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magazineSolid start for FreeAgent
FreeAgent (FREE:AIM) 110p
Loss to date: 5.2%
Original entry point: Buy at 116p, 16 February 2017
We largely knew what to expect from full year results to 31 March 2017, FreeAgent’s (FREE:AIM) first since its November 2016 IPO at 84p per share. Revenues of £8m, up 41%, and marginally better-than-expected losses on the earnings before interest, tax, depreciation and amortisation (EBITDA) line is very solid progress given stage in the company’s growth profile.
Of particular note is the stunning progress made through its accountancy practice channel, where user numbers nearly doubled from 16,705 to 33,147. That compares to just 11% growth from micro business customers signing up through is direct channel, the FreeAgent website in other words.
There’s also been little impact from big TV ad campaigns of rivals (Quickbooks has been especially visible lately), largely because of FreeAgent’s deeper feature quality versus peers.
A partnership with Royal Bank of Scotland (RBS) remains in its early phase but FreeAgent anticipates having more to say in an update in September. Recently clarity from HMRC on its ‘making tax digital’ programme designed to get all business online by 2020 should be a big driver as sole traders and micro businesses adapt, with early migrations from April 2018.
An encouraging start for this exciting growth company. Still a buy. (SF)
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