Release Date: December 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NCC Group PLC (NCCGF, Financial) reported strong recurring revenues and improvements in EBITDA, highlighting its cash-generative nature.
- The company has made significant progress in its cyber security and Escode businesses, driven by increasing cyber threats and digitalization.
- NCC Group PLC (NCCGF) has improved gross margins through better pricing, global delivery models, and a more commercial mindset.
- The company has successfully executed on two disposals, strengthening its balance sheet and providing future optionality.
- NCC Group PLC (NCCGF) has launched new services around AI, addressing critical client needs and expanding its capabilities.
Negative Points
- The company faces challenges with lengthening sales cycles, particularly in government and public sector contracts.
- There is a noted decline in the North American Technical Assurance Services (TAS) business, requiring strategic adjustments.
- NCC Group PLC (NCCGF) is experiencing foreign exchange headwinds, impacting revenue translation.
- The company acknowledges the need for further operational efficiencies and cost management to maintain profitability.
- Despite strong performance, the macroeconomic environment and government budget changes pose potential risks to future growth.
Q & A Highlights
Q: Within the consulting business, should we expect a margin pickup as the pipeline converts over the next 12 months?
A: Mike Maddison, CEO, explained that the consulting business is shifting from compliance-driven services to transformation projects and technology implementations. They are building the pipeline first before hiring more resources, leveraging their Manila delivery model for flexibility.
Q: Post-disposal, the North American TAS business seems to have low margins. Are remedial actions needed?
A: Guy Ellis, CFO, noted a shift in North American tech spending from a supply-constrained market to consultative selling. They are focusing on reshaping the business to improve client engagement and value delivery.
Q: Can the consulting business act as a funnel for TAS upsells?
A: Mike Maddison confirmed that the consulting business aims to establish relationships and insights into client challenges, leading to full-service engagements, as seen with clients like TikTok.
Q: How does the organic revenue growth momentum in cyber relate to the full-year guidance for FY25?
A: Guy Ellis mentioned stable order creation but noted lengthening sales cycles. Managed services will grow but at a lower rate, with other areas expected to remain flat or slightly decline.
Q: How are you prioritizing resources internally with cyber budgets under pressure?
A: Mike Maddison highlighted a focus on non-tech verticals in North America and driving managed services in the UK. Marketing efforts are aligned with new capabilities and alliance partners.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
