Update

Gamma Communications (GAMA) released their full year numbers on Tuesday last week.

The company continued to build on its impressive track record of revenue growth, delivering an increase of 18% year on year. Adjusted earnings per share (EPS) jumped 31% and their cash pile now sits at £40.6m.

As mentioned in our February buy recommendation, Gamma has opportunities to diversify into new segments and to leverage its strong balance sheet for expansion into Europe. We should also note that Gamma’s Brexit risk is mitigated by 90% recurring revenue and its inherent resilience as it provides customers with a more cost-efficient alternative to legacy products.

Andrew Taylor, Chief Executive Officer, commented:

“I have been impressed by what I have observed during my first nine months at Gamma, including the high quality of our team and the strength and special market approach of both our direct and indirect channel businesses, which are both delivering strong double-digit revenue and margin growth. The quality and reliability of Gamma’s core network, our service and operations, and our products, coupled with the digital capabilities that we have developed, has directly contributed to the strong results we have announced today. Looking forward, we are focused on building on our strong business foundations at Gamma, and ensuring that we continue to deliver what our customers and our channel partners want. As part of our Gamma 2023 strategy, we look forward to taking the business forward and delivering long term top and bottom line growth.”

The market has reacted favourably to the update with the shares gapping higher on the day of the update and trending higher during the last week. This positive update has given our position a healthy kick-start and we’re now sitting on a healthy 14% open profit (not including spread and dealing commission).