Cloud momentum drives customer expansion and recurring revenue

CLOUD MOMENTUM DRIVES CUSTOMER EXPANSION AND RECURRING REVENUE
Forterro has seen a strong year to date and as we enter the final quarter of 2024, Dean Forbes, CEO, provides an update on company highlights and proforma performance figures.
Sales and revenue growth
Total sales increased 20% year-on-year, driving revenue growth that is ahead of market averages and broadly in line with the company’s plan. As we continue our proactive shift towards multiyear, recurring service agreements, we have seen our one-off revenues for Professional Services reduce year-on-year. However, this shift contributes towards our overall recurring revenue growth making the company stronger for the long term, with our annual recurring revenue (ARR) growth up 20% year-on-year.
Continued cloud momentum
Our overall recurring revenue growth was strong through the first three quarters, growing at 16% year-on-year and now representing 62% of all revenues. Strong cloud momentum for Orderwise, Sylob, Abas and Myfactory is driving a large portion of this growth, and we have added more than 500 new customers, the vast majority of which were deployed in the cloud. In addition, we continue to see strong customer expansion opportunities as traditional on-premise customers sign up for newly created subscription offerings and managed services.
Forterro Cloud Suite
Q3 saw the very first release of the Forterro Cloud Suite, our unified cloud platform through which Forterro customers will access their cloud applications, and in time, additional products and capabilities acquired through M&A, built by our R&D team or leveraged through partnerships. This is an exciting milestone which will enable our long-term strategy to accelerate. Prodaso, the AI platform acquired in Q2, will the be first, non-ERP capability to be offered through Forterro Cloud Suite. We are expecting the first customer deployments of our platform in early in 2025.
Sustained profits 2024 and beyond
Profitability grew 10% year-on-year, resulting in an overall EBITDA margin of 30%. This highlights our ability to grow both top and bottom line simultaneously, whilst undergoing a significant transformation towards a cloud-centric business model. Despite this transition, profitability has consistently seen double-digit growth each year and as the outlook is positive, we expect that growth to continue into Q4 and 2025 on both an organic and inorganic basis as we ready ourselves to close sizable M&A transactions in Q4.
Based on current trading momentum and our Q4 forecast we expect revenues in excess of €300M and profitability north of €100M next year, which would mean our business has more than doubled since 2022 when Partners Group became our majority shareholder.