Shares of Trustpilot are rising sharply as the review website beats profit expectations after a strong first half

Trustpilot shares rose sharply on Tuesday morning after the group said it had beaten profit expectations following a stellar first half of the year.

The ratings website raised earnings estimates above market expectations after a 16 percent increase in bookings to $99.2 million.

Shares in Trustpilot rose by almost 11 cents to 92.25p on Tuesday morning.

Revenue rose 16 percent from $73.4 million to $84.6 million in the first half of the year, ending June with annual recurring revenue of $180 million, up 17 percent at constant exchange rates.

Profitability was ‘above expectations’ with a core profit of $5.7 million, compared to a loss of $5.4 million in the first half of 2022.

However, the group reported a first-half loss of $2.5 million, compared with a loss of $9.2 million a year ago.

Founder Peter Holten Muhlmann – who stepped down as CEO earlier this month – said: “Our business delivered strong performance in the first half of the year, allowing us to transition to adjusted Ebitda profitability and positive free cash flow earlier than originally planned.”

As of June 30, 2023, Trustpilot had net cash flow of $82.7 million and no debt, reflecting positive free cash flow in the period.

“While we were impacted by the uncertain macro environment in the first quarter, which impacted new business and retention bookings, we subsequently saw a more encouraging performance in the second quarter, which continued into the third quarter,” said Holten Muhlmann.

‘We therefore maintain our outlook for steady FX revenue growth in the mid-teens for the full year, but with further operating leverage in the second half we expect adjusted EBITDA (before the impact of sales commission capitalization ) will exceed current market expectations.

“The board remains confident in the company’s ability to deliver sustainable growth and long-term operational impact, and in its significant and growing long-term market opportunity.”

UK revenue rose 12 percent year-on-year to $33.4 million, while bookings rose 9 percent to $38.4 million.

There was an ‘encouraging acceleration’ in North America, where revenue rose 9 percent to $18.1 million and bookings rose 11 percent to $21.1 million.

Europe and the rest of the world revenue rose 23 percent to $33.1 million, while bookings rose 19 percent to $38.6 million.

Adrian Blair, who took over as CEO earlier this month, said: ‘This is an exciting time to join Trustpilot and I look forward to working with the team as we continue to scale the business and deliver sustainable, profitable growth. continue to realize this in addition to product innovation. .’

Dan Ridsdale, director of technology, media and telecoms at Edison Group, said: ‘The company is somewhat halfway between growth and value.

‘The growth rate has not been high enough to capture the attention of structural growth technology investors, while the company needs to improve margins for mainstream, profitability-oriented investors to see value, although today’s interims do show a better path forward in this regard.

‘All eyes will be on the new CEO, Adrian Blair, to understand the changes he is considering, but having just joined it is unlikely that much will be said at this stage.

“One of the most important questions will probably be his opinion on the American activities, which are small in a competitive market and where growth is lagging behind (9 percent turnover growth in the first half of the year).”