![Marc Murphy, Fenergo chief executive: 'Covid really accelerated our shift to SaaS [software as a service]. So underneath the numbers is a massive transformation going on.' Photograph: Alan Betson](https://www.irishtimes.com/resizer/v2/YGCBW6OOXFLJ5KUQLHYUYP6FDE.jpg?auth=9fec9b1efb63d64836b296983b6a213eb9a99a3568525971b12f06c2dc785349&smart=true&width=1024&height=694)
Irish fintech Fenergo said revenue and operating profit rose in 2022 as the business continued to grow, but expenses related to its 2021 acquisition by private equity investors weighed.
In the latest accounts filed for the company, Fenergo showed an operating profit of €900,000 for the year ended March 31st, 2022, reversing a loss of €400,000 incurred in the prior year. However, once transaction fees and other expenses were taken into account, the accounts showed a pretax loss of €40 million. These fees were one-time expenses related to the $600 million acquisition of Fenergo by private equity investors Astorg and Bridgepoint in July 2021.
The transaction also triggered the acceleration of notional shares, part of the company equity incentive plan, as it was considered an “exit event”.
Revenue for the year was €112.8 million, up from €91.3 million a year earlier. Gross profit was also higher, at €58.4 million compared with €54.1 million a year earlier.
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Fenergo develops software for financial institutions that helps them with issues such as regulatory compliance and managing client data. Its customers include 300 of the largest banks and insurers in the world, including ABN Amro, Aviva, Bank of China, Danske Bank, Credit Suisse, UBS, Santander and State Street.
The group has a deficit in total equity of €55.1 million, down from €98.9 million in 2021, with a 2019 share buyback behind much of the deficit carried forward. At the end of the year, the company had cash of €28.4 million, a reduction from the €43.7 million it had at the end of its 2021 financial year.
“Traditionally Fenergo was an enterprise software platform… Covid really accelerated our shift to SaaS [software as a service],” said chief executive Marc Murphy. “So underneath the numbers is a massive transformation going on.”
That transformation includes an annual increase of about 40 per cent in recurring revenue and subscription, which rose from €41.1 million in 2021 to €56.6 million in 2022.
The US is the company’s largest market by sales, accounting for €26.7 million in revenue during the year. Australia generated €23.2 million in revenue.
The company employed more than 560 people in 2022, up from 512 a year earlier. But staff costs were lower at €54.2 million, down from €57.5 million in 2021 as Fenergo’s wage bill fell. Management compensation was also cut slightly over the year.
The company is expecting further growth, despite the uncertain economic environment.
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“We’re seeing massive momentum in the business,” said Mr Murphy, noting that, unlike the consumer banking market, the commercial and corporate institutional banking sector where Fenergo operates has been slower to deliver a better digital service for corporate and commercial clients.
He pointed to the three pillars driving growth in the business: transformation and digital experience; regulatory certainty, which continues to be the company’s biggest driver; and cost pressures around operational efficiencies and reducing headcount. “Our technology brings the automation of the software,” he said.
Fenergo made its first acquisition in the weeks after the period covering the accounts, buying Amsterdam-based Sentinels in May last year. The value of the deal was not disclosed at the time, although the accounts show it was €60.3 million in both cash and stock. That business has now been integrated into the Fenergo operation, with the Sentinels brand transforming into Fenergo Transaction Monitoring from this week. Further acquisitions are on the horizon, Mr Murphy said.
Founded in 2008, Fenergo became one of only a handful of Irish tech unicorns when it achieved a $1 billion-plus valuation in 2021, when London-based Bridgepoint and French private equity group Astorg joined together to buy out stakes previously owned by Insight Venture Partners and DXC.
