Release Date: March 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Synectics PLC (LSE:SNX, Financial) reported strong growth in all sectors for FY24, with record gross margins and results exceeding market expectations.
- The company achieved excellent cash generation, ending the year with a record cash balance of GBP9.6 million.
- Synectics PLC (LSE:SNX) finished the year with a robust order book of GBP38.5 million, indicating strong market momentum and contract wins.
- The company launched the first part of its AI suite of tools, enhancing its product offerings with live hazard detection capabilities.
- Synectics PLC (LSE:SNX) is strategically expanding its geographical presence, including setting up operations in the Middle East to capitalize on substantial investment opportunities.
Negative Points
- The public space, transport, and infrastructure sector remains challenging, despite an 11% revenue increase year-on-year.
- The company experienced a significant decline in share price following the publication of FY24 results, attributed to market challenges and profit-taking.
- Synectics PLC (LSE:SNX) faces competition from large players like Genetec, Dallmeier, Milestone, and Motorola, which could impact market share.
- The transition to a subscription-based pricing model is still in progress, with potential impacts on revenue recognition yet to be fully determined.
- The company is still in the early stages of exploring new market opportunities, such as renewables and data centers, with no immediate impact expected.
Q & A Highlights
Q: Can you explain the upcoming launch of Synergy Search?
A: Synergy Search is the next stage in our AI suite of tools. It's a forensic search tool that uses natural language queries, similar to ChatGPT, to quickly search through recorded data and present relevant results. This tool is designed to save time, such as when searching for a lost person by describing their appearance.
Q: Shore Capital estimates revenue of GBP65 million for 2025. With a record order book of GBP38.5 million, how confident are you in hitting this target?
A: We are comfortable with the Shore Capital forecasts, and our results to date in FY25 are in line with Board expectations. The remaining revenues will come from pipeline conversions throughout the year.
Q: Can you provide more details on the move to a subscription-based model and its impact on revenue recognition?
A: We are working through the impact of the subscription-based model on revenue recognition. By Q3 this year, we will provide more guidance on this. The transition will be gradual, and we expect more annual recurring revenue from new products like AI tools and transport cloud services.
Q: Who are your main competitors?
A: Our main competitors vary by region and sector. Some of the key competitors include Genetec, Dallmeier, Milestone, and Motorola, especially after Motorola's recent acquisitions.
Q: What are your plans for the net cash that the company holds?
A: We plan to invest in sales and marketing initiatives, the partner program, subscription models, and CAPS certification. Additionally, we may consider targeted M&A to enhance our organic strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
