The Bravura Solutions Ltd (ASX: BVS) share price could be heading for a new all-time high on Wednesday following the release of a solid half year result this morning.
Here's how Bravura performed in the first half compared to the prior corresponding period:
- Revenue increased 24% to $127.4 million.
- Wealth Management segment revenue up 24% to $90.4 million.
- EBITDA lifted 28% to $23.8 million.
- Net profit after tax rose 15% to $16.3 million.
- Earnings per share up 15% to 7.6 cents.
- Interim dividend of 5.3 cents per share declared.
- Guidance revised upwards to mid to high-teen EPS growth.
A key driver of the company's growth during the half was its increasingly popular Sonata wealth management platform.
Management advised that the platform's compelling value proposition which supports clients with managing new regulation, digital, and cost pressures has driven significant growth in Sonata revenue. It now makes up almost all of Wealth Management segment revenue.
The Wealth Management segment posted a 24% increase in revenue to $90.4 million and a $36% lift in EBITDA to $29.4 million.
Supporting this growth was its Funds Administration segment which achieved a 23% increase in revenue to $37 million. EBITDA increased at a slower rate of 7% to $13.7 million.
The company's chief executive officer, Tony Klim, was deservedly pleased with the company's performance during the first half.
He said: "Bravura has had an outstanding start to the 2019 financial year, with significant revenue and earnings growth underpinned by strong demand across all key markets. Recurring revenue was up strongly by 31% and comprised 72% of total revenue. In particular, we have seen significant project activity from existing clients, as they extend their business reach by licensing and implementing more of Sonata's rich and sophisticated functionality across new products."
As a result of strong demand, Mr Klim has upgraded the company's full year EPS growth guidance to be in the mid to high-teens.
How will the market react to this?
According to a note out of Goldman Sachs, it was expecting revenue of $121.9 million and EBITDA of $21.6 million. Which means that Bravura Solutions has beaten on both these metrics.
In light of this and its upgraded guidance, I wouldn't be surprised to see the Bravura Solutions share price climb to an all-time high today.
Should you invest?
Based on its guidance I estimate that the company's shares are changing hands at 33x forward earnings. I think this is more than fair given this result and its significant market opportunity that could fuel similarly strong growth for some time to come.
As a result, I think it would be a great investment in the tech sector along with Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).
