Shares in specialist software provider Eleco (ELCO) jumped 15% after the firm raised its FY25 earnings guidance. The company works with construction firms on scheduling, cost management, delivery and management of new buildings.
| Share price: 152p (+15%) | PE: 32x |
| Market cap: £125m | Yield: 0.8% |
STRONG TOP-LINE GROWTH
AIM-listed Eleco can trace its history back to 1895 when it began life as The Gilbert Arc Lamp Company. It also has plenty of years under its belt as a public company, having been listed on the London Stock Exchange since 1939.
Today, construction firms rely on its specialist software and services throughout the building lifecycle. The company helps with everything from early planning and design to construction, fit out and property management.
For the year to December 2025, the firm expects revenue of around £39 million, up 20% on the previous year. Organic growth excluding acquisitions is expected account for around half of the increase in turnover.
Total recurring revenue rose 26% to roughly £31 million, representing 81% of total revenue against 77% the previous year. The group remained debt free with net cash of £16.3 million reflecting strong cash generation.
According to CEO Jonathan Hunter, revenue, profit and net cash are all expected to be ahead of market forecasts. ‘The continued expansion of recurring revenue streams, alongside cost and cash management, reflects the effectiveness of our strategy’, added Hunter.
Eleco has flown under our radar until today’s results and the eye-catching response from investors. Still, every day is a school day and any firm which can grow its top line by 20% merits our attention.
Granted half that growth comes from acquisitions, but the firm obviously does a good of integrating new businesses. It also provides customers with regular upgrades to its software, tying them in and driving recurring revenue.
CEO Jonathan Hunter argues the structural drivers in Eleco’s markets ‘remain compelling’ and the firm can keep delivering sustainable growth. We need to do some digging, but on the strength of these results we are tempted to agree.
Read the press release here: https://eleco.com/investor-relations/
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