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Sector: IT services



This company has a lot going for it. It operates in a global market, providing propriety financial services software with a predominantly recurring revenue model. GBST also generates good cash flow but the software industry is not a sector where you can just rest on your laurels. Significant and ongoing R&D investment is required and the company is almost half way through a $50m program. While it’s attractively priced at a FY19 EV/EBITDA multiple around five times, the company is a speculative bet on the company delivering growth in FY20. In the UK alone, GBST estimates that it could add $20m in annual licence revenues by 2022, which is 22% of our forecast $93m FY19 revenues.


GBST reported a weak 1H19 result but is guiding for a strong second half which shows improving earnings momentum. 1H19 operating EBITDA before strategic R&D expenses fell 40% on 1H18 to $5.8m on revenue growth of 3% to $42.7m. Guidance implies 2H19 EBITDA will be up at least 16% on 2H18 to $12.2m. Operating cash flow almost doubled to $10m and the net cash position was $1.8m lower at $9.6m. The huge $50m strategic R&D investment program is tracking on time and budget. It is 36% complete with 44% of the budgeted expenditure used. However, with $21m-$22m to be spent in FY19, no dividend was declared.

**FY19 Forecast 

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  • Radar Rating Unlock
  • Market Cap ($m)* 237.7
  • Dividend Yield (%)* 0
  • NET CASH ($M) 10
  • * Data as of 21 November 2019

Latest Research Summary

03 Jul, 2019

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Previous Research

Research Date Radar Rating  
GBST: RESEARCH TIP UPDATES - JULY 2019 03 Jul, 2019 6001bd9a View Research
GBST: RESEARCH TIP UPDATES - JUNE 2019 26 Jun, 2019 bdc9fc08 View Research
GBST HOLDINGS: RESEARCH TIP UPDATES - APRIL 2019 18 Apr, 2019 b973b201 View Research
GBST HOLDINGS: RESEARCH TIP UPDATE - FEBRUARY 2019 13 Feb, 2019 4a92f5bd View Research