As an investor, I first purchased shares in SaaS Buildtech software developer Elecosoft nearly 10 years ago - over which time I’ve never sold any stock, but instead added occasionally on pullbacks. Why?

Well, what particularly interests me about the company is not only its blue chip customer base, secular growth drivers and healthy profit margins. But also ELCO’s low churn, strong cash generation, consistently high execution and resilience - even in the face of major dislocations such as Brexit and Covid. All hallmarks of a high quality business.

Better still, I can now add double digit organic sales growth to the list. Today in a positive H1’24 trading update, the group delivered record ARR (up +31% YoY to £25.8m and +14% vs £22.6m Dec’23 ) and TRR (+24% YoY to £12.0m) thanks to turnover up 12% LFL (vs 7% FY23 - ie excludes M&A, forex & disc products), new client wins, up/x-selling, increased average order values and continued strong delivery. Closing June 2024 with 74% recurring revenues and £12.0m of net cash (£10.9m Dec’23), or 14.5p/share - even after paying £1.1m for Vertical Digital in April and a £0.5m final dividend.

Indeed the integration of Vertical Digital is progressing well, whilst the group remains on track to hit consensus expectations. Here house broker Cavendish is forecasting 2024 turnover, adjusted EBITDA and EPS to come in at £32.3m, £7.0m and 4.6p/share respectively – climbing to £44.1m, £9.9m and 7.3p by 2026. Which hypothetically putting the stock on modest multiples of 1x PEG and 4x EV/sales, would generate an intrinsic worth of between 160p to 200p/share (Cavendish at 160p).

CEO Jonathan Hunter commenting: "We are proud to report positive momentum in H1’24. With the launch of AstaGPT, our customers have benefited from using Generative AI to find tailored support from the wealth of our knowledge bank of documentation. AstaGPT was shortlisted for the Innovation of the Year at the Digital Construction Awards 2024. We also recently launched Asta Vision LiveTM, a powerful new collaboration capability which allows multiple project planners and stakeholders to work simultaneously on a project in an encrypted, SaaS cloud-based environment.”

“Vertical Digital has bolstered our ability to meet our internal technical resourcing demands, utilising its proven track record in software development and consulting. Eleco is well positioned in…

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