Craneware is back on track
Craneware is in our portfolio because it offers excellent growth opportunities in the US. Reliable, recurring revenue – a key characteristic of a software company – helps to justify its slightly stretched valuation. This is the ultimate guide to news updates from the AIM gem.
Hospitals can be great customers of software companies. They’re loyal to their providers (switching patient data to a new platform is not easy) and are always looking for ways to improve efficiency by adding extra products and subscriptions. That is why Craneware (LON: CRW) – provider of specialist software solutions to US hospitals – has long been a darling of AIM, with a dazzling valuation to match (at its 52-week peak in September 2018, shares traded on 65 times forecast earnings).
Craneware has historically gone some way to justifying its valuation with its reliability. Every year at the interim stage, management reveal how much revenue they expect to receive from ongoing contracts or long-standing subscriptions in the full year. In 2017 and 2018, that forecast (known as visible revenue) contributed an average of 95% of the total annual revenue. In 2019, visible revenue at the half year stage ($70m) contributed nearly all the total annual revenue ($71.4m).
The slowdown in the second…
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