2024? AND: Graham Busby, Co-Founder, CFO, Executive Director: H1 24 was a record half year for Elixirr with half year revenue of £53m, representing 28% absolute growth and 14% organic growth compared to the prior year. Adjusted EBITDA was £15.1m with a 29% margin and adjusted diluted earnings per share increased by 16% to 21.5p. Free cash flow doubled to £7m driven by EBITDA growth and improved working capital performance.

Q:How did the integration of Insigniam and iOLAP work? AND: Stephen Newton, CEO, Co-Founder, Executive Director: We successfully integrated Insigniam into Elixirr Group, seeing increased demand for their services. iOLAP has been rebranded as Elixirr Digital, further integrating and enhancing our digital capabilities.

Q: What are the key elements of Elixirr’s growth strategy? AND: Stephen Newton, CEO, Co-Founder, Executive Director: Our growth strategy is based on four pillars: expanding our partner team, promoting from within, hiring new partners, and growing through acquisition. We have increased our partner revenue goals and continue to see strong results. Promoting from within remains key, and we have made key hires, including a new general counsel and a seasoned entrepreneur to drive new sales opportunities.

Q: Can you tell us more about the results and future plans regarding the acquisition of AI, Responsum? AND: Graham Busby, Co-Founder, CFO, Executive Director: Responsum has seen significant growth in customer conversations. For example, a US telecommunications leader used our AI solutions to increase customer acquisition productivity by 93% and reduce time to first contact by 90%, resulting in an 83% increase in revenue for AI-enabled sales reps in the next quarter.

Q:What are the forecasts for the rest of fiscal year 2024? AND: Stephen Newton, CEO, Co-Founder, Executive Director: We remain confident in our fiscal year 2024 outlook, with revenues expected to be in the range of £104 million to £110 million and EBITDA margins to remain strong at 27% to 29%. Our four-pillar growth strategy continues to deliver, with our goal of reaching $1 billion in the next few years.

Q:How has the equity incentive program affected the company? AND: Stephen Newton, CEO, Co-Founder, Executive Director: The pre-IPO option vesting was a source of pride, it reinvigorated our equity incentive programs and created value for our team. We controlled for any dilution by using shares already purchased in the Employee Benefit Trust (EBT).

Q:What are the future development areas for Elixirr? AND: Stephen Newton, CEO, Co-Founder, Executive Director: Cybersecurity is a key growth area for the future. We are exploring both organic and inorganic opportunities, including the recent hire of Joe Hubback, who brings extensive experience in cybersecurity and consulting.

Q:How did the acquisition of Insigniam impact Elixirr’s results? AND:Graham Busby, Co-Founder, CFO, Executive Director: Insigniam is performing to high expectations, with significant revenue and EBITDA margin growth. Integration has led to strong customer relationships and several cross-selling opportunities.

Q:What steps are being taken to minimize share dilution while increasing profits? AND: Graham Busby, Co-Founder, CFO, Executive Director: We focus on increasing the value of each share by minimizing dilution. We achieve this through controlled vesting schedules and the use of shares already purchased in EBT.

Q: Can you give an example of how Elixirr AI solutions have benefited customers? AND:Graham Busby, Co-Founder, CFO, Executive Director: For example, a US telecommunications industry leader used our AI solutions to reduce the time it took sales reps to qualify and connect with prospects by 75%. This led to a 93% increase in lead acquisition productivity and an 83% increase in revenue for AI-enabled sales reps in the next quarter.

For a complete transcript of the financial results conference call, please see the complete transcript of the financial results conference call.

This article originally appeared on GuruFocus.