Idox – building value while expanding opportunities, attractive ARR, with a good balance sheet to take it forward, shares 57p, brokers 90p TP

23.05.2025

Yesterday’s First Half Trading Update from Idox (LON:IDOX), the specialist information management software and geospatial data solutions group, showed that its positive momentum of 2024 had continued into the six months to end-April this year.

The group will be declaring its Interims on Thursday 12th June.

The Business

Idox develops specialist software for government and industry, with an established track record serving tightly regulated markets including local authorities, health, engineering, transport and property.

Built around the needs of the user and designed in collaboration with experts, its software delivers exceptional functionality and reliability to critical operations and embeds workflows that drive efficiency and best practice.

The £260m-capitalised Woking, Surrey-based group provides software and services for the management of local government and other organisations in the UK, the USA, the rest of Europe, and internationally.

It operates in three segments: Land, Property & Public Protection; Communities; and Assets.

The company offers specialist software and information management solutions for the government, health, engineering, transport, and property sectors; engineering document management and control solutions to asset-intensive industry sectors; and delivers software solutions.

It also provides various solutions for facilities management, regulatory services, built environment, public protection, social care and special educational needs and disabilities, funding and information services, hospital asset tracking and patient records management system, GIS and geospatial, CAFM, electoral services, sexual health management, transport network management, address data solutions, and policy and intelligence, as well as engineering, construction, and asset management solutions.

The company serves the construction, land, emergency services, utilities, and education sectors.

Management Comment

CEO David Meaden stated that:

"The Group has delivered a positive performance during the first half, in line with the Board's expectations, with good revenue and adjusted EBITDA growth as well as solid order intake providing good future visibility.

We have significantly reduced our net debt since the end of FY24 to a net cash position as we continue to drive positive cash performance in the business.

Our M&A pipeline is healthy, and we were pleased to complete the acquisition of Plianz shortly after the half-year end to strengthen our existing Social Care offering and build on our strong public sector software capabilities.

We remain confident of adding to our existing portfolio of specialist software and geospatial data solutions to deliver further profitable growth.

We are pleased with our progress and positive momentum and are confident that Idox is well positioned for growth in the remainder of 2025."

The Equity

There are some 462m shares in issue.

The larger holders include Octopus Investments (16.76%), Long Path Partners (12.32%), Soros Fund Management (10.07%), Canaccord Genuity Wealth Management (8.05%), Investec Wealth & Investment (7.97%), Gresham House Asset Management (6.84%), Herald Investment Management (3.81%), Canaccord Genuity Asset Management (2.61%), Charles Schwab Investment Management (2.18%) and Artisan Partners (2.10%).

Broker’s Views

The consensus average Price Target across four brokers rating the shares as a Buy, suggests an aim at 84.75p a share, with the Highest at 90p, the Lowest at 81p.

Analysts Ian Robertson and Gareth Evans at Progressive Research are looking for the group to show revenues of £93.4m (£87.6m) for the year to end-October 2025, with a steady £16.1m adjusted pre-tax profit, earnings of 2.7p (2.6p), and a dividend of 0.8p (0.7p) per share.

For the coming year they see £98.1m sales, £18.4m profits, 2.9p of earnings and a 0.9p dividend.

The 2027 year could report £103.0m of revenues, with £20.5m of profits, 3.2p of earnings and a 1.0p per share dividend.

In My View

Regular readers will know just how much I love to see Annual Recurring Revenues (ARR) in any company’s reports, and this group has a good 62% ARR.

The group has significant financial resources to provide a solid basis for larger, accretive, and technology-enhancing

acquisitions at attractive valuations.

Its shares, which peaked at 82p four years ago in August 2021, have in the last year ranged between 53p and 69p.

Now at 57p, ahead of the Interims being announced on Thursday 12th June, I consider that holders should stick firmly to the shares, while looking to buy more upon any subsequent price falls.

(Profile 30.04.20 @ 38.50p set a Target Price of 50p*)