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№ 264 33 filings · 2021-07-19 → 2026-07-21

NETCALL PLC

NET
Technology Share price 115p Market cap £197m Overall fit 605 /1000

Strong fit on AI-receiver angle (genuine vertical SaaS with AI-driven ACV uplift) and quality/balance-sheet pillar (net cash, high retention), fair valuation with modest upside; partially held back by only moderate operating leverage delivered so far and limited valuation cushion.

Fair value range 110p–140p Mid case · £213m
Absolute upside +8.1% vs current market cap
Conviction 4/5 confidence in fair call
Supports the call
  • Consistent 5-year meet/beat track record vs guidance
  • Strong ACV/RPO disclosure gives forward-revenue visibility
  • Multiple valuation methodologies converge on 110-140p
Limits the call
  • FY27 margin expansion assumption is judgement call
  • Statutory earnings materially adjusted for acquisition-related charges
Methodology

Blended EV/adj-EBITDA and EV/sales on FY26A/FY27E

In one line · bull case

A genuine AI-receiving UK vertical SaaS with net cash, 115% net retention and accelerating Cloud ACV, available at c.3x sales — priced fairly rather than for perfection, so the AI attach story is largely optionality.

In one line · biggest risk

Operating leverage has been muted (only 30% incremental margin conversion) so the 'long-tail' profit surprise that the investor profile seeks may not materialise if reinvestment stays elevated.

Drivers
AI beneficiary 68 /100
Vertical SaaS with embedded AI agents; AI product sales tripled and appear in 40%+ of new Cloud orders — real ACV uplift, not press-release AI.
Operating leverage 58 /100
High gross margin (~82%) and largely fixed R&D base but management disclosed only ~30% incremental EBITDA conversion in FY26 — leverage present but currently reinvested.
Earnings vs expectations 65 /100
Consistently in-line-to-ahead across 10 reporting cycles since FY21; one clear ahead in FY22 following landmark $19m contract; no profit warnings.
Growth momentum 75 /100
Revenue growth accelerating from 8% (FY21) to 20% (FY26); Cloud ACV +37%, record pipeline into FY27.
Moat 55 /100
Sticky vertical hubs (Patient Hub, Citizen Hub) with 115% net retention and sector-specific solutions; not dominant — only 16% penetration of target UK accounts.
Earnings quality 60 /100
Adj EBITDA to statutory PBT gap is wide due to share-based payments and post-completion services; cash conversion typically strong in H2 but H1 FY26 was noisy.
Management quality 68 /100
Consistent execution, disciplined bolt-on M&A track record (four deals in two years all with visible cross-sell), candid disclosure of KPIs like Cloud ACV and net retention.
Cyclicality 25 /100
Mission-critical software for NHS, councils and financial services — highly defensive with subscription revenue base, but public-sector budget cycles add mild sensitivity.
Leverage 8 /100
£21m net cash and no debt at FY26 despite Jadu M&A; fortress balance sheet.

NETCALL PLC (NET) — Investment Research Note

Executive summary

Netcall is a UK AIM-listed enterprise software company selling Liberty, an AI-powered platform that unifies workflow automation and customer engagement for c.700 organisations concentrated in UK healthcare (2/3 of NHS Acute Trusts), local government (1/2 of UK councils post-Jadu) and financial services. Over the five-year period covered, the business has transformed from a legacy customer-engagement vendor into a subscription-heavy platform with Cloud ACV up from £9.4m (FY21) to £46.3m (FY26) and total revenue nearly doubling from £27.2m to £57.7m, with adjusted EBITDA margin edging up from 20% to 21%. The valuation question today is whether an investor should pay c.14x FY26 EV/adj-EBITDA and c.3.0x EV/sales for a business that (a) demonstrably captures AI-driven ACV uplift within its own customer base, (b) has a fortress balance sheet, but (c) is showing only modestly expanding margins despite mix improving toward subscription.

Fair value estimate

  • Fair value range: 110p – 140p per share; implied market cap £188m – £239m.
  • Methodology: primary blend of EV/adjusted-EBITDA and EV/sales on FY26A / FY27E, sense-checked against a discounted cash-flow view.
  • Key assumptions:
    • FY26A: revenue £57.7m, adj EBITDA £12.1m, net cash £21.0m 2026-07-21 trading update.
    • FY27E (my central): revenue growth ~15% to c.£66m (organic 11-12% + Jadu carry) with adj EBITDA margin to 22% → adj EBITDA c.£14.5m. Backed by record pipeline commentary and 27% total ACV entry rate.
    • Multiple applied: 13–16x FY26 adj EBITDA (mid-teens for 20% growth cash-generative vertical SaaS with net cash) → EV £158–194m + net cash £21m = £179–215m equity value. FY27 look-through at 12–14x gives £195–225m.
    • Cross-check: 2.9–3.5x FY26 revenue → EV £167–202m + cash = £188–223m.
  • Comparison to current market cap (£192.8m): the price sits at the low end of my range.
  • Absolute upside/downside on midpoint (125p) vs 118.67p: c.+5%.

Sector context

  • Sector: Technology (vertical/specialist enterprise SaaS, contact-centre and low-code automation).
  • Netcall's quality/growth/leverage profile is broadly in line with UK small-cap vertical SaaS peers, with above-average balance sheet strength (net cash) and below-peer growth rates compared with pure-cloud AIM SaaS (e.g. Cerillion, Beeks). Adj EBITDA margin of ~21% is materially below scaled subscription peers (30%+) reflecting continued R&D and go-to-market spend.
  • Listed comparables: Cerillion (CER) — cleaner-margin billing SaaS at richer multiples; Kainos (KNOS) — larger, similar UK gov/NHS exposure; Iress / Idox / Craneware for adjacent vertical SaaS reference.

Investment thesis

  • Genuine AI-receiver rather than AI-buyer. AI-related product sales "reached almost three times the prior-year level" and were included in >40% of new Cloud orders in FY26, with cross-referenced evidence that Liberty AI attaches to expansions and drives higher ACV per account 2026-07-21 FY26 trading update; 2026-03-04 H1 FY26. This is measurable revenue capture, not marketing language.
  • Multi-year subscription compounding with strong ACV visibility. Cloud ACV up 37% to £46.3m (organic 24%) and total ACV £53.7m, with contracted RPO of £92.4m at H1 FY26 and 115% Cloud net retention supporting a highly predictable forward revenue base 2026-03-04 half-year; 2026-07-21 trading update.
  • Fortress balance sheet enabling continued accretive M&A. Net cash £21.0m even after £13.4m of acquisition cash for Jadu, no debt; the four-acquisition track record since 2024 (Skore, Govtech, Parble, Jadu) has expanded TAM (local gov 26% → 50% of councils) and delivered visible cross-sell wins 2025-12-10 Jadu acquisition; 2025-10-08 FY25.

Key risks

  • Operating leverage has been muted so far. Despite 20% revenue growth, adj EBITDA margin only expanded 100bps in FY26; management disclosed just "approximately 30% of incremental organic revenue converted to Adjusted EBITDA" 2026-07-21 FY26 trading update. If R&D and Cloud investment stay elevated, the "long-tail" profit outcome the strategy seeks may not materialise as fast as pure-software analogues.
  • Concentrated end-market exposure to UK public sector. NHS and local government (with Jadu now half of UK councils) are subject to procurement cycles, budget freezes and political risk; UK fiscal tightening could slow bookings even with pipeline strength multiple filings, inferred from customer disclosures.
  • Growth-through-acquisition dependence and reported earnings quality. Reported profit before tax fell 31% in H1 FY26 to £2.54m despite +15% revenue as post-completion services, contingent consideration and share-based-payment charges hit statutory earnings; the £1.60m gap between adj EBITDA (£6.45m) and operating profit (£2.38m) is unusually wide 2026-03-04 half-year.

Operating leverage

The business has classic vertical-SaaS operating leverage characteristics but has not yet reaped them fully. Gross margin runs at c.82% (H1 FY26: £21.7m gross on £26.5m revenue) with cost of sales largely cloud hosting and delivery. The fixed cost base — c.£20m of admin expenses at H1 FY26 including capitalised R&D at £1.5m and a full-year R&D spend that reached £7.3m in FY25 (up 28%) — should scale sub-linearly with revenue. Management's own disclosure that FY26 incremental organic revenue converted to adj EBITDA at c.30% reflects both this leverage and continued reinvestment. If FY27 sees 12% organic revenue growth (£5m) with 40-50% incremental conversion once the FY25 Cloud investment programme fully anniversaries, that would add £2-2.5m of EBITDA on £14m base — a c.20% profit uplift for c.12% revenue. A 15-20% revenue "surprise" scenario, plausibly delivered by faster AI attach or a second landmark contract like the 2022 S&P 500 win, could plausibly add £4-5m EBITDA (c.35-40% profit uplift) — meaningful but not "multiples of profit" 2026-03-04 H1; 2025-10-08 FY25. The leverage is present but currently absorbed by strategic investment.

Value-trap signals

None identified. Growth is accelerating, ACV visibility is strengthening, balance sheet is unencumbered, customer retention is high, and management has consistently delivered against guidance.

Earnings vs. expectations

Across 10 disclosed reporting cycles (FY21–FY26 finals, interims and pre-close trading updates), Netcall has consistently reported results in line with or comfortably in line with market expectations at every occasion: FY24 was "ahead of market expectations" following the June 2022 landmark contract; FY25 was "comfortably in line with market expectations"; FY26 pre-close reported "in line with market expectations" with revenue £57.7m vs consensus £57.6m and adj EBITDA £12.1m vs £12.0m 2026-07-21 FY26 trading update; 2025-07-22 FY25 trading update; 2024-07-18 FY24 trading update. Beat frequency exceeds miss frequency (one implied upgrade in FY22 following the $19m Contract Win) with no profit warnings across the five-year window. This is a consistent "meet-and-slightly-beat" execution track record.

Conviction

Conviction: 4 (high).

  • Anchors: (i) unambiguous ACV and RPO disclosure gives strong forward visibility; (ii) consistent 5-year track record of hitting guidance; (iii) EV/EBITDA and EV/sales approaches converge on a similar fair-value corridor around 110-140p.
  • Limits: (i) the AI-attach and organic-conversion assumptions in FY27+ carry more subjectivity than the historic run-rate; (ii) statutory EPS is materially depressed by acquisition-related non-cash items, meaning the "quality" of adjusted earnings is a judgement call.
Filings consulted · 42

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

  1. 2026-07-21Fy26 Trading Update2026-07-21_9678454_fy26-trading-update.md0.85
  2. 2026-03-04Half Year Report2026-03-04_9456909_half-year-report.md0.90
  3. 2026-01-22Trading Update And Notice OF Results2026-01-22_9374437_trading-update-and-notice-of-results.md0.85
  4. 2025-12-17Result OF Agm2025-12-17_9303679_result-of-agm.md0.26
  5. 2025-12-17Agm Statement2025-12-17_9301658_agm-statement.md0.34
  6. 2025-12-10Acquisition OF Jadu Holdings Limited2025-12-10_9286444_acquisition-of-jadu-holdings-limited.md0.64
  7. 2025-11-20Notice OF Agm And Posting OF Annual Report2025-11-20_9245490_notice-of-agm-and-posting-of-annual-report.md0.81
  8. 2025-10-08Final Results For The Year Ended 30 June 20252025-10-08_9156877_final-results-for-the-year-ended-30-june-2025.md0.85
  9. 2025-07-22Fy25 Trading Update2025-07-22_8990156_fy25-trading-update.md0.55
  10. 2025-03-05Half Year Report2025-03-05_8763464_half-year-report.md0.58
  11. 2025-01-23Trading Update2025-01-23_8701746_trading-update.md0.55
  12. 2024-12-17Result OF Agm2024-12-17_8616501_result-of-agm.md0.20
  13. 2024-12-17Agm Statement2024-12-17_8614875_agm-statement.md0.26
  14. 2024-11-18Notice OF Agm And Posting OF Annual Report2024-11-18_8555224_notice-of-agm-and-posting-of-annual-report.md0.62
  15. 2024-10-09Final Results2024-10-09_8474229_final-results.md0.65
  16. 2024-09-16Acquisition OF Parble2024-09-16_8417280_acquisition-of-parble.md0.49
  17. 2024-08-07Acquisition OF Govtech Holdings Limited2024-08-07_8352962_acquisition-of-govtech-holdings-limited.md0.49
  18. 2024-07-18Trading Update2024-07-18_8317384_trading-update.md0.38
  19. 2024-03-06Half Year Report2024-03-06_8072659_half-year-report.md0.41
  20. 2024-01-23Trading Update And Notice OF Results2024-01-23_8000999_trading-update-and-notice-of-results.md0.38
  21. 2024-01-23Acquisition OF Skore Labs Limited2024-01-23_8001172_acquisition-of-skore-labs-limited.md0.34
  22. 2023-12-19Result OF Agm2023-12-19_7951487_result-of-agm.md0.14
  23. 2023-12-19Agm Statement2023-12-19_7949893_agm-statement.md0.18
  24. 2023-11-20Notice OF Agm And Posting OF Annual Report2023-11-20_7892466_notice-of-agm-and-posting-of-annual-report.md0.43
  25. 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
  26. 2023-07-20Trading Update And Contract Renewal2023-07-20_7643476_trading-update-and-contract-renewal.md0.21
  27. 2023-03-08Half Year Report2023-03-08_7327720_half-year-report.md0.23
  28. 2023-01-24Trading Update And Notice OF Results2023-01-24_7499639_trading-update-and-notice-of-results.md0.21
  29. 2022-12-08Result OF Agm2022-12-08_7360452_result-of-agm.md0.07
  30. 2022-12-08Agm Statement2022-12-08_7358923_agm-statement.md0.10
  31. 2022-11-10Notice OF Agm And Directorate Change2022-11-10_7332482_notice-of-agm-and-directorate-change.md0.07
  32. 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
  33. 2022-07-20Trading Update And Notice OF Results2022-07-20_7080377_trading-update-and-notice-of-results.md0.21
  34. 2022-02-23Investor Presentation2022-02-23_6924455_investor-presentation.md0.17
  35. 2022-02-23Half Year Report2022-02-23_6924249_half-year-report.md0.23
  36. 2022-01-20Trading Update And Notice OF Results2022-01-20_6909717_trading-update-and-notice-of-results.md0.21
  37. 2021-12-16Result OF Agm2021-12-16_6876259_result-of-agm.md0.07
  38. 2021-12-16Agm Statement2021-12-16_6833811_agm-statement.md0.10
  39. 2021-11-22Notice OF Agm And Posting OF Annual Report2021-11-22_6835652_notice-of-agm-and-posting-of-annual-report.md0.24
  40. 2021-10-06Investor Presentation2021-10-06_6711422_investor-presentation.md0.17
  41. 2021-10-06Final Results2021-10-06_6711354_final-results.md0.25
  42. 2021-07-19Trading Update And Notice OF Results2021-07-19_6656036_trading-update-and-notice-of-results.md0.09

This research note was authored by a large language model after reading 33 regulatory filings published between 2021-07-19 and 2026-07-21. 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.