Delivering 60% revenue growth and almost 100% EBITDA growth in FY2018 translated into revenue of £6.6m and EBITDA of £1.0m.

The support we received from our existing customers and the trust shown in us by our many new customers have been key drivers of our growth, taking us from £4.0m revenue in FY2017 to £6.6m in FY2018.  Successfully delivering that 60% step up in revenue in FY2018 through organic growth alone and our extrapolated final quarter run rate showing a scale of almost £8.5m combine to further validate our ambition to take Incremental beyond £60m revenue by FY2022 through organic and inorganic growth.

With services and support being at the heart of what we do, this revenue stream is a key metric with which we measure our pace of growth.  Representing almost three quarters of our business, this revenue stream has increased by an exceptional 95% year-on-year, with our Q4 FY2018 run rate being 2.5 times the corresponding run rate in Q4 FY2017.

Licences and software maintenance renewals on behalf of our key partners are the key elements of our remaining income streams, together delivering revenues of £1.6m in FY2018.  With our licence income increasingly moving towards monthly subscriptions instead of large perpetual sales, these revenue streams represent a strong and growing source of recurring revenues for the business.

Our exceptional FY2018 top line growth was delivered at significantly improved gross margins. A sustained focus on effective deployment of our people and related utilisation were the key drivers of us being able to lift our delivered gross margin by a full 10 percentage points between FY2017 and FY2018.  The benefit of such a marked improvement in our margin was that we could make substantial investment in our supporting infrastructure – strengthening our leadership and commercial teams and investing in our new Glasgow office contributed to a £1.0m increase in our overhead base year-on-year.

Gross Margin

UP 10% POINTS

Notwithstanding FY2018 being a year of reinvesting the returns from our scaling revenue and margin improvement, our EBITDA for the year broke through the £1.0m threshold.

Increasing our EBITDA by almost 100% year-on-year while investing to establish our platform for growth has been particularly satisfying and provides confidence on the future profit potential of our business. Indeed, our extrapolated final quarter shows an EBITDA run rate of more than £1.7m.

Growth of the scale we have experienced in the last year can place a strain on working capital, however it has been pleasing that we have been able to convert 75% of our EBITDA into operating cash flow in the period. This has provided us with available cash to reinvest in equipment and better office environments for our people, while also servicing the funding facilities held within our parent company.

Leveraging our current revenue and EBITDA run rates with further organic growth, together with the contribution from the June 2018 acquisition of Gap Consulting, will result in us delivering revenues approaching £15m and EBITDA of more than £2m in FY2019.

[1] Includes recharges of funding-related and other non-trading costs from Incremental Group Holdings Limited, acquisition related charges, reorganisation costs and non-recurring directors’ remuneration.