Celebrus Technologies – accounting policy changes will smooth out this group’s seasonality, tomorrow’s results statement will be closely followed

07.07.2025

Tomorrow morning, Tuesday 8^th July, Celebrus Technologies (LON:CLBS) will announce its Final Results for its year to end-March 2025.

In late April, the specialist provider of data collection, management and analysis solutions, updated its investors that although it had a strong sales pipeline, it had endured some contract hassles.

Much more importantly, it informed the market that it is evolving from a services business which sometimes sold software, to become a software-led business which sells third-party products only when necessary.

Given that the typical three-year contract is now delivered on a hosted basis, revenue recognition, which has long disconcerted investors, is under review, with the expected effect of spreading recurring licence revenue instead of recognising it all on day one annually.

Tomorrow the company will advise just what will be the combined impacts of those changes.

The Business

Previously known as D4T4, the company, which classes itself as a disruptive data technology platform, is focused upon improving the relationships between brands and consumers via better data.

It redefines what ‘digital identity verification’ means to power both next-level marketing and fraud prevention use cases.

The company states that as a disruptive data technology platform, it is focused on improving the relationships between brands and consumers via better data.

Deployed across 32+ countries throughout the financial services, healthcare, retail, travel, and telecommunications sectors, Celebrus automatically captures, contextualises, and activates consumer behavioural data in live-time across all digital channels.

To ensure that brands can begin to improve those relationships quickly, Celebrus Cloud activates the Celebrus platform efficiently for brands in a single-tenant, private cloud capacity.

The group, which has offices in the UK, USA, and India with key talent in all markets to drive the growth of the business, is debt-free and holds some $23m in cash.

Celebrus automatically captures, contextualises, and activates consumer behavioural data in live-time across all digital channels and empowers brands to detect and prevent fraud before it occurs through the addition of behavioural biometrics and AI.

By selling more software, the group continues to focus on driving ARR growth with higher gross margins, increasing shareholder value, and building upon its high customer retention rates across the business to drive organic growth.

Celebrus Cloud allows the company to gradually shift away from a reliance on third-party hardware and into a hosting model that drives ARR Managed Services Revenue.

The company states that:

“Annual Recurring Revenue, driven by selling our Celebrus software, is a core focus for the business to drive more value for our shareholders.

Our goal, given the nature of our business, is to have ARR comprise roughly 75% of our total revenues in a given year.”

The Equity

There are some 40.68m shares in issue.

The larger holders include Canaccord Genuity Wealth (11.77%), Investec Wealth & Investment (9.41%), Ennismore Fund Management (7.30%), Chelverton Asset Management (6.29%), Close Asset Management (5.74%), Rathbones Investment Management (5.62%), Peter Kear (2.73%), Peter Simmonds (0.88%), Octopus Investments (0.38%) and Ash Mehta, CFO (0.20%).

Analyst View

At Cavendish Capital Markets, analysts Andrew Darley and Kimberley Carstens see the end-March 2025 year sales at $38.6m ($40.9m, with adjusted pre-tax profits at $8.5m (($7.4m), earnings of 16.3p and paying 3.3p per share in dividend.

Until their reassessments tomorrow, the analysts have an ‘Under Review’ rating.

At Canaccord Genuity Capital Markets, analysts Kai Korschelt, Tom Like and Hayley Palmer also have an ‘Under Review’ rating on the shares, awaiting the full year’s results and outlook being announced tomorrow.

Accordingly, they have withheld their estimates, however when they commented upon the Trading Update in late April this year the analysts noted that:

“Celebrus decided to change how it accounts for revenue from its typical 3-year software term licences for new contracts and future renewals.

This will move from recognizing the annual contribution in the month of contract signing and subsequent anniversaries and renewals to a monthly recognition, similar to a SaaS subscription.

Over the next 2-3 years, we believe this will have the major benefit of smoothing Celebrus' currently heavy 2H weighting where typically 60% of FY sales and all profits were generated in the second half.

In addition, ARR now only includes Celebrus licences, support & managed services without 3rd party software, reducing this metric by c.25%.”

My View

The company is profitable, it is cash-generative, and dividend-paying; it also has a strong balance sheet whilst boasting ample cash to fund investment into its revenue growth.

The strong management team has a track record of success in growing software businesses.

Buying the group’s shares ahead of tomorrow’s statement would be an obvious gamble.

Between August and November last year they were trading in the 250p to 316p price range.

After the end-April Trading Update they fell from 219p to 169p in reaction.

They subsequently eased further to 140p before moving gently better to the current 148.50p.

(Profile 09.04.20 @ 170p set a Target Price of 215p*)

Asterisk * denotes Target Price has been achieved since Profile publication.