Pipeline growth highlights commercial progress

eEnergy’s interims confirm a period of strong commercial progress, underpinning confidence in revenue growth prospects for H2’24 and into FY’25. As previously reported, H1 trading was subdued but the sales pipeline is showing genuine momentum (+25% in H1) with >£6m of contracted orders scheduled for the remainder of the year. We note an element of caution over the timing of project delivery, given the strong Q4 pipeline, but this should not detract from the underlying progress that is increasingly evident. Following the disposal of the Energy Management business, eEnergy has a strong balance sheet and, in our view, is well placed to play a leading role in the Net Zero transition.

H2 has started well, with a quarterly revenue record in Q3 (£9.2m). Revenue expectations for the remainder of FY’24 are underpinned by a contracted order book of £7.6m at the end of September, £6.4m of which is expected to convert to revenue in the current year. The Board has maintained its revenue guidance of between £25m and £26m. We trim our forecast to the bottom of this range (previously £25.5m) and apply an element of caution to margins and cash generation, noting some risk over timing. As a reminder, our forecasts do not include the potential benefit of deferred consideration from the EM disposal, which management estimates at between £8m and £10m over the next two years.