Gamma Communications plc Results for the year ended 31 December 2024

Sustained strong financial performance, enhanced by acquisitions. Growth in line with expectations, delivering healthy cash generation. Announcing a share buyback of up to £50m in H1 2025.

Gamma Communications plc (“Gamma” or “the Group”), a leading provider of technology-based communication services across Europe, is pleased to announce its results for the year ended 31 December 2024.

Key highlights

• Strong financial performance and cash position. Gross profit and Adjusted EBITDA growth in all business units, driven by solid organic growth and supported by acquisitions.
• Three acquisitions completed during 2024, each enhancing future organic growth: Coolwave in February; BrightCloud in July: and Placetel in September.
• The Group acquired STARFACE in February 2025, a strategically significant acquisition positioning Gamma as a leader in the German SME cloud communications market when combined with our acquisition of Placetel. The German market is both larger and has materially lower cloud penetration than the UK. In Germany we now have over 500,000 Cloud Seats along with a range of products to meet growing customer communication needs.
• In Gamma Business the acquisition of Coolwave has allowed our Service Provider business to expand its services to around 20 countries. The Service Provider business provides carrier services, such as hosting telephone numbers and connecting calls, for customers who wish to run a service but do not have network capabilities.
• Gamma Enterprise continues to win new customers including WM Morrisons, Edmundson Electrical and Equiniti. The acquisitions of BrightCloud and Satisnet have enhanced our range of solutions providing additional customer experience and cyber security capabilities.
• As previously announced, Gamma intends to move to the Main Market and all workstreams are progressing as planned with admission expected on 2 May 2025.
• In line with the Board’s capital allocation framework, today we are announcing a share buyback programme of up to £50m in H1 2025.
• Adjusted cash conversion was in line with expectations at 96% (2023: 108%). The reduction primarily reflects nonrepeatable working capital improvements in the prior year.

Financial highlights

Group performance:

• Group revenue grew by 11% to £579.4m, gross profit grew by 12% to £300.3m (2023: £521.7m and £267.2m), with Adjusted EBITDA growing by 10% to £125.5m (2023: £114.3m). Acquisitions have positively contributed to the Group’s performance during the year. On an organic basis growth was solid as revenue increased by 5%, gross profit by 6%, and Adjusted EBITDA by 6%. PBT grew by 34% to £95.6m (2023: £71.5m) principally as a result of the prior year exceptional items. Adjusted PBT (which removes the impact of exceptional items) grew by 14% to £111.9m (2023: £97.9m).
• Recurring revenue (being revenue which is recognised “over time” as per note 3) grew to £516.6m (2023: £462.8m), being 89% (2023: 89%) of revenue as existing customers renewals and new customer agreements continue to deliver contracted income.
• Adjusted EPS (fully diluted) increased by 13% to 85.1p (2023: 75.1p) reflecting the impact of Adjusted EBITDA growth and increased interest income with a 1% benefit from the share buyback in 2024.

Business unit performance:

• Gamma Business continued to grow strongly driven primarily by our UCaaS portfolio and supported by recent acquisitions. Gross profit increased by 11% to £194.7m (2023: £176.1m), 6% on an organic basis, with a stable gross margin.
• Gamma Enterprise, benefitted by a number of significant contract wins, grew gross profit by 14% to £60.2m (2023: £52.6m) with the Satisnet and BrightCloud acquisitions contributing £4.4m (2023: £1.5m) on an inorganic basis.
• European gross profit grew 18% to £45.4m (2023: £38.5m). Placetel contributed £6.1m (2023: Nil) of gross profit which was supported by healthy organic growth in Germany. There was a negative impact from movements in foreign exchange rates.

Post period end

The Group acquired STARFACE in February 2025 for a cash outlay (excluding transaction costs) of £168.7m (€201.6m). After taking account of net cash and working capital, this equates to £164.0m (€196.0m) on a cash-free, debt-free basis.

Outlook

Trading at the beginning of 2025 has begun with good progress in Europe, in particular in Germany, as we continue to integrate our recent acquisitions. We expect satisfactory Group organic growth supported by continued active cost management throughout the year. We expect this to be further strengthened by the recent German acquisitions, driving strong Group growth.

Andrew Belshaw, Chief Executive Officer, commented:

“Gamma has achieved another strong set of results, marked by robust revenue growth, stable margins, and healthy cash generation despite general soft macro-economic performance in our two main markets of the UK and Germany. Our broadened product set is resonating well with both Channel Partners and end users. As customers require more complex communications solutions, we continue to see opportunities to grow our revenues further.

The strength of Gamma’s balance sheet has enabled us to expand our capabilities, through both product development and strategic acquisitions. I am delighted to have welcomed the teams from Coolwave and BrightCloud to Gamma – their contributions will be invaluable as we continue to expand our solution set. I am also pleased to be able to say that Gamma is now a significant player in the German market following the acquisitions of Placetel and STARFACE; this gives us a fantastic opportunity to build a business in Europe’s largest market. We expect significant medium- and long-term growth in this market as new technologies are adopted.

I believe our increased scale in Germany through acquisitions will drive more significant returns, allowing Europe to contribute more meaningfully to group growth in 2025 and beyond. Our resilient business model continues to help us mitigate the current macro-economic uncertainties and I look forward with confidence given the medium-term market opportunity.”

About Gamma

Gamma is a leading provider of technology-based communication solutions across Europe. With approximately 2,200 employees and admitted to trading on AIM, Gamma helps organisations connect and collaborate through solutions including Unified Communications, voice enablement, connectivity, mobile and security.

Gamma’s vision is a better-connected world – working smarter for the benefit of businesses, people and the planet. Selling exclusively to businesses and public sector organisations, Gamma’s core markets are the UK and Germany, with additional presence in Spain and the Benelux region.

In the UK, Gamma serves SMEs through an extensive network of over 1,500 channel partners (Gamma Business). For larger businesses and public sector organisations, Gamma Enterprise engages directly to sell, deliver, and support more complex, integrated communications solutions. In Germany, Gamma operates through a combination of a self-service digital platform and a strong partner network and is now one of the country’s leading cloud communications providers following strategic acquisitions.

For more information about Gamma and its full range of products and services, visit gammagroup.co.