FD Technologies plc is to break up its three businesses after reporting in-line EBITDA of £22.5 million and lower-than-forecast revenue of £247m for the last financial year.
The Northern Irish tech firm – previously known as First Derivatives – said it would “address short-term trading issues” by separating its main consulting services business First Derivative from marketing platform MRP and analytics division KX.
MRP, which uses data analytics to help clients find high-value leads, will be merged with CONTENTgine, a provider of B2B technology buyer insights and lead generation.
The combined customer base includes some of the largest brands in enterprise technology and the merged business will be led by MRP CEO Christopher Rack, assisted by the three founders of CONTENTgine.
For the financial year ending 28th February 2023, MRP generated revenue of £41.5m and adjusted EBITDA of £1.4m while in the six months ending 31st August 2023 it generated revenue of £15.7m and an adjusted EBITDA loss of £0.2m. In the second half of the financial year MRP continued to incur a loss.
FD said the combined entity is expected to be profitable from the first quarter of FY24 and generate a cash EBITDA run-rate of £5m by the end of the 2024 calendar year.
The group, which will own 49% of the combined entity, has made available a $5m debt facility for the next 12 months to the combined business.
Meanwhile, FD has seen slower-than-expected ARR growth in KX, which offers high-performance analytics solutions, despite high hopes for the division in the age of artificial intelligence. Seamus Keating, CEO of FD Technologies, described its growth as “disappointing”.
“The board will take a measured approach to the separation of KX and First Derivative, particularly with respect to the timing of any transaction, having regard to market conditions to ensure that a divestment of First Derivative reflects its value,” read a statement to the London Stock Exchange.
“The company looks forward to engaging closely with its investors as the process progresses.”
Donna Troy, chair of FD Technologies, said: “FD Technologies has an exciting collection of assets and at this stage in the evolution of these businesses and against the current market valuation, it is the right decision to take transformative action to separate them and realise value for shareholders.
“I am confident we can address some of the recent short term trading issues with the actions we have announced today in the trading statement and with focus and input from our management and board we will ensure we maximise the potential across the portfolio.”