What's in the News

ActiveOps is hosting an Analyst and Investor Day to demonstrate how its Decision Intelligence platform is transforming service operations management, highlighting strategy to scale growth with enterprise customers and partners, accelerate R&D, and leverage its scalable operating model (Key Developments).

At the event, the company will set out its financial ambition to reach £100 million in annual recurring revenue with a 25% EBITDA margin, underpinned by disciplined execution and a focus on sustainable, profitable growth (Key Developments).

ActiveOps issued new guidance for the first half of 2026, expecting overall revenue growth of about 45% year on year, or 50% on a constant currency basis, to approximately £20.8 million, with organic revenue up roughly 34% on a constant currency basis to £18.7 million (Key Developments).

The company anticipates full year 2026 revenues will be comfortably ahead of consensus expectations. Reported profit before tax is expected to remain in line with consensus due to integration and reorganisation costs in 2026 (Key Developments).

Management expects operating cost efficiencies from current integration and reorganisation initiatives to begin benefiting profit from fiscal year 2027 onwards (Key Developments).

Valuation Changes

Fair Value: Unchanged at £3.17 per share, indicating no revision to the central valuation estimate.

Discount Rate: Fallen slightly from 8.76% to 8.74%, reflecting a marginally lower perceived risk profile.

Revenue Growth: Essentially unchanged, remaining at 14.76% in the long term model.

Net Profit Margin: Stable at 6.54% in projected steady state profitability.

Future P E: Reduced slightly from 79.30x to 79.24x, signaling a minimal recalibration of the forward earnings multiple.

Key Takeaways

ActiveOps can capitalize on AI demand for decision intelligence tools and significant ARR growth potential from existing clients like Fidelity International.
New sales hires and the transition to enhanced platforms suggest increased market reach and improved margins from upselling and cross-selling.
Reliance on a major customer and direct sales alongside marketing expenditures pose revenue and scalability risks, impacting revenue stability and net margins.

Catalysts

About ActiveOps

Engages in the provision of hosted operations management software as a service solution to industries in Europe, the Middle East, India, Africa, North America, and Asia Pacific.What are the underlying business or industry changes driving this perspective?

ActiveOps is well-positioned to capitalize on the growing demand for AI-driven operational solutions, which could significantly drive revenue growth as organizations seek better decision intelligence tools.
The company's land and expand strategy, particularly with high-profile clients like Fidelity International, indicates potential for substantial ARR growth within existing accounts, directly impacting revenue projections.
Ongoing investments in new sales channel capacity, with 5 new sales hires and more expected, suggest a potential increase in market reach and customer acquisition, positively affecting future revenue.
The transition to the new ControliQ platform and the upcoming Series 4 release enables ActiveOps to upsell and cross-sell enhanced products, likely improving net margins as these products carry higher gross margins.
ActiveOps has identified significant untapped ARR potential from its existing customer base, estimated at £90 million, which could drive long-term revenue growth without needing extensive new customer acquisition efforts.

ActiveOps Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming ActiveOps's revenue will grow by 16.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 3.6% today to 5.2% in 3 years time.
Analysts expect earnings to reach £2.5 million (and earnings per share of £0.02) by about September 2028, up from £1.1 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting £3.3 million in earnings, and the most bearish expecting £1.7 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 77.6x on those 2028 earnings, down from 118.9x today. This future PE is greater than the current PE for the GB Software industry at 37.6x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.62%, as per the Simply Wall St company report.

ActiveOps Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

ActiveOps' reliance on a single significant customer that has indicated a reduction in user base could impact ARR growth, highlighting potential risks to revenue stability.
Notification from a significant customer about the reduction in user base implies potential vulnerability in customer retention, which might affect revenue and net margins.
The direct sales model and limited current reliance on channel sales partners suggest potential scalability constraints, which could hinder revenue growth.
Significant investments in marketing and R&D with varying margins in training implementation could strain net margins if additional revenue is not generated from these investments.
Execution risk related to expanding sales and marketing capacity without directly correlating increased revenue immediately may temporarily impact earnings and net margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of £2.133 for ActiveOps based on their expectations of its future earnings growth, profit margins and other risk factors.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £47.7 million, earnings will come to £2.5 million, and it would be trading on a PE ratio of 77.6x, assuming you use a discount rate of 8.6%.
Given the current share price of £1.84, the analyst price target of £2.13 is 13.7% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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