Record revenues and positive EBITDA
ClearStar (CLSU) is a leading technology provider to the multi $billion job screening (63% of $17.8m 2017 revenues, up 11% LFL) and drug/medical testing (H1’18 40%) markets. The firm, head-quartered in Atlanta Georgia (US), employs ~90 staff; and enjoys high retention rates of >90%, and excellent forward visibility reflecting the everyday, low-cost and often mandated nature of its products.Not only is the Dollar the world’s reserve currency, but also the US economy is on a roll. Aided by unemployment of 4% and January’s sweeping tax cuts, the Atlanta Fed are pencilling in Q2’18 GDP of 3.9% (vs 2.0% Q1). Meaning that, with CPI inching up to 2.9% in June, Q2 domestic output could in nominal terms even tip 6.5% (vs UK at ~3.5%).
Unsurprisingly, this is welcome news for Georgia-based ClearStar. A technology-rich (R&D accounts for ~10% turnover) provider of every day, low cost background checks for job seekers and drug/medical testing services (MIS), generating 90%< of its revenues from the States.
This constructive demand picture - combined with expansion in the ‘gig’ economy, market share gains and the gradual legalisation of cannabis - is helping to power double digit top line growth. With the firm achieving its highest ever 6-monthly turnover of $9.9m in H1’18 (+11% vs LY $8.9m - estimated split 11.4% Q1, 10.6% Q2), and encouragingly becoming EBITDA positive (Est $0.1m). Boosted by impressive performances from MIS (+27% to $4.0m) and Direct (+22% to $2.8m - transportation & logistics), alongside favourable operating leverage.
Elsewhere, two important system integrations were completed in the period to enhance CLSU’s offering and routes-to-market. Namely ClearMD, with the 3 largest US drug laboratories (Re Abbott, LabCorp and Quest Diagnostics), enabling customers to choose from >9,500 testing sites across the country. And CLSU’s state-of-the-art ‘touchless’ mobile solution (including facial recognition) with SAP SucessFactors.
Shifting to the numbers, we have increased our valuation from 95p to 100p/share thanks to the better than expected H1 cash out-turn. Albeit at this stage, prudently retained the FY18 turnover and EBITDA forecasts of $19.9m and $0.5m respectively.
Fiserv is a provider of financial services technology. The company provides account processing systems, electronic payments processing products and services, internet and mobile banking systems, and related services. The company's segments are: First Data, which provides merchant acquiring, e-commerce, mobile commerce, and other business solutions; Payments and Industry Products, which provides electronic bill payment and presentment services, internet and mobile banking software; and Financial Institution Services, which provides financial institutions with account processing services, item processing and source capture services, loan origination and servicing products, and cash management, among others.
GB Group is engaged in the provision of identity data intelligence services. Co. has two operating segments: Identity Proofing, which provides electronic ID Verification services for combating ID fraud, money laundering and under-age gambling, ID Employ & Comply services for employee authentication and screening, and ID Fraud & Risk Management services; as well as Identity Solutions, which provides ID Registration, ID Engage and ID Trace & Investigate software and services that provide consumer information and facilitate understanding, targeting and retention of profitable consumers. Between them, the segments have six complementary lines of business including ID Verification and ID Engage.
Ideagen is a supplier of information management software to regulated industries. Co. supplies Governance, Risk and Compliance solutions principally to the Healthcare, Transport, Aerospace & Defense, Life Sciences, Manufacturing and Financial Services sectors.
Paychex is a provider of integrated human capital management (HCM) solutions for payroll, benefits, human resource (HR), and insurance services for small- to medium-sized businesses. The company's portfolio of HCM and employee benefit-related services include: payroll processing services; payroll tax administration services; employee payment services; regulatory compliance services (new-hire reporting and garnishment processing); HR Solutions Administrative Services Organization; retirement services administration; HR administration services, including time and attendance; other HR services and products; business services; Professional Employer Organization services; and insurance services.
Salesforce.Com is engaged in customer relationship management technology. The company's Customer 360 is an integrated platform that unites sales, service, marketing, commerce, integration, analytics and more to give companies a single, shared view of their customers. Through its platform and other developer tools, the company also enables third parties to develop additional functionality and applications, or apps, that run on its platform, which are sold separately from or in conjunction with the company's service offerings. The company's cloud service offerings include sales cloud, service cloud, marketing and commerce cloud, and salesforce platform and other.
Wolters Kluwer operates through four divisions: Health is a global provider of information for medical and health professionals; Financial & Compliance Services is a U.S. provider risk management, compliance, finance, and audit professionals the services they need to optimize risk and business performance, and ensure compliance with local, regional, and global regulation; Tax & Accounting is a provider of tax, accounting, and audit information, and services; and Legal & Regulatory provides customers with expert content, software, and services in the areas of law, business, and regulatory compliance in Europe, North America and Asia Pacific.
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