As an investment firm with a focus on the technology services space, Alten Capital monitors the progress of publicly traded digital engineering companies. Companies we track include EPAM (EPAM), Globant (GLOB), Endava (DAVA), Thoughtworks (TWKS), CI&T (CINT), Grid Dynamics (GDYN), and AgileThought (AGIL).
Endava was the last one reporting earnings this week. Below is a valuation and operating metrics update.
Even though we invest in the private markets, it is useful to gain insights into key public players. Growth metrics for 2023 remain flat overall, showing a stark difference from the ~30% growth achieved on average during 2022.
In addition, we looked at valuation, growth, and profitability metrics. The size of each bubble in the chart below represents the respective enterprise value of each company. We can see the market expects Globant to grow the fastest (even at its scale), with CI&T second, whereas Thoughtworks is expected to grow the least this year. Notably, Globant stands out as the most expensive company from a revenue multiples standpoint, while AgileThought emerges as the least (filed for Chapter 11 in August). If we drew a regression line, we would see a correlation between higher growth rates and higher multiples.
Looking at profitability now, AgileThought does not have positive EBITDA so not listed, the market sees Thoughtworks with the lowest expected profitability for 2023 (11% margins), whereas Globant is expected to show the highest projected EBITDA margin for 2023 (21%). Notably, CI&T stands out as the least expensive from a profitability metric at 11.1x 2023 EBITDA. Globant maintains the highest relative valuation in both revenue and EBITDA metrics.
Alten Capital actively engages in the technology services sector. We seek to establish connections with founders, management team members, and fellow investors in IT services. Please reach out to connect and explore how we can collaborate.