"GlobalData's 2024 Earnings: Navigating the EPS Miss and Strategic M&A"

In the ever-evolving landscape of data and business intelligence, GlobalData Plc (LON:DATA) has been a standout player, known for its innovative solutions and strategic acquisitions. However, the company's recent full-year 2024 earnings report has left investors with a mix of emotions. While revenue growth and strategic M&A activities paint a promising picture, the earnings per share (EPS) miss has raised eyebrows and sparked concerns. Let's dive into the details and explore what this means for income-seeking investors.

The EPS Miss: A Closer Look

GlobalData reported a 5% increase in revenue to £285.5m for the year ended 31 December 2024, which was in line with market expectations. However, the EPS missed analyst expectations by a significant 46%, coming in at UK£0.038. This miss has led to a volatile ride for the stock price, with a notable drop of -10.93% on March 10, 2025, from 183.00p to 163.00p. The stock has also experienced a decline in 6 of the last 10 days, with an overall decrease of -14.66% for this period.

Strategic M&A: The Growth Engine

Despite the EPS miss, GlobalData's strategic M&A activities continue to be a core element of its growth strategy. The company completed four earning accretive acquisitions during the year, including Business Trade Media International, LinkUp, Celent, and Deallus. These acquisitions have strengthened GlobalData's One Platform offering and provided a significant boost to its revenue and profitability.

The recent acquisition of AI Palette, an AI-powered consumer insights platform, is a testament to GlobalData's commitment to innovation and growth. This acquisition aligns with the company's AI-first approach and enhances its AI Hub, which integrates proprietary data with advanced AI capabilities. With over 42,000 users already engaged with the AI Hub, this acquisition is expected to drive further growth and innovation.

Mitigating the Impact of EPS Misses

To mitigate the impact of EPS misses and improve future earnings performance, GlobalData can implement several strategic measures:

1. Enhance Revenue Growth: Focus on increasing the revenue growth rate, which is currently forecasted at 9.4% per annum. By expanding the customer base and increasing demand for data and business intelligence solutions, the company can achieve higher revenue.

2. Cost Management: Implement cost management strategies to reduce operating expenses. The company reported a 12% decline in operating profit to £65.1m due to acquisition expenses, restructuring costs, and higher share-based payments. By managing costs more effectively, GlobalData can improve its profitability.

3. Strategic M&A: Continue to pursue strategic mergers and acquisitions to strengthen the platform and accelerate the growth strategy. The company completed four earning accretive acquisitions during the year, including Business Trade Media International, LinkUp, Celent, and Deallus. By acquiring complementary businesses, GlobalData can expand its offerings and improve its earnings performance.

4. AI Integration: Leverage the AI Hub to enhance the value proposition and attract more customers. The company reported that over 42,000 users are engaged with its AI Hub, transforming how users discover and apply insights in their daily workflows. By continuing to invest in AI and data analytics, GlobalData can improve its earnings performance.

5. Dividend Policy: Review the dividend policy to ensure that it is aligned with the growth strategy. The company proposed a final dividend of 1.0p for the year 2024, down from 3.2p in 2023, to free up more cash for M&A. By balancing the dividend payout with growth investments, GlobalData can improve its earnings performance.

6. Investor Communication: Improve communication with investors to manage their expectations and mitigate the impact of EPS misses. The company reported that its EPS missed analyst expectations by 46% for the full year 2023. By providing more transparent and timely updates on its earnings guidance and performance, GlobalData can manage investor expectations and improve its earnings performance.

Potential Risks and Benefits

While the recent acquisition of AI Palette and other strategic M&A activities align with GlobalData's growth transformation plan, they also present potential risks and benefits. The acquisitions are expected to enhance GlobalData's competitive position, increase revenue and profitability, and diversify revenue streams. However, integration challenges, financial risks, and dividend reduction may pose threats to the company's overall performance.

Conclusion

In conclusion, while the EPS miss in GlobalData's 2024 earnings has had a negative impact on investor sentiment and stock performance in the short term, the company's strategic initiatives and growth plans could help to restore investor confidence in the long term. By focusing on revenue growth, cost management, strategic M&A, AI integration, dividend policy, and investor communication, GlobalData can mitigate the impact of EPS misses and improve its future earnings performance. As income-seeking investors, it is crucial to stay informed about the company's strategic moves and potential risks to make informed investment decisions.