Sirma Group Holding

IT developer Sirma Group Holding (SKK BU) posts 22.4% y/y rise in sales for FY 2016, according the Company’s consolidated financial statements. Sirma net income surges 45% y/y to BGN 2.4m. The Company met EBITDA guidance with 31% y/y rise to BGN 12.7m.

FY 2016 missed management guidance for a 25% y/y rise in sales and net income doubling on slower than expected H1’16. Sales growth accelerated in H2’16 and the Company reports 22.4 y/y higher revenues to BGN 41.4m, above our expectations.

Major sales growth drivers were US and Bulgarian markets while segments that outperformed were fin-tech and multi-industrial software solutions.

Q3 results met management forecasts

Sirma Group Holding booked 26.4% y/y rise in consolidated sales for the 9M16 to BGN 27m in line with management guidance. The bottom line turned positive in 3Q16 after a minor loss in 2Q16. Yet, Sirma net income was slightly down 5.4% y/y for the 9M16 to BGN 1.4m.

US, UK and Bulgaria were key growth markets with the fin tech, cloud and system integration services best performers. Public sector services underperformed expectations but management expects to compensate with better performance in the other verticals including manufacturing solutions. Sales in North America are up 38.6% y/y to BGN 6.7m while sales in Europe add 22.3% y/y to BGN 20.7m.

30% EBITDA was the management guidance for 2016

Profitability in Q3 was slow with EBITDA expanding only 10% y/y on 30% y/y management guidance for 2016F. Yet a usually strong 4Q16 was anticipated, including improved performance from key product company – Ontotext. The latter delivered only 3% y/y top line expansion for the 9M16 but is bank on profit. Management expects Ontotext’s performance to improve by year end on stronger sales.

Look back at Q3 2016 investors’ online meeting

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