Gamma Communications, the UK-based business call services provider, is considering a move to the London Stock Exchange’s Main Market following a strong set of interim results which could potentially see the company moving from AIM to the FTSE 250 Index.
Shares in Gamma surged by as much as 10 per cent in early trading on Tuesday, as the company reported a 10 per cent increase in revenue to £282.5m for the period, while its adjusted pre-tax profit rose 16 per cent to £56m.
The firm said the growth was thanks to rising demand for its expanded product suite, as businesses grapple with increasingly complex communication needs.
Chief executive Andrew Belshaw said: “Our broadened product set is resonating well with both channel partners and enterprise customers.
“As customers require more complex communications solutions, we continue to see opportunities to grow our revenues further.”
M&A is a ‘key tool’ – Gamma Communications
Gamma, which handles around 30 per cent of UK business calls for clients such as Morrisons, Tui and the AA, has been steadily expanding its enterprise offerings.
Gamma has completed two recent acquisitions, Coolwave Communications and BrightCloud, and the firm has conditionally agreed to acquire Placetel, a key player in Germany’s Cloud PBX market.
“We continue to view M&A as a key tool to complement our organic growth, broaden our capabilities and expand our European presence,” Belshaw added.
Peel Hunt upgraded its full-year 2024 earnings per share (EPS) forecast by three per cent, increasing its target price for Gamma from 1,750p to 1,800p.
Shore Capital is also optimistic, writing in an analyst note that the company is “well placed to increase its intrinsic equity value over the medium term” and sees potential for further sustainable upside in the near term.
Gamma said it expects growth to continue in the second half of the year, with adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) and EPS forecast to be at the top end of market expectations.
The current consensus range for adjusted EBITDA is between £120.9m and £127.4m, with adjusted EPS expected to fall between 78.4p and 84p.