We expect revenue growth to accelerate

In this note, we review the prospects for accesso ahead of the final results in April. The January update was reassuring, with revenue of ca.$152m ahead of our $150m forecast and the ca.15% cash EBITDA margin well ahead of the 13.2% forecast. Conservatively, we maintained our FY25 and FY26 forecast. However, as accesso is a growth technology company with a leading market position, we expect revenues to gradually accelerate from 6% in FY25E into the high single digits, and margins to rise as the group focuses on high-margin transactional revenues. Nevertheless, the shares trade on a modest ca.13x our FY26E earnings.

• Trading update: In its year-end update, accesso said it expects to report FY24 revenue of ca.$152m, in line with the August guidance of $150m-$153m. The cash EBITDA margin was ahead of target, however, at ca.15%. Growth, when ignoring pass-through revenues, was ca.4%. Net cash was $28.7m.
• Strategy: accesso’s purpose is to partner with venue operators worldwide to deploy technology solutions that enhance guest experiences and optimise venue revenue. accesso is the clear leader and no competitor has the breadth of solutions, customer base or geographical reach that accesso can offer.
• Valuation: The stock trades on 17x our forecast earnings in FY24, falling to 16x in FY25 and 13x in FY26. In addition, accesso has a strong net cash position and healthy cash generation with a FY25E free cashflow yield of ca.6.6%. Further, the quality of revenues is improving, with 85% repeatable.
• Risks: The pandemic highlighted a risk associated with the global leisure industry. However, the downturn was less than feared and drove accelerated digital transformation. Customer concentration is declining as customer base expands and five flagship customers now generate less than half of revenues.
• Investment summary: The stock trades at a discount to its AIM enterprise software peer group. In addition, accesso has a strong net cash position and healthy cash generation, with a FY25 free cashflow yield above 6%, on our forecasts. Additionally, the quality of revenues is improving, with 85% repeatable. accesso sizes its total addressable market at $2.3bn, giving it a ca.6% market share, with plenty of scope for growth.