FD Technologies half-year results - £120m for Shareholders following First Derivative Sale

FD Technologies the Newry based company with a global workforce of around 3000 have published their half-year results for the six months ended 31 August 2024. The period saw a 5% revenue increase in their KX operation with First Derivative revenue declining by 2%. Overall FD Technologies revenue declined by 7% to £118.2m compared to £126.8m in the same period in 2023 but this was partially offset by KX growth. Gross profit remains healthy at £52.1m compared to £52.3m in the 2023 period.

The sale of the First Derivative portion of the business for £230m, as announced in October is expected to complete on 2 December. KX will then become the Group’s sole continuing operation, retaining approximately £54m of the £205m net divestment proceeds, and, after the repayment of £32m of debt outstanding at the completion date, a balance of around £120m cash will be returned to shareholders.

The group into next year expect a healthy mix of expansion and new opportunities across Capital Markets, Aerospace & Defence, and Semiconductor Manufacturing.

Speaking on the results CEO Seamus Keating said “We have made significant strategic and operational progress in the first half, with the divestment of First Derivative and strong execution in KX. Following the completion of the sale of First Derivative, we expect to return cash to shareholders, in line with our disciplined approach to capital allocation, and KX will be a pure-play, high-growth software business; fully funded and well-positioned to capitalise on the significant and growing global market opportunity.”

Financial highlights

• KX revenue increased 5% to £39.5m, with annual recurring revenue (“ARR”) up 8% reported, or 10% at constant currency, to £74.6m (H1 FY24: £69.3m)
• KX annual contract value (“ACV”) added at £7.4m (H1 FY24: £6.9m), in line with the expected range of £6-8m.
• Net revenue retention (“NRR”) of 110% reported (H1 FY24: 112%), or 112% at constant currency.
• First Derivative revenue of £78.8m (H1 FY24: £89.1m) declined by 2% compared to H2 FY24, reflecting a resilient performance against anticipated ongoing challenging market conditions.
• Group revenue declined 7% to £118.2m (H1 FY24: £126.8m), reflecting the 12% decline in revenue from First Derivative partially offset by the robust growth in KX.
• Group adjusted EBITDA was £10.5m (H1 FY24: £14.2m), reflecting the revenue performance and increased investment in R&D, go-to-market and people to support our growth ambitions for KX.