On a day when large-cap stocks disappointed investors, sending the market lower, a handful of small- and mid-cap UK IT services firms stood out. Reports from NCC (LON:NCC), Redcentric (LON:RCN), RWS (LON:RWS) and Shearwater Group (LON:SWG) were a reminder of the UK’s prowess in specialist IT applications.
Mid-cap firms thriving
Maidenhead-based RWS, the largest of the four firms by market cap, provides language platforms and services and AI data services. More than 80 of the world’s top 100 brands trust it to generate and protect their IP in new and existing markets.
For the year to September, the AIM-listed firm showed growth in revenue, customer numbers and new products. It also added brand protection to its portfolio through an acquisition, ‘materially’ expanding its addressable market.
Manchester-based NCC, the next-largest firm, provides cyber security and resilience solutions to governments and the world’s leading companies. As life becomes more ‘connected’, so our digital security needs, from our phones to energy services and even cars, keeps growing.
For the year to September, NCC grew its revenue in line with estimates and its earnings ahead of estimates. Gross margins on its cyber business hit a record, and new CEO Guy Ellis said there was still a ‘significant opportunity ahead’ to grow recurring revenue and earnings.
Small-caps cashing in
Harrogate-based Redcentric provides network, cloud and collaboration services to private and public UK organisations. Its customers include manufacturers, software and IT service providers, the retail and leisure sectors, the NHS and local authorities and charities.
For the half-year to September, the firm posted margins above managament expectations and reiterated its full-year guidance. Also, the sale of the data centre business, which has substantial investment requirements, generated a higher-than-expected cash inflow of around £125 million.
Finally, AIM-listed Shearwater Group, based in the City of London, provides cyber, software testing, identity and access security services. It sells its cloud and on-premise software products through around 360 resellers across the world.
For the year to June, revenue jumped 34% and adjusted pre-tax profit soared 186% thanks to strong demand from telecoms and financial services customers. The firm said trading year-to-date was positive due to the frequency and complexity of cyber threats and new contract wins.
