AOM: Scalable Model Will Drive Margin Expansion Toward Ambitious Recurring Revenue Goal

Analysts have modestly raised their price target on ActiveOps, lifting fair value from £3.12 to £3.17 as they balance slightly higher discount rates and slower expected revenue growth against improving profit margin forecasts and a more reasonable future earnings multiple.

What's in the News

• ActiveOps held an Analyst and Investor Day to demonstrate how its Decision Intelligence platform is reshaping service operations management and to highlight its strategy for deepening enterprise relationships and expanding through partners, alongside accelerated R and D investment and a scalable, profit focused operating model (Key Developments).
• Management reiterated a long term ambition to reach £100 million in annual recurring revenue with a 25% EBITDA margin. This underscored confidence in the company’s ability to convert its scalable model into sustainable, profitable growth (Key Developments).
• The company issued new guidance for the first half of fiscal 2026, expecting overall revenue growth of about 45% year on year, or 50% on a constant currency basis, to around £20.8 million. This guidance was described as being driven by expansion with existing enterprise customers and new wins across all regions (Key Developments).
• Organic revenue growth is projected at approximately 34% on a constant currency basis, to £18.7 million, and the group anticipates an increase in profit before tax for the first half of 2026 based on this performance (Key Developments).
• For full year 2026, ActiveOps stated that it expects revenue to be comfortably ahead of consensus, while near term integration and reorganisation costs are likely to keep reported profit before tax broadly in line with expectations. The company also indicated that it expects cost efficiency benefits from fiscal 2027 onward (Key Developments).

Valuation Changes

• Fair Value: risen slightly from £3.12 to £3.17 per share, reflecting a modest uplift in intrinsic value estimates.
• Discount Rate: increased marginally from 8.67% to 8.76%, implying a slightly higher perceived risk or required return.
• Revenue Growth: reduced from about 18.4% to approximately 14.8%, indicating a more cautious outlook on top line expansion.
• Net Profit Margin: improved from roughly 4.9% to about 6.5%, pointing to better expected profitability.
• Future P/E: fallen significantly from around 113.6x to about 79.3x, suggesting a less demanding valuation multiple on projected earnings.