Half Year Trading Update 2021

GBG, (AIM:GBG) the experts in digital identity software, provides an update on its trading performance for the six months to 30 September 2021 in advance of releasing its half-year results.

The long-term structural growth opportunities for each of GBG's three business units of Location, Identity and Fraud continue to be supported by consumer activity shifting online and an increased need for fraud prevention solutions. Each business unit grew in both reported and organic constant currency terms in the first half year.

We are pleased to report that total revenue for the first six months is expected to be approximately £109 million, which represents an increase of 5.3% over the prior year period.  This is before adjusting for exits from our marketing services and employment screening businesses, which gives an increase of 12.4% on an organic constant currency basis.

In Identity we had expected the revenue comparison for H1 to be challenging, given the substantial benefit derived from a one-off project related to the USA government's financial stimulus activity last year. However, this customer project continued into the current financial year at higher than expected volumes, generating additional revenue of approximately £3 million. We also benefitted from the increased transaction volumes across crypto-currencies, experienced in our Q4 last year, continuing into April and May of this financial period. This generated a further circa £4 million of additional consumption revenue in H1. In both cases, consumption volumes have now settled at normalised run rates and we anticipate these will remain at these levels through the second half of the year.

GBG's Location business continued to experience good demand across a range of sectors driven by the continuing consumer shift to greater online activity. 

As anticipated, our Fraud business unit experienced strong year-on-year growth as a result of restarting more on premise deployment activity, new contracts and strong renewals.

As a result, adjusted operating profit for H1 is expected to be approximately £27.5 million, an increase of 3% on last year and an adjusted operating profit margin of approximately 25.2%. This is marginally higher than we had expected due to the one-off revenue impacts noted above. Because of the market opportunity available to us we continue to increase investment in GBG's people, technology and channel-to-market capacity.

The Company's balance sheet and cash conversion remains strong with net cash and treasury deposits of £39.5 million at 30 September 2021.  We also have an unutilised revolving credit facility of £110 million.

Outlook

The Board remains positive about the long-term prospects for GBG. Our markets have positive structural growth drivers, we continue to invest in our market leading technology and data, enjoy long-term customer relationships and we have an outstanding global team. As a result, the Board can confirm that the outlook for the second half of FY22 remains in line with its expectations. 

Chris Clark, CEO of GBG, commented:

“We are pleased with the financial and operational performance over the past six months, particularly considering the conditions many of our customers and teams around the world continue to experience. We have made excellent progress against our growth strategy and have continued to support our customers throughout. This progress is testament to the hard work and dedication shown by the GBG team around the world. GBG remains excellently positioned at the forefront of the digital identity software industry.”

The Group intends to publish its half-year results on 30 November 2021.

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About GBG

GBG are the experts in digital identity software. Helping organisations across the globe eliminate customer friction and fraud from their digital experiences. GBG develop and deliver digital identity, address verification, fraud prevention and compliance software to over 20,000 customers globally.

Through the combination of the latest technology, the most accurate data and our unrivalled expertise, GBG helps organisations ranging from start-ups to the largest consumer and technology brands in the world deliver seamless experiences, so their customers can transact online with greater confidence.

Headquartered in the UK and with over 1,000 team members across 15 countries.

To find out more about how we help our customers establish trust with their customers, visit www.gbgplc.com and follow us on LinkedIn and Twitter@gbgplc.