FD Technologies (LON:FDP) today announced its interim results for the six months ended 31 August 2022.

Group revenue increased by 15% to £147.4 million (H1 FY22: £128.0m) while gross margin increased by 1% to 41%, led by a 3% increase at KX due to a higher proportion of software revenue in the mix. Revenue growth was boosted during the period by the strength of the dollar against sterling, FD Technologies’ reporting currency, with constant currency revenue growth of 9%. Due to the natural hedge of the Group’s operations in the US the impact on profitability was marginal.

KX returned to strong growth in H1, with 41% growth in ARR to £26.8m balanced by an 11% reduction in services to £10.2m to deliver revenue of £37.8m, representing growth of 19%. The growth in ARR is ahead of Group expectations.

Financial services revenue grew by 16% to £32.3m, with recurring revenue up 35% as FD Technologies upsold a number of its existing customers to KX Insights and added new customers across Europe and in North America. The revenue uplift from KX Insights upsells is expected to positively impact performance over the next few years.

Industry revenue grew by 36% to £5.6m with recurring revenue growing by 120% to £3.2m. Growth was led by subscription contracts across the energy and manufacturing markets with both new and existing customers, as well as in pharma.

Adjusted profit before tax was broadly flat at £5.0m, with the increase in adjusted EBITDA balanced by higher depreciation and software amortisation charges. Financing costs fell by £0.3m, reflecting the decrease in FD Technologies’ outstanding loans balanced by the impact of the stronger dollar on the Group’s dollar-denominated interest payments.

The Group reported a profit before tax of £1.1m for the period, compared to a loss of £1.6m in H1 FY22. The major factors here were the movement in foreign currency translation reflecting the strength of the dollar in the period and the cost of implementing the Group’s new Oracle ERP system.

The Group reported a profit after tax of £0.8m for the period, compared to a £2.1m loss in H1 FY22. Adjusted profit after tax was £4.0m, a 21% increase on the prior period and generating a 21% increase in adjusted diluted earnings per share for the period to 14.2p.

Seamus Keating, CEO of FD Technologies, commented:

‘The Group has enjoyed a strong H1, growing revenue and profitability and laying the foundations for accelerated growth from here. In KX the momentum we have built since the launch of KX Insights is delivering results, as evidenced by the 41% growth in annual recurring revenue. The recent appointment of Ashok Reddy is already benefiting KX through his significant experience in scaling product-led enterprise technology businesses. Likewise, First Derivative maintained its strong growth, while we have taken action to enable MRP to improve its performance in H2 despite the market conditions experienced there.

These results demonstrate that our strategy of investing to accelerate growth is working. We have added significant value to the Group during H1 as our investments in product, systems and people are delivering. We are very well placed to continue to create value, with major growth opportunities ahead.’