GlobalData — New three-year growth plan

Research: TMT

GlobalData — New three-year growth plan

Having completed its five-year growth plan a year ahead of schedule, despite the intervening pandemic, GlobalData has now set out its ambitions for the next three years. These build on the group’s strengths in platform and proprietary data across its three segments in healthcare (36% of FY23e revenue), consumer (36%) and tech (28%). M&A is a key element, with the group’s financial strength significantly bolstered by the deal with Inflexion in December, where Inflexion took a 40% stake in GlobalData’s healthcare business at an implied valuation equivalent to c 75% of the group’s then market capitalisation. The share price has yet to reflect the benefits of this deal or the value inherent in the rest of the GlobalData.

Fiona Orford-Williams

Written by

Fiona Orford-Williams

Director, TMT

iStock-1176054530

TMT

GlobalData

New three-year growth plan

Media

QuickView

25 January 2024

Price

202.5p

Market cap

£1,686m

Share price graph

Share details

Code

DATA

Listing

AIM

Shares in issue

845m

Business description

GlobalData provides business information in the form of high-quality proprietary data, analytics and insights to the healthcare, consumer and technology sectors.

Bull

Extensive proprietary data resources.

Substantial target addressable markets.

Balance sheet strength post deal.

Bear

Competition for quality assets.

Execution risk and deals and integration.

Difficult markets for recruitment of AI talent.

Analyst

Fiona Orford-Williams

+44 (0)20 3077 5739

Having completed its five-year growth plan a year ahead of schedule, despite the intervening pandemic, GlobalData has now set out its ambitions for the next three years. These build on the group’s strengths in platform and proprietary data across its three segments in healthcare (36% of FY23e revenue), consumer (36%) and tech (28%). M&A is a key element, with the group’s financial strength significantly bolstered by the deal with Inflexion in December, where Inflexion took a 40% stake in GlobalData’s healthcare business at an implied valuation equivalent to c 75% of the group’s then market capitalisation. The share price has yet to reflect the benefits of this deal or the value inherent in the rest of the GlobalData.

Building in scalability

GlobalData’s key strength is in its resources of high-quality, proprietary data, accessed via a common scaled platform. The group has been reorganised into three market-facing segments and each will now have its own designated management, commercial and product teams, allowing for greater scalability than the group’s historical centralised model. With substantial addressable markets totalling over £20bn across the three segments, GlobalData is looking to accelerate the pace of M&A, likely focusing on bolt-ons, prioritising assets that are also rich in proprietary data and have high subscription renewal rates.

GlobalData has been using AI and natural language processing across its business for many years. It is now stepping up its investment, with additional recruitment incorporated into the new growth plan and the implementation of an AI Hub with access to all the proprietary data. This will improve both the quality of forecasting and the speed with which enquiries and projects can be realised by using prompt cards that can be adapted and personalised.

Inflexion deal highlights value

The Inflexion deal is likely to complete in Q224, raising net cash proceeds of £434m. The implied valuation of the Healthcare segment is £1,115m (c 11x FY23 expected revenue) and leaves the remainder of the group trading at 3.3x revenues and at sub-10x EBITDA. Management estimates that the current market valuations for high-quality data assets are closer to 25x EBITDA.

Consensus estimates

Year
end

Revenue
(£m)

Adj EBITDA*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/21

189.3

64.4

2.8

2.7

72.3

1.3

12/22

243.2

86.4

3.7

3.6

54.7

1.8

12/23e

274.0

110.6

6.5

4.5

31.2

2.2

12/24e

293.2

122.0

8.6

5.1

23.5

2.5

12/25e

316.6

134.9

9.6

5.6

21.1

2.8

Source: Refinitiv. *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.

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General disclaimer and copyright

This report has been prepared and issued by Edison. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

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This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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