The top line falls in 4Q 2022 as revenue recognition moves toward normalcy
Humansoft’s revenue in 4Q 2022 decreased 23% YoY to KWD 21.7mn, coming slightly above our estimate (+6% variance). The decline in revenue primarily resulted from a transition of revenue recognition towards normalization, as the company recognized 60% of the 2022-23 Fall semester revenue in 4Q (vs. 75% revenue recognition in 4Q 2021).
Operating and net profit beats our estimate on better-than-expected efficiency and higher other income
Operating profit came in 14% above our estimate (-38% YoY) at KWD 12.8mn owing to better-than-expected efficiency as a result of which operating profit margin beat our estimate by over 400 bp YoY. Further, the company’s other income came in about 75% more than our expectation as it climbed over 100% YoY, because of which net profit beat our forecast by 16% to KWD 12.8mn (-36% YoY).
Maintain target price
We contend Humansoft’s 4Q 2022 earnings were on the expected lines, and hence we maintain our KWD 4.100 target price on the stock. We remain positive about the company’s prospects as the company is preparing to launch new majors in the near term, which should boost the earnings capacity of the company going forward.