FD Technologies (LON:FDP) today reported its results for the year ended 28 February 2022.

Group revenue increased by 11% to £263.5m (2021: £237.9m), driven by growth in First Derivative and MRP balanced by lower professional services and perpetual license revenue in KX, in line with FD Technologies’ stated strategy to focus on growth in ARR.

Group gross profit increased by 5% to £106.1m, reflecting improved margin performance in First Derivative and MRP while in KX the reduction in high-margin perpetual license revenue in line with the strategy resulted in gross margin of 69% (2021:72%).

The Group’s accelerated growth strategy resulted in increased expenditure on R&D (£5.2m), sales and marketing (£8.1m) and operational costs to scale the business (£6.5m). These investments for growth enabled FD Technologies’ business units to achieve their targets for the year, particularly KX where exit ARR grew by 25%. The impact of the investment and the focus on ARR resulted in EBITDA falling by 23% to £31.0m, in line with earlier guidance.

On a reported basis, the Group recorded a profit of £6.4m after tax, compared to £9.0m in the prior year. Reported diluted earnings per share was 22.9p (2021: 32.0p), adjusted diluted earnings per share was 32.3p (2021: 59.0p per share).

The adjusted profit after tax for the year of £9.1m (2021: £16.6m) represented a decrease of 45%.

The Group generated £28.9m of cash from operating activities before taxes paid (2021: £46.7m) representing 93% conversion of adjusted EBITDA.

At the year end, the Group had returned to net cash of £0.3m (2021: net debt £9.9m), excluding lease liabilities.

Seamus Keating, CEO of FD Technologies, commented:

“We have delivered a year of transformation across the Group, with each business unit achieving the Key Performance Indicators we set out in our strategy one year ago to accelerate our growth. KX, which was the principal focus of our investment in the year, delivered our target ARR growth, and enters the new financial year with increased momentum from our partnership with Microsoft enabled by the launch of our cloud native KX Insights platform.

First Derivative recorded strong growth as it built on its reputation for domain knowledge and delivery excellence, while MRP continued to grow strongly from its leadership position in predictive lead generation. Across the Group, our investment in systems and people positions us to scale our operations to meet our growth ambitions. The opportunities across the markets in which we operate are significant and through continued execution of our strategy I am confident we can unlock value for our customers and accelerate our growth in the years ahead.”