Fintel shares fall as UK fintech acquisition spree pushes up costs

Fintel shares fell on Tuesday after it warned that profitability would be hit by higher costs driven by an acquisition frenzy.

The AIM-listed fintech firm told shareholders its 2024 earnings before unpleasant developments would be “marginally below expectations” despite strong interim growth in revenue and profitability.

Huddersfield-based Fintel said it will face “additional staff costs” in the second half as a result of investment in previously acquired businesses and the “initial realisation of future cost synergies… following the acquisitions”.

The group, which provides technology and support to financial advisers and wealth managers, has embraced acquisitions as a key part of its growth strategy, helping its shares gain around 50 percent over the past year.

Fintel shares fell 6.07 percent to 294 pence in afternoon trading on Tuesday.

Fintel has completed four acquisitions so far this year, including Synaptic Software, Threesixty, Owen James Events and ifaDASH.

Fintel has completed four acquisitions so far this year: benchmarking software Matrix, compliance support company Threesixty, Owen James Events and technology provider ifaDASH.

It has made eight acquisitions in the last 12 months.

The deals helped drive revenue growth of 13 per cent year-on-year to £35.7m for the six months ended 30 June.

Adjusted profits rose 7 percent to £9.6 million.

Fintel said it expects Threesixty to increase its revenue for the year by around £3m.

Fintel Joint Chief Executive Matt Timmins said the acquisitions “have significantly enhanced our scale, capabilities and intellectual property, whilst accelerating investment in our core propositions and technology offering.”

He added: “Current operations are strong and we are confident of meeting our full-year revenue expectations, while continuing to drive improved results for retail financial services.”

Following the upgrade, Investec maintained its buy rating on Fintel, citing “strong organic performance and several attractive add-on acquisitions”, and raised its target price from 320p to 340p.

He said: “Given the marked improvement in both revenue quality and margins that these transactions will generate, we continue to believe that the current valuation does not adequately reflect Fintel’s intrinsic value and reiterate our buy recommendation.”