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№ 309 36 filings · 2021-10-06 → 2026-10-07

NETCALL PLC

NET
Technology Share price 129p Market cap £220m Overall fit 660 /1000

Genuine AI-receiver via vertical SaaS with demonstrable AI-attach uplift (sales tripled, 40%+ new-order attach), fair-not-cheap valuation at 16x EV/EBITDA, moderate (not spectacular) operating leverage, and a fortress balance sheet — fits all three investor pillars with the main reservation being that operating leverage is capped by ongoing re-investment.

Fair value range 125p–160p Mid case · £243m
Absolute upside +10.4% vs current market cap
Conviction 4/5 confidence in undervalued call
Supports the call
  • Clean five-year disclosure with reconcilable ACV/RPO/retention metrics
  • Consistent in-line-to-ahead delivery vs guidance, no profit warnings
  • Multiple valuation methods converge within 125-160p range
Limits the call
  • Statutory PBT diverging materially from Adjusted PBT as M&A compounds
  • FY27 Jadu earn-out (20% ACV growth target) is a load-bearing assumption
Methodology

Blended EV/EBITDA and P/E on FY27E, cross-checked vs UK vertical SaaS peers

In one line · bull case

Vertical SaaS with a real AI-attach revenue line, 83% recurring base, net cash and a 115% retention engine — available at a fair-not-cheap mid-teens EV/EBITDA.

In one line · biggest risk

UK public-sector customer concentration (c.50% of councils, c.two-thirds of NHS acute trusts) exposes the top line to fiscal and procurement-cycle shocks.

Drivers
AI beneficiary 72 /100
Vertical SaaS whose per-customer ACV expands as AI products are attached; AI product sales tripled YoY and are in >40% of new Cloud orders.
Operating leverage 68 /100
High gross margin (~84%) and 83% recurring revenue, but management-stated 30% drop-through reflects deliberate R&D re-investment capping flow-through.
Earnings vs expectations 68 /100
Multiple in-line to modestly-ahead years, one explicit FY22 upgrade; no profit warnings in the five-year window.
Growth momentum 78 /100
20% total / 12% organic revenue growth, 37% Cloud ACV / 24% organic Cloud ACV, accelerating from prior year.
Moat 60 /100
Switching costs on mission-critical workflows (patient access, citizen services), sector-tailored Hubs, but ultimately execution-led rather than regulatory/network-effect-wide.
Earnings quality 65 /100
Clean 105% EBITDA-to-cash conversion, but adjusted-vs-statutory gap widening from acquisition charges and SBP.
Management quality 70 /100
Consistent delivery, orderly CEO transition in Jan 2024, disciplined acquisition integration track record (four deals in 24 months, cost synergies banked).
Cyclicality 25 /100
UK NHS/local-government-heavy customer base with multi-year contracts; largely defensive to macro cycle.
Leverage 10 /100
£20.1m net cash, no borrowings, lease liabilities under £1m — fortress balance sheet.

NETCALL PLC (AIM: NET) — Investment Research Note

Executive summary

Netcall is a UK enterprise software vendor whose "Liberty" platform combines low-code application development, workflow/robotic process automation and omni-channel customer engagement, with AI capabilities embedded across the suite; it sells into mission-critical workflows at ~700 organisations, dominated by UK local authorities (c.50% of councils) and NHS trusts (c.two-thirds of acute trusts). Over the five-year filing window the business has transformed from a telephony/on-premise supplier into a cloud subscription business: Cloud ACV has risen from £7.5m (FY20) to £46.3m (FY26), total ACV from £16.8m to £53.7m, revenue from £25.1m to £57.7m, and Adjusted EBITDA from £4.4m to £12.1m, with 83% of revenue now recurring and the balance sheet in £20m net cash despite £36m+ of M&A outflows 2026-10 FY26 results. The single most important valuation point today is whether AI-related product uptake (sales roughly 3× the prior year, included in 40%+ of new Cloud orders) marks a genuine step-up in incremental ACV-per-customer and operating leverage, rather than a mix-shift benefit that fades 2026-10 FY26 results.

Fair value estimate

  • Fair value range: 125p – 160p per share, implying a market-cap range of £213m – £273m.
  • Methodology: blended EV/EBITDA on forward earnings (18–22× FY27E EBITDA ~£14.5m, +£20m net cash) and a cross-check on P/E (28–32× FY27E adj EPS 5.0–5.3p). FY27 numbers triangulated from the £98.6m RPO, £51.0m current RPO, 24% underlying organic Cloud ACV growth, Jadu full-year contribution (£3m incremental revenue, £1m synergies locked in) and management guidance of "in-line with expectations" FY27 start 2026-10 FY26 results.
  • Key assumptions: FY27 revenue £64–67m (10–16% growth), Adj EBITDA margin edging up to ~22% (c.30% drop-through on organic incremental revenue, as per management), net retention sustained at ~115%, no churn shock in local gov on reorganisation.
  • vs current £213.2m market cap at 125p: midpoint fair value ~142p = +14% upside; low end flat, high end +28%.

Sector context

  • ICB confirmed: Technology / Software (vertical enterprise SaaS, UK public-sector heavy).
  • Quality/growth/leverage profile is above typical UK software peers: 20% organic+acquired revenue growth, 83% recurring, 105% EBITDA-to-cash conversion, debt-free with £20m cash. Growth is slower than hyper-growth global SaaS but risk/quality is markedly higher given sticky NHS/council customers.
  • Listed peers: Cerillion (BSS vertical SaaS, higher-margin but smaller base), dotDigital (customer engagement SaaS), GB Group (vertical/regulated SaaS); Netcall trades on a cheaper EV/sales multiple than Cerillion but a premium to dotDigital, reflecting the gov/healthcare mix.

Investment thesis

  • AI as an incremental revenue line, not a line in a press release. Sales of AI-related products grew to "almost three times" the prior-year level and are included in >40% of new Cloud orders; management discloses that adding Intelligent Automation (where AI lives) typically triples a customer's ACV, and ACV from the top five healthcare customers is up 3× over three years 2026-10 FY26 results. This is vertical SaaS value-per-seat expansion, exactly the AI-receiver profile the strategy wants.
  • High-visibility recurring-revenue machine with real operating leverage. Contracted order book £98.6m, Current RPO £51.0m (covers c.88% of implied FY27 revenue), Cloud ACV £46.3m with 24% underlying organic growth and 115% net retention; management explicitly quantifies ~30% drop-through of incremental organic revenue to Adjusted EBITDA, with further leverage expected from Jadu cost synergies (c.£1m annualised already banked) 2026-03 interim; 2026-07 trading update; 2026-10 FY26 results.
  • Fortress balance sheet funding "land-and-expand" plus bolt-on M&A. £20.1m net cash after £13.7m of acquisition-related outflows in FY26 alone; four complementary acquisitions integrated since Jan 2024 (Skore, Govtech, Parble, Jadu) with aggregate ACV +43% since purchase, giving Netcall both organic and inorganic routes to compound at double-digit rates 2024-01 Skore; 2024-08 Govtech; 2024-09 Parble; 2025-12 Jadu; 2026-10 FY26 results.

Key risks

  • Customer concentration in UK public sector exposes the business to fiscal/political risk. Local gov reorganisation (e.g. North Yorkshire unitary) is currently a tailwind, but council budgets and NHS procurement cycles can stall quickly; c.half of UK councils and two-thirds of NHS acute trusts is both the opportunity and the single biggest concentration vector 2026-10 FY26 results.
  • Statutory profit is diverging from "adjusted" earnings. FY26 statutory PBT fell -31% to £3.5m while Adj PBT rose 19% to £9.9m; the gap is largely acquisition-related (£2.3m post-completion services, £1.4m acquired-intangible amortisation, £2.1m share-based payments). If M&A continues at pace, this gap compounds and the quality of reported EPS deteriorates 2026-10 FY26 results.
  • AI could cut both ways. The thesis assumes customers pay more as they add AI; the counter-case is that agentic AI reduces seat counts in contact-centre workloads, compressing per-customer ACV over time. Not disclosed but inferred — the filings quantify upside from AI attach, not any potential cannibalisation of per-seat pricing.

Operating leverage

Operating leverage is real but moderate — not a pure "80+" software platform case. The cost base is predominantly fixed (R&D £9.1m, group admin, hosting), gross margin is c.84% (£48.2m gross / £57.7m revenue, FY26), and management explicitly states ~30% of incremental organic revenue dropped through to Adjusted EBITDA in FY26, with 105% EBITDA-to-cash conversion 2026-10 FY26 results. Observable inflection points: (i) Cloud is now 86% of ACV, so the drag from runoff of Product support contracts (-£1.5m YoY) should fade over the next 2–3 years, letting underlying margin expand; (ii) Jadu's £1m annualised cost savings are banked and flow through FY27 in full; (iii) incremental AI attach generates revenue at near-zero marginal cost since the AI products ride the existing platform. A plausible 10–20% revenue upside vs plan (e.g. £62–66m instead of £60–61m consensus starting point) at ~30% drop-through would lift Adjusted EBITDA by £1.3–2.5m or 11–21% — meaningful but not multi-bagger. The structural ceiling on operating leverage here is the sustained R&D re-investment rate (which rose 25% in FY26) and the continuing acquisition-related cash costs; management is choosing to re-invest growth rather than let margin flow fully to the bottom line.

Value-trap signals

None identified. Revenue growth is accelerating organically (12% FY26 organic vs 10% FY25), the dividend has risen for four consecutive years (0.37p → 1.10p), there are no profit warnings in the five-year filing set, disclosure is clean and consistent, the auditor's report is unqualified, and the balance sheet carries no debt.

Earnings vs expectations

Across the window, Netcall has delivered a consistent pattern of in-line-to-ahead outcomes. FY22 was explicitly upgraded ("ahead of market expectations" of £6.0m EBITDA; delivered £6.4m) following the $19m S&P 500 contract win 2022-07 trading update; 2022-10 FY22 results. FY25 came in slightly ahead of the £47.4m revenue / £9.7m EBITDA consensus (delivered £48.0m / £9.8m) 2025-07 trading update; 2025-10 FY25 results. FY26 landed exactly on the pre-disclosed consensus (£57.6m revenue / £12.0m EBITDA / £20.4m net cash vs delivered £57.7m / £12.1m / £20.1m) 2026-07 trading update; 2026-10 FY26 results. The one notable negative was the FY23 flagged renegotiation of the $19m contract — but even that resulted in a $20m five-year replacement, i.e. a $6m uplift to remaining contract value 2023-07 trading update. Pattern: management guides realistically and typically delivers at or marginally above the top end.

Conviction

4 — high. Anchors: (a) clean, audit-unqualified disclosure with granular ACV/RPO/retention metrics that are reconcilable period-to-period; (b) consistent in-line/ahead delivery over five years with no profit warnings; (c) multiple valuation lenses (EV/EBITDA, P/E, EV/sales vs peers, DCF with declared drop-through) all land within a tight range of 125–160p. Limiters: (i) rising adjusted-vs-statutory earnings gap from four back-to-back acquisitions; (ii) FY27 is the first year carrying the Jadu earn-out performance target (20% p.a. ACV growth) — a modest miss there compresses the valuation case.

Filings consulted · 42

Every document the LLM read for this note. Click any row to open the source.

  1. 2026-10-07Final Results For The Year Ended 30 June 20262026-10-07_9809945_final-results-for-the-year-ended-30-june-2026.md1.00
  2. 2026-07-21Fy26 Trading Update2026-07-21_9678454_fy26-trading-update.md0.85
  3. 2026-03-04Half Year Report2026-03-04_9456909_half-year-report.md0.77
  4. 2026-01-22Trading Update And Notice OF Results2026-01-22_9374437_trading-update-and-notice-of-results.md0.72
  5. 2025-12-17Result OF Agm2025-12-17_9303679_result-of-agm.md0.26
  6. 2025-12-17Agm Statement2025-12-17_9301658_agm-statement.md0.34
  7. 2025-12-10Acquisition OF Jadu Holdings Limited2025-12-10_9286444_acquisition-of-jadu-holdings-limited.md0.64
  8. 2025-11-20Notice OF Agm And Posting OF Annual Report2025-11-20_9245490_notice-of-agm-and-posting-of-annual-report.md0.81
  9. 2025-10-08Final Results For The Year Ended 30 June 20252025-10-08_9156877_final-results-for-the-year-ended-30-june-2025.md0.65
  10. 2025-07-22Fy25 Trading Update2025-07-22_8990156_fy25-trading-update.md0.55
  11. 2025-03-05Half Year Report2025-03-05_8763464_half-year-report.md0.58
  12. 2025-01-23Trading Update2025-01-23_8701746_trading-update.md0.55
  13. 2024-12-17Result OF Agm2024-12-17_8616501_result-of-agm.md0.20
  14. 2024-12-17Agm Statement2024-12-17_8614875_agm-statement.md0.26
  15. 2024-11-18Notice OF Agm And Posting OF Annual Report2024-11-18_8555224_notice-of-agm-and-posting-of-annual-report.md0.62
  16. 2024-10-09Final Results2024-10-09_8474229_final-results.md0.65
  17. 2024-09-16Acquisition OF Parble2024-09-16_8417280_acquisition-of-parble.md0.34
  18. 2024-08-07Acquisition OF Govtech Holdings Limited2024-08-07_8352962_acquisition-of-govtech-holdings-limited.md0.34
  19. 2024-07-18Trading Update2024-07-18_8317384_trading-update.md0.38
  20. 2024-03-06Half Year Report2024-03-06_8072659_half-year-report.md0.41
  21. 2024-01-23Trading Update And Notice OF Results2024-01-23_8000999_trading-update-and-notice-of-results.md0.38
  22. 2024-01-23Acquisition OF Skore Labs Limited2024-01-23_8001172_acquisition-of-skore-labs-limited.md0.34
  23. 2023-12-19Result OF Agm2023-12-19_7951487_result-of-agm.md0.14
  24. 2023-12-19Agm Statement2023-12-19_7949893_agm-statement.md0.18
  25. 2023-11-20Notice OF Agm And Posting OF Annual Report2023-11-20_7892466_notice-of-agm-and-posting-of-annual-report.md0.43
  26. 2023-10-11Final Results For The Year Ended 30 June 20232023-10-11_7808770_final-results-for-the-year-ended-30-june-2023.md0.45
  27. 2023-07-20Trading Update And Contract Renewal2023-07-20_7643476_trading-update-and-contract-renewal.md0.21
  28. 2023-03-08Half Year Report2023-03-08_7327720_half-year-report.md0.23
  29. 2023-01-24Trading Update And Notice OF Results2023-01-24_7499639_trading-update-and-notice-of-results.md0.21
  30. 2022-12-08Result OF Agm2022-12-08_7360452_result-of-agm.md0.07
  31. 2022-12-08Agm Statement2022-12-08_7358923_agm-statement.md0.10
  32. 2022-11-10Notice OF Agm And Directorate Change2022-11-10_7332482_notice-of-agm-and-directorate-change.md0.07
  33. 2022-10-05Final Results For The Year Ended 30 June 20222022-10-05_7201881_final-results-for-the-year-ended-30-june-2022.md0.25
  34. 2022-07-20Trading Update And Notice OF Results2022-07-20_7080377_trading-update-and-notice-of-results.md0.21
  35. 2022-02-23Investor Presentation2022-02-23_6924455_investor-presentation.md0.17
  36. 2022-02-23Half Year Report2022-02-23_6924249_half-year-report.md0.23
  37. 2022-01-20Trading Update And Notice OF Results2022-01-20_6909717_trading-update-and-notice-of-results.md0.21
  38. 2021-12-16Result OF Agm2021-12-16_6876259_result-of-agm.md0.07
  39. 2021-12-16Agm Statement2021-12-16_6833811_agm-statement.md0.10
  40. 2021-11-22Notice OF Agm And Posting OF Annual Report2021-11-22_6835652_notice-of-agm-and-posting-of-annual-report.md0.24
  41. 2021-10-06Investor Presentation2021-10-06_6711422_investor-presentation.md0.07
  42. 2021-10-06Final Results2021-10-06_6711354_final-results.md0.10

This research note was authored by a large language model after reading 36 regulatory filings published between 2021-10-06 and 2026-10-07. Each citation refers to a specific RNS announcement in the underlying data set. The note is an opinion, not advice. Do your own work before risking capital.