HotViews Archive

Skip Navigation Links.
Collapse 2015 (47)2015 (47)
Collapse February (47)February (47)
Share Indices for February 15
28 Feb 2015
SCC inks DWP hosting deal for Universal Credit
27 Feb 2015
Technology’s crucial role in the shadows at RBS
27 Feb 2015
Apple and that 'burden of being fully appreciated'
27 Feb 2015
Mixed reactions to Workday's Q4 results
27 Feb 2015
Warehousing SaaS startup Peoplevox stores $6m cash
27 Feb 2015
No need to cry for Argentina/UK Jampp
27 Feb 2015
Harvey Nash previews ‘in line’ year
27 Feb 2015
UK leads cheer at Sopra Steria
27 Feb 2015
Kainos 'Good News Story'
27 Feb 2015
Cadcentre best performing share this millennium?
26 Feb 2015
First Derivatives buys to build “nuclear” Big-Data strategy
26 Feb 2015
ATTRAQT maintains its momentum
26 Feb 2015
Capita beats organic growth target in FY14
26 Feb 2015
Outsourcery secures its first G-Cloud contract
26 Feb 2015
Digital Barriers warns on full year
26 Feb 2015
"The Rise and Fall of Google"?
26 Feb 2015
Colt fails to deliver in FY14
26 Feb 2015
Salesforce predicts ‘more profitable’ year
26 Feb 2015
Xchanging full year revenues slump
26 Feb 2015
Robert Walters growth belies gross margin squeeze
26 Feb 2015
Delighted to say 'Sorry' to Fidessa!
25 Feb 2015
Tribal Group: 2015 off to good start
25 Feb 2015
Microgen Chairman steps down
25 Feb 2015
HP Q1: Enterprise Services continues to shrink
25 Feb 2015
AO World shares crash
25 Feb 2015
CSC inks major apps contract with Amey
25 Feb 2015
‘Confidence’ boosts Hays UK IT recruitment
25 Feb 2015
Investec launches Voice Biometrics
25 Feb 2015
EXL buys insurance analytics player for $74m
25 Feb 2015
'Exciting' highs and 'Boring' companies
24 Feb 2015
HP signs mega-deal with Deutsche Bank
24 Feb 2015
Too much of a good thing in UK ‘tech’?
24 Feb 2015
Ideagen’s Gael lands contracts worth £1m
24 Feb 2015
dotDigital turns on the turbo
24 Feb 2015
Positive notes in Phoenix update
24 Feb 2015
PROACTIS signs Inspired deal
24 Feb 2015
Netcall calls in slower growth
24 Feb 2015
Lead generation specialist MVF scoops Bridgepoint investment
23 Feb 2015
MXC buys Calyx Managed Services from Better Capital
23 Feb 2015
Audioboom turns up the volume for 2015
23 Feb 2015
Rosslyn gets a foothold in US Higher Education
23 Feb 2015
Have you got what it takes to be a Little British Battler?
23 Feb 2015
NEW RESEARCH – Monitise Strategy Update
23 Feb 2015
Quindell extends offer to Slater & Gordon
23 Feb 2015
Bumper year for UK tech VC funding
23 Feb 2015
Informed Funding Launch Event
23 Feb 2015

UKHotViews©

 

Saturday 28 February 2015

Share Indices for February 15

SIn the month when the FTSE100 hit record levels – surpassing the last record set on the last day of 1999 – it was an even more agreeable month in tech. The FTSE100 might have risen 2.9% (5.8%) YTD, but NASDAQ was up 6.7% and the TechMark100 up 5.4%.

FTSE Telcom Index was up 1% masking a 3.8% decline in the Mobile side (as Vodafone fell 4.3% on broker reports of a possible costly acquisition of Liberty Global and costs of bidding for extra spectrum in India) and a 9.1% rise in Fixed (as BT rose 9%). BT’s acquisition of EE was agreed, the associated placing was well received and they seemed to get the better of Sky in the football bidding contest.

The FTSE SCS Index, which most closely follows the UK SITS companies we follow, was up a more modest 3.4% (5.9% YTD)

Monitise was the best performer – up 67%. But possibly for all the wrong reasons as investors bet on a premium if the current strategic review results in them being bought. See Monitise Progress. MXC (the sponsors of our Little British Battlers programme) put on another 47.5% as they announced their acquisition of Calyx. MXC shares have doubled this YTD and tripled since their IPO in July 14. Amazing! Also good to see Serco up 44% (38% YTD). Although that’s only a partial recovery on the losses made in 2014. Outsourcery also gained 29% (6% YTD) as they signed their first G-Cloud contract with Berkshire Healthcare Trust. .

At the other end of the scale, Triad lost 32% (35%) YTD. Digital Barriers was down another 20% (30% YTD). See Digital Barriers warns for full year. Must admit I’ve lost complete confidence in them. I had such high hopes when Tom Black set them up. He failed and left and I can’t say I have any more faith in the new management. My old boss, Sir John Hoskyns, oft said “If you can’t forecast your business, you won’t have a business’. Constant mis-forecasting is just not acceptable. Mind you that other company set-up by a pillar of the industry – Parity/Philip Swinstead – fell another 11% (29% YTD) Mr Miller has been warning about their business model for yonks. See Parity on track maybe. Or maybe not. We should have taken more notice.

On the global stage, SalesForce.com rose 23% (17% YTD) as it predicted a ‘more profitable year’. We’d just be pleased to see them not making a loss! CSC was up 17% (12% YTD). We don’t normally cover ‘rumours’ in HotViews. But we can explain that this share price rise was due to what appeared to be well sourced predictions that CSC is considering bidders for both is US federal business (to Private Equity) and its private sector/international business (to a global SITS player). Reuters reported that the firms interested in buying CSC were Carlyle and CapGemini. These rumours have been around for a long time but seem to have moved into a new phase recently.

At the other end of the global scale, there were no major fallers. The worst fall was HP -down 3.6% but 13.2% YTD - as its Q1 performance disappointed. They blamed the strong dollar. But I can't remember any US firm ever explaining that enhanced performance was due to the dollar weakness!

Posted by Richard Holway at '16:18'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 27 February 2015

SCC inks DWP hosting deal for Universal Credit

sccReseller and infrastructure services firm, SCC, has signed a new two-year deal with the Department for Work and Pensions to help deliver the Universal Credit welfare benefit.

DWP is an existing SCC customer but the hosting services are a new win for the company. DWP will retain the development and operational support of the application and operating system suite, while SCC’s role will be to provide and support the infrastructure upon which these sit. 

Over the longer-term, SCC will integrate the Universal Credit service over the Public Services Network (PSN) with other core DWP applications. The service is being delivered from SCC’s Sentinel cloud platform, which was the first Pan-Government Accredited platform of its kind. Other public sector organisations using Sentinel include the Civil Aviation Authority, HM Passport Office, The Highways Agency, North Yorkshire and Humber CSU and Mersey Care NHS Trust.

This is a good win for SCC, which appears to be on something of a roll right now. Its H1 services performance looked good with 11% growth, partly thanks to the investments it has made over the years in data centre services such as Sentinel.

Posted by Kate Hanaghan at '10:14' - Tagged: cloud   hosting   government   DWP  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 27 February 2015

Technology’s crucial role in the shadows at RBS

logoYesterday, Royal Bank of Scotland (RBS) reported full year results for 2014, showing progress in its transformation, with a smaller business (in income terms by 6% to £18.2bn) and lower costs (by 11% to £12.4bn).

But there is still a lot to do, and the fundamental improvements required, to customer experience, reliability and efficiency, can only be achieved through the effective use of technology.

RBS are targeting a single digital platform for customers by the end of 2016. They also promise a “simplified IT infrastructure with fewer applications” by end 2018.  Laudable goals, but it is necessary to ask if the planned changes are big enough and soon enough!

But answering these questions is difficult. Although IT is central to any bank, the subject barely gets a mention in RBS’s 250-page Annual Report. They trumpet the success of their mobile app, branch WiFi and Paym’s launch, but the key question of core system renewal is relegated to a bland comment in the Risk Factors section. Even a £250m software write-off only gets a passing mention. To maintain market position and share of transactions, the incumbent banks need to become more agile and easier to deal with. Here RBS has made some progress, but long term success will require core system renewal and bold moves. We have seen Deutsche Bank future-proof its IT infrastructure and applications strategy and this shows that even the biggest banks can change tack.

Obviously RBS has lots of other things to report, such as structural change (and 17 pages of litigations), but could surely be more open about its crucially important IT plans (and where total spending is both enormous and undisclosed). Shareholders (in the case of RBS that’s us) deserve better disclosure in this vital area. 

Posted by Peter Roe at '09:55' - Tagged: cloud   mobile   legacy   banking  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 27 February 2015

Apple and that 'burden of being fully appreciated'

AIveLooks like the profile of Apple’s Sir Jonathan Ive in The New Yorker has caused quite a stir. If you have time to read the 16,500 article Click here. Or you could read the various summaries. Or maybe the rather thought provoking critique by Sathan Sanghera in The Times today. Click here. Or, as Sanghera does, reduce it to one line as follows. “Sir Jonathan’s “manner suggests the burden of being fully appreciated” — an apt description not only of the man, but of Apple too”. Sanghera observes “For if there is any company anywhere that has ever been more “fully appreciated”, I cannot think of it.”

This struck a chord with me as some suggest I am too much of an Apple groupie. Certainly there are many who think that ‘Apple can do no wrong’. Even I cringe when I see journalists rising to stand to applaud and ‘whoop whoop’ at every Apple product announcement ‘show’.

Problem is that those that have called Apple’s peak at numerous times in the last 10 years have all (so far) been proved wrong. Apple Mac is ‘a niche product’. iPod ‘one hit wonder’. iPhone ‘will get slaughtered by cheaper versions’. ‘Who needs a ‘tablet?’. They say that now about the Apple Watch. This, and Apple’s incredible valuation and share price performance, has engendered a ‘walk on water’ adoration.

But Apple has many shortcomings. They cock up like others. Remember Apple Maps? iPhone battery life is still appalling. They have been rightly criticised for the conditions for their workers in some of their suppliers.

Even if you are an Apple fan like me, I commend you to read the articles. Steve Jobs was a hero until I read many books on him which basically portrayed him as a bully with a massively flawed personality. Sir Jonathan Ive doesn’t come over that much better. A man clearly carrying that ‘burden of being fully appreciated’.

Posted by Richard Holway at '09:36'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 27 February 2015

Mixed reactions to Workday's Q4 results

LogoWorkday’s share price plummeted by around 7% before hauling back in, in the wake of its Q4 and full year results. Despite achieving market revenue expectations there were concerns that it had not make enough progress on managing losses, and the Q4 growth comparative hurt because the year ago quarter was particularly strong.

This is the second quarter in a row that the market has reacted negatively (see here). As we said at the time, leading SaaS providers like Workday and Salesforce.com (who reported yesterday – see here) have to outperform at a stellar level to continue to impress the financial markets. Workday’s 59% revenue increase to $226m in Q4, and 68% rise for the year (to January 31 2015) taking revenue to $787m, were not enough to impress across the board. It does expect to break the $1bn revenue point in the current fiscal year, which will be a milestone.

It is still in growth and expansion mode – expanding in Europe/Germany and Japan in particular – so costs were up and losses deepened again. In Q4 operating losses rose from $48m to $50m, while for the year they shifted from $153m to $215m and no reversal is in sight.  

I think Workday was hurt by a lack of colour around the results, with very little discussion about adoption of its financials offering for example which should be a growth area, despite lengthy sales cycles. At the end of the last quarter the company said it had 50 live Financials customers, but there was no update on the numbers nor were there insights into metrics such as average contract sizes or the pipeline for the overall business. On the positive side, Workday Insight applications from the Identified acquisition will start to roll out in the current year.    

Posted by Angela Eager at '09:23' - Tagged: results   saas   software  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 27 February 2015

Warehousing SaaS startup Peoplevox stores $6m cash

logoPeoplevox, the oddly-named Watford-based warehouse management SaaS startup, has raised $6m in a Series A funding round led by Index Ventures. Peoplevox is also backed by ‘angels’ Ben White (of Notion Capital fame) and ex-ASOS exec Jon Kamaluddin.

Peoplevox founder Jonathan Bellwood told an encouraging story to the Financial Times some five years ago (see Mind the (funding) gap) about how he got a £150k facility from NatWest Bank after being inspired by seeing then prime minister Gordon Brown on television insisting that the UK’s high street banks must lend more. Timing is everything! Since then Peoplevox says it has signed up some 100 retailers including Barbour, Mothercare and Surfdome. Good luck to them!

Posted by Anthony Miller at '09:17' - Tagged: funding   startup  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 27 February 2015

No need to cry for Argentina/UK Jampp

logoRegular readers will know that I see Brazil as a hotbed for tech innovation, though not much of it escapes overseas. Well, it’s not just happening in Brazil. Jampp, the Buenos Aires and London-based mobile app marketing startup, has raised $7m in a Series A funding round led by existing investors, Highland Capital Partners Europe. Other investors included Endeavor Catalyst, Innova and NXTP Labs. Jampp recently opened offices in the US and in Brazil. Anyone for a tango or samba?

Posted by Anthony Miller at '08:52' - Tagged: funding   startup  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 27 February 2015

Harvey Nash previews ‘in line’ year

logoWe won’t see the full story until the end of April, but UK-headquartered, international recruitment, outsourcing and offshoring firm, Harvey Nash, has signalled that FY results (to 31st Jan. ’15) will be in line with the revised numbers issued in last November's trading statement (see Harvey Nash profit growth hits the buffers). Headline gross profits rose by less than 1% (5% constant currency), way below that of compatriots Robert Walters and Hays, strongly suggesting yet a further squeeze on margins. But what management does really well is look after the cash, which is expected to show a £2m increase.

Posted by Anthony Miller at '08:24'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 27 February 2015

UK leads cheer at Sopra Steria

logoThe landmark £500m+/10 year joint venture announced at the end of 2013 between the UK Home Office and Paris-based Steria, known as Shared Services Connected Limited (SSCL), was the major driver behind growth at Sopra Steria, the company created mid-2014 by the acquisition of Steria by much smaller compatriot, Sopra. Pro forma 2014 preliminary results show Steria’s growth at 6.0% vs 4.7% for Sopra (constant scope and currency), bringing headline revenues for the combined company to €3.37bn.

The lion’s share of Sopra Steria’s UK operations come from the Steria bit, where revenues grew by 24% headline (18% organic) to €860m. This far outstripped UK revenue growth at larger Paris-based peers Atos (+6%) and Capgemini (4%).

We await Sopra Steria’s ‘full monty’ results – including profitability – due in mid-March.

Posted by Anthony Miller at '07:58' - Tagged: results  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 27 February 2015

Kainos 'Good News Story'

KainosHere’s a great ‘Good News’ story to end the week. Kainos, perhaps one of my favourite companies, has announced that it is to create 403 new jobs in Belfast and Londonderry in Northern Ireland.

Peter Robinson, NI First Minister said the new jobs had an average salary in excess of £30,000 here in Northern Ireland. This expansion will drive sales and increase annual revenue by 25 per cent year-on-year, to £94m, over the next three years. This growth will be substantially achieved through increased export sales.”

Kainos was formed c30 years ago out of Queen’s University as a JV with ICL (Fujitsu) and ACT. It now employs over 700 in NI, UK and Poland. And it is really motoring as we said last year in Kainos impresses when it reported another impressive set of results with revenues up by 46% in FY 2013-14 (£43m) and record pre-tax profits of £8m, up from £3.5m. We’ve also been impressed by Kainos and Apprenticeships. If Kainos can do it, then nobody has an excuse. And, to be blunt, we rather like its CEO Brendan Mooney who has the mix of comKmercialism and social respect that we so admire. Very much in line with our maxim ‘Doing Good is Good for Business”. We’ve long tried to encourage Brendan to think about an IPO but he seems steadfastly against such a move. Maybe he thinks you can’t have those kind of attitudes in the glare of a public market. If true, that would be a real shame. But I, for one, would love to own shares in Kainos.

Creating an international systems company out of Belfast with this kind of job creation in an area of the UK with the highest unemployment really is to be applauded.

Footnote - Photo shows First Minister, Peter Robinson, Kainos CEO Brendan Mooney and Dep First Minister Martin McGuinness. That’s certainly a first for HotViews! What a difference 10 years makes…

Posted by Richard Holway at '07:55'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

Cadcentre best performing share this millennium?

AAfter having to say a rather happy ‘sorry’ to Fidessa this morning, I’m going to have to do it again.

Had an email from Will Wallis, Head of Research at Numis Securities, pointing out that I might have missed Cadcentre. Cadcentre? Who they, you might ask. Well, in 2001 Cadcentre changed their name to Aveva. Aveva still makes engineering data and design IT systems. See Aveva – Macro issues still prevailing. If you take into account stock splits and other consolidations (which the super computers at Numis can obviously do), then the equivalent share price on 31st Dec 99 they say was 107.38p. Which means, wait for it, that their shares up are c15x since. Rather comfortably beating both Fidessa and Capita. Aviva now has a market value of £1b compared to just £53m back at the start of the millennium. A major success story. Indeed great credit to Richard Longdon who has been Aveva’s CEO since 1999. So longevity of management is something that Aveva also has in common with top performers Fidessa and Capita.

I rather liked Will’s closing remark “perhaps they were helped by the fact that CADCentre was perceived to be such a boring company (in the non-Holway sense) back in 1999, that it barely participated in the bubble!”.

What I should have said in my original article was that Capita was the only company still quoted with the same name as at 31st Dec 99 to be showing a gain since.

I think I’ll draw this to a close and offer a blanket apology to any other company I might have omitted!

Posted by Richard Holway at '17:09'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

First Derivatives buys to build “nuclear” Big-Data strategy

logoFirst Derivatives has made several key steps over the past year as it secures its technology base, strengthens its position in its core Financial Markets business and broadens its market reach into other Big Data opportunities. Earlier this month it raised £15m to fund this strategic development. See here and work back.

Today the First Derivatives management announce that they have spent up to £13m (£5m up front) on Prelytix, a US software company specialising in predictive analytics based on data from web-sites, social media and real-time advertising data. First Derivatives had already been working with Prelytix and their system has already been incorporated in First Derivatives’ Delta Marketing Cloud. Preyltix’s revenue totalled US$2m in 2014, with customers including hp, EMC and IBM.

The combination of First Derivatives high-speed database technology and Prelytix’s solution is aiming to provide the company with competitive advantage in the handling of very big data sets at near real time. The market for “Big Data” in sectors such as retail is already crowded and competitive, with many companies already active, see our recent report on Monitise and today’s HotView on ATTRAQT, but the First Derivatives approach is very much at the “nuclear” end of the analytics arms-race.

The “Very-Big, Very-Fast Data” approach of First Derivatives is likely to be deployed in other targeted verticals and the management are on the look-out for other acquisitions. Watch this space.

Posted by Peter Roe at '09:56' - Tagged: ecommerce   analytics   big+data   retail  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

ATTRAQT maintains its momentum

logoRecently AIM-listed ATTRAQT, providing eCommerce technology maintained the momentum shown at the interim stage, see here, and had a good 2014. It should also do well in 2015, as its technology convinces us all to spend more with its growing customer base.

ATTRAQT’s proprietary “Freestyle Merchandising” platform includes site search, a product recommendations engine and a system to change the appearance of a web site to meet the individual needs of a potential customer. The company’s success in driving new business for its retail customers delivered 32% revenue growth in 2014, to £2.09m. EBITDA losses doubled to £0.7m as development expenditure grew and as the sales team expanded (particularly in the US). Year-end cash was £0.3m, having raised £1.25m at the August listing.

New customer acquisition went well with the roster growing from 60 to 87 during the year and the average value of new contracts rose by 45% to £24,700.

Building the customer list will be a key focus this year, by expanding the direct sales model and increasingly through joint marketing with technology partners such as providers of eCommerce platforms. Client on-boarding is relatively quick, straightforward and paid for by the customer. Another driver will be the increase of the average value per user, as revenue grows through deeper and wider penetration of a large customer’s organisation, the use of the platform across multiple channels and as higher platform usage results in activity-related fee hikes. Further product development is under way.

ATTRAQT is expected to grow well throughout the current year, given its increasing success with High St. names and its edge as a result of its visual merchandising capability. Medium term growth will require more funding, but ATTRAQT has an interesting position in the development of the retail sector.

Posted by Peter Roe at '09:49' - Tagged: ecommerce   big+data   retail  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

Capita beats organic growth target in FY14

lUK BPS market leader Capita has beaten its already impressive organic growth target for FY14, reaching 9% (see Capita on track to hit 8% organic growth). Against a UK BPS market growing in mid-single digits (see UK BPS Market Trends & Forecasts 2014), Capita is continuing to both outperform the market and stretch its lead over the competition.

Headline revenue for the year ended 31 December was up 14% to £4.37bn, and underlying operating profits were up 11% to £576.3m – keeping Capita’s margin more or less flat at 13.2%.

Capita’s impressive results are a world away from those of rival UK-HQ'd BPS player Xchanging, which also announced its FY14 results today (see Xchanging full year revenue slumps). There is no clearer sign than here of the diversity of performance among suppliers within the buoyant BPS marketplace.

Looking ahead, Capita has done a great job of replenishing its bid pipeline to £5.1bn up from £4.1bn in November 2014 (94% new business; 6% extensions and renewals). The opportunities are across private sector (53%) in telecoms, financial services and utilities; and public sector (47%), in health, local government and defence.

Capita has also significantly stepped up the big deal flow, with its preferred bidder status on  a £700m ten-year deal to run the research services at FERA (see here), and award of a place on the Clinical Commissioning Groups (CCGs) support services framework, as one of three lead suppliers, which will procure services worth between £3-5bn.

Capita's recent strategic move into the German BPS market via the takeover of Avocis shows the ambition of new CE Andy Parker to expand Capita's addressable market even further. There are of course risks entering a new geography, but as the largest industrial market in Europe, and still largely underpenetrated in BPS, Germany represents a really exciting new opportunity for the group.

The only real negatives affecting Capita were the loss of the Disclosure and Barring Services deal to TCS in late 2012 (see here), and further declines in the Insurance & Benefits (-4%) and Health & Wellbeing (-2.4%) divisions, which have been underperforming for some time now (see Capita FY13: inconsistency under the covers). There are much more positive signs for the public sector side of health business, particularly thanks to the CCG framework (see Capita reinvigorating its healthcare business).

Despite these niggling underlying issues, Capita’s strength and depth gives it the ability to deliver time and again. Indeed Capita is again targeting low double-digit revenue growth in FY15. Competition watch out. 

Posted by John O'Brien at '09:47' - Tagged: results   bps  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

Outsourcery secures its first G-Cloud contract

outBerkshire Healthcare NHS Foundation Trust has chosen Outsourcery to deliver its Microsoft Lync SaaS solution, which will be delivered from Outsourcery's O-Cloud platform. O-Cloud has been certified to run government classified information at OFFICIAL and OFFICAL SENSITIVE over the internet. The procurement was made via the G-Cloud framework and is the first time the Trust has procured services using the framework. The Trust provides specialist mental health and community health services and employs over 4,000 staff across 100 hundred sites.

For those of you who are not regular readers, our view of the Outsourcery business has been characterised by caution, to put it mildly. Our concerns have been centred on losses and funding (see Outsourcery: show me the money! and Outsourcery conjures up another million), and the subsequent (and immense) pressure on share price – see Outsourcery worries.

Credit to the company for inking the contract, but Outsourcery still has a long way to go in order to change the fundamentals of its position.

Posted by Kate Hanaghan at '09:36' - Tagged: cloud   g-cloud  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

Digital Barriers warns on full year

digital barriers logoIn Digital Barriers dashes, dilutes, delays! we outlined the steps taken by surveillance technology provider Digital Barriers to shore up the balance sheet and keep the business running. 

This morning’s trading update cites that the timing of two contract awards will have a detrimental impact on year-end results (FY ending 31 March 2015). Both revenues (although stronger than FY14’s £19m) and profits will be below management’s expectations. Profits are expected to show a year-on-year improvement (FY14: adjusted loss before tax £12.0m).

Digital Barriers has been scaling up its international sales (see here) but today CEO Zak Doffman, said DB would be concentrating the sales organisations to deliver follow-on sales to existing customers. As part of the review the company now has new sales leadership for the UK/Europe region and new management in the Americas and Middle East/Africa regions. In the longer-term Digital Barriers will focus on licensing or selling its intellectual property through partnerships, which makes sense to expand its reach.

On a positive note, the company announced a contract win within ‘the UK industrial services sector’ to supply TVI video surveillance technology initially worth value approximately £1.0m. Supporting the follow-on sales strategy, the contract includes an option for a further £3.5m of TVI solutions to be purchased over two years from next financial year.

Although by prioritising upselling to existing customers should lead to enhanced forward visibility and improved sales forecasting; the potential for contract timings to have a material effect on the business remain. Digital Barriers still aims for a break-even performance by FY16; time will tell.

Posted by Michael Larner at '09:25' - Tagged: profitwarning   surveillance  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

"The Rise and Fall of Google"?

GFTYesterday I was called by the FT’s Murad Ahmed asking my views on Google’s European reorganisation. Previously Google had effectively a Northern and Southern European split (the cold & wet bits and the warm & sunny bits). Now Matt Brittin is to lead a unified Europe with Country Managers reporting to him. My quote in the FT – See Google loses its way in Europe – was as follows

Richard Holway, chairman of TechMarketView, the industry analyst, said other major US groups already adopt a unified grouping, saying this was necessary given how the “EU speaks with one powerful voice to big tech companies”.

“You can’t always be unconventional,” he said. “This is part of Google growing up. It’s adopting the same sort of corporate structure that has been tried and tested in Europe.”

I think in retrospect I should have said “So what?” In the past few decades I’ve seen many companies try different structures. The most common error by global companies is to think of Europe as ‘one unified market’ and dispense with Country Managers. Big mistake. Conversely, as I said, the EU is becoming more and more powerful and outspoken in its dealings with global tech companies. So you really do have to have both the structure and the person who can deal with that. In my view, all Google has done is to accept reality. Brittin  (a Brit!) is as good a person as I know to fill that brief.

Google does have multiple issues to tackle in Europe. Competition, Privacy, Tax to name but three. I personally think that Google has big business issues too. It still makes most of its money from search and its associated advertising revenues. This was a fantastic cash cow on big screen PCs. But they have found the move to small screen mobile much more difficult. Indeed the imbedded Facebook kind of advertising is much more effective here. Google has invested billions in new ventures but it is difficult to name any runaway successes yet. Easier to name the failures.  Even IBM has had difficulties in reinventing themselves for a changed environment. Few - Apple is a notable exception - manage it.

In a few years time, I suspect we might be reviewing a new business studies book entitled ‘The Rise and Fall of Google’.

Posted by Richard Holway at '09:05'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

Colt fails to deliver in FY14

coltAs Colt’s CEO, Rakesh Bhasin, puts it: "Our performance in 2014 did not deliver what we set out to achieve…” The numbers speak for themselves: The top line declined 6.4% (constant currency) to €1,49bn. At the time of its Q3 results, Colt said EBITDA would come in 5-10% lower; today’s results show an 8.4% decline in EBITDA. By service line, Network Services (56% of revenue) was flat, Voice Services (30% of revenue) declined 19.4%, Data Centre Services (8% of revenue) increased 5.7% and IT Services (5% of revenue) declined 3.4%. In December, Colt acquired KVH, which contributed €3.9m to Group FY revenue and €400k to EBITDA - year-on-year revenue growth was 8.3%.

Colt’s historical challenges in its traditional voice and network businesses caused by pricing and regulatory pressures are not going to go away. Meanwhile, the company’s IT businesses (Data Centre Services and IT Services) are sub-scale and its cloud business hasn’t yet been able to capture the market opportunities other suppliers are starting to see.  

One of Colt’s objectives is to make better use of its existing assets, and in its IT services business that means transitioning more customers on to the shared cloud platform (where it made a significant investment a few years back). The decline in the IT Services business (-3.4%) reflects churn of customers taking its legacy hosting services, which it intends to move away from. However, we can’t help but think the company has just been too slow to replace that with new revenue flow from the cloud platform.

The current priorities for the Group are to improve cost control, returns on investment and free cash flow. Challenging times lay ahead, and at time of writing shares were down c2.5%.

Posted by Kate Hanaghan at '09:02' - Tagged: results   colocation   hosting   telecoms  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

Salesforce predicts ‘more profitable’ year

chartOf course I use the term loosely. Marc Benioff, the mild mannered and unopinionated chairman and CEO of original SaaS poster-child, Salesforce.com, is predicting a substantial reduction in losses for the company in FY16. Tying up FY15 (to 31st Jan. 2015) with a higher net loss than the prior year, of $263m, Benioff expects Loss Per Share to reduce from $0.42 in FY15 to a ‘mere’ $0.16-0.14 in FY16.

But as ever, it’s the top line that grabs the headlines in every respect, with FY15 revenue up 32% to $5.37bn but with a forecast of 20-21% growth in FY16.

I'm not going to reiterate my oft-repeated ‘maxims’ on SaaS profitability as you should know my views by now. But just to illustrate the state of play, I include my latest chart on quarterly operating ‘profit’ for the current batch of SaaS ‘stars’ (Salesforce is the thicker blue line - and yes, it was once profitable!). Not one of them has made a ‘true’ operating profit for the past year and, bar an heroic Q314 for Demandware, the loss history goes back a few more years.

Nuff said.                                                                

Oh, by the way, our ‘very own’ Sage has decided to hitch its horse to the Salesforce wagon and will use the SaaS company’s CRM platform across the globe. Sage will also undertake development work on the Salesforce1 platform to extend its capability in delivering cloud solutions to Sage’s core small and medium-sized companies market. Well, if you can’t beat them …

Posted by Anthony Miller at '08:47' - Tagged: results  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

Xchanging full year revenues slump

lAs expected, following a string of lost contracts and exits in the past eighteen months, Xchanging’s revenue fell sharply in full year 2014.

Headline revenue was down almost a quarter to £406.8m (22.7% off 2013), although adjusted operating profits (before all the nasty bits) were more or less flat at £55.8m.

A look across the operating divisions shows declines across the board. Technology services decreased 9% to £93.1m in large part due to the loss of London Metal Exchange contract last year (see here). Procurement fell 42% to £31.3m on the loss of its flagship HRS deal with BAE Systems and subsequent exit from HR (see here). But the largest division business processing services, took the biggest revenue hit, falling to £282.4m from £370m last year (-31%).

Xchanging is in the midst of a painful turnaround. It has exited some of its legacy joint venture Enterprise Partnerships buying out its partners, and made a string of acquisitions and investments across procurement (MM4), insurance software ‘technology’ (Total Objects and Agencyport Europe) and the Internet of Things (MachineStop). Meanwhile it is now 'no longer pursuing major business process outsourcing contracts. This market is commoditising in the absence of technology and organisations are increasingly looking to automation or to returning activity in-house’.

That's a simplistic appraisal of its challenges in BPS. Look at pure play competitors like Genpact and its clear that there are still plenty of opportunities for large BPO deals if you have the right capabilities, scale and expertise (see Genpact new bookings jump 50%).

The question is where does this leave Xchanging? It has a fledgling insurance software business Xuber, which is embroiled in a protracted completion of the Agencyport deal (see here). It also has declining technology and procurement businesses, which desperately need to re-ignite growth. For now Agencyport and ‘longer than expected Xuber sales cycle’ are going to adversely impact H115 results. 

Clearly, there is much more work to do before Xchanging is back on the road to recovery.

Posted by John O'Brien at '08:37' - Tagged: results   bps  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 26 February 2015

Robert Walters growth belies gross margin squeeze

logoWhile FY14 net fee income growth (NFI – i.e. gross profit) at UK-headquartered international recruitment firm Robert Walters told a reasonable story – up 8% yoy to £215m – this belied a squeeze on gross margins – down from 33.3% to 31.7% - as headline revenues rose 14% to £670m. This, I assume, points to some pressure on contractor fee rates and/or permanent placement fees. Nonetheless, better control on SG&A dramatically boosted operating profit by nearly 70% to £18.2m lifting operating margins by nearly a point to 2.7%.

Like much larger peer Hays (see ‘Confidence’ boosts Hays UK IT recruitment), Robert Walters’ UK business was in fine form, showing 24% NFI growth. But again,UK revenues grew faster – by 32% to £312m – depressing gross margins by 160bps to 22.8%. However, SG&A improvements saw UK pre-tax margins rise from 1.1% to 1.7%. As in Q3 (see here), CEO Robert Walters alluded to signs of recovery in the permanent financial services market in London.

So the message seems to be ‘demand up’ – good news – but no let-up on clients looking for a better deal.

Posted by Anthony Miller at '07:57' - Tagged: results   recruitment  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 25 February 2015

Delighted to say 'Sorry' to Fidessa!

FidessaThere are sometimes when you are really delighted to trumpet your errors. In my post yesterday – ‘Exciting’ highs and ‘Boring’ companies - I said that there was only one company on my share price list of 31st Dec 99 that was now trading at a higher price today. That one company was ‘Boring’ Capita which had doubled in the 15 year period.

I was wrong.

Andy Malpass – CFO at financial services/trading software and services company Fidessa – emailed to point out that their share price was 1048p on 31st Dec 99 and was up 122% at 2330p now. I am so delighted to report this. Andy goes on to say that Fidessa has raised no new capital in the period but has returned substantial dividends to shareholders. Although even Andy admits that my ‘Boring Test’ (ie no earnings reversals) had not been passed!

My only defence is that Fidessa was known as RoyalBlue back then.

BTW – Talk about management longevity! Andy has been CFO since 1995, Chris Aspinall (CEO) has been with Fidessa since 1986 and John Hamer (Chairman) since 1983. In that respect they do have similarities to Capita where, until very recently, Paul Pindar had been CEO from its inception 1980s. Maybe there is a lesson here?

Posted by Richard Holway at '17:00'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 25 February 2015

Tribal Group: 2015 off to good start

Tribal Group logoTribal Group didn’t have the best end to 2014. In December, it announced that it looked set to miss its profit target for the full year (to end December) as it had failed to meet key contract milestones and completions. Just a month earlier, it had been confident of meeting its expectations. But it seems 2015 is off to a good start; this morning the provider of software and services for education management has announced contract progress, in both the UK and ‘down under’ supporting expectations for 2015. In the UK, OFSTED has extended Tribal’s Early Years Quality Assurance contract; the original deal ran from August 2010 and was due to expire in August 2015. The contract has now been extended for 19 months, with a likely value of £18m. Meanwhile, in Australia the Group announces its third state-wide college contract in Australia.

Posted by Georgina O'Toole at '09:34' - Tagged: contract  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 25 February 2015

Microgen Chairman steps down

logoAlong with the 2014 results, today’s announcement from Microgen, Big Data aspirant and Financial Systems company, includes the news that the Chairman, Martyn Ratcliffe, is to step down. Throughout his tenure, shareholders have benefited from the group’s cash generation capability with £70m returned over seven years alone (three-quarters of today’s market capitalisation). However, Ratcliffe appears to have been the driving force behind the protracted Strategic Review and the stalled initiative to grow through acquisitions so perhaps fresh ideas are now required to take the business forward.

Over the year, Microgen stood still in revenue terms, at £29.8m, with pre-tax profit falling by a third to £5.8m. As discussed in our January HotView, see here, the company is returning £20m to shareholders.

The Aptitude Software business saw overall revenue up 5%, to £15.4m, with a shift towards software (where growth was 12% to £8.8m) and away from services. Seven new contracts were signed with success for the Aptitude Accounting Hub and Revenue Recognition Engine in the newly targeted telecommunications sector. Additional development spending resulted in a faster rate of new product announcements but has meant a decline in margins to 18%, with operating profit halving, to £1.2m.

Financial Systems declined in revenue terms, by 5% to £14.4m, with a slight shift away from applications management. The favoured wealth management products however showed no growth despite 10 new business wins for the 5Series product. We are concerned at the rate of progress here in what is an important time for this subsector. The small acquisition of Unity Software, see here, does not look enough to change this division’s outlook. Operating margins remained high at over 50%, with operating profit of £7.1m, giving scope for some additional attention to be paid to this business.

Richard Holway adds…

I served as an NED on the board of Microgen between 2004 and 2006 with Martyn as  Executive Chair. There was little doubt that Martyn was the driving force behind the company. Indeed nobody could doubt his passion and dedication. Since then, finding the right strategic path has been difficult. Indeed, I have long advocated that Microgen should be acquired. I suspect they received expressions of interest but I have no insider information. Perhaps with Martyn not in place, such an acquisition will be easier.

Posted by Peter Roe at '08:47' - Tagged: software   financialservices   big+data  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 25 February 2015

HP Q1: Enterprise Services continues to shrink

HPHP’s Q1 results reveal a mixed performance. Personal systems grew 3%, Enterprise Group increased 3%, Printing revenue declined 4%, and networking revenue shrank 9%.

Enterprise Services continued to perform poorly from a top line perspective, with revenue down 8% (constant currency). This follows an almost 7% decline in FY14, with the same reasons being cited:  key account run off and weakness in EMEA. The two component parts of ES (Application and Business Services and IT outsourcing) each saw deep declines. Profitability, however, did improve - up 1.9 points largely due to productivity actions and improved margins in underperforming accounts. The Technology Services business (IT support and consulting) faired better with ‘just’ a 2% top-line decline.

In all, that pushed HP’s Q1 revenue down 2% to $26.8bn. The non-GAAP operating profit was 8.8%, up 0.3 points year-over-year. HP shares were down c7% in afterhours trading.

The results show that Meg Whitman’s turnaround programme is helping profits edge forward. However, the colossal challenge HP faces in growing the ES top line is apparent. Furthermore, progress made selling SMAC services just seems to get wiped out by the steep declines in its traditional business. In this regard it faces a similar challenge to IBM (see What does IBM’s recent run of wins tell us?), its largest competitor in infrastructure outsourcing. However while legacy revenue is the source of top-line shrinkage, it remains crucial to these firms, and they must continue to ink these types of deals. Credit to HP for its recent Deutsche Bank win (other recent wins include DWP, and Sheffield, but it lost out to Computacenter on the large Post Office deal) – but our analysis would suggest IBM is currently winning a greater share of the megadeals.

For FY15, HP is forecasting non-GAAP diluted net EPS of $3.53 to $3.73, which is lower by $0.30 due to currency headwinds.

Posted by Kate Hanaghan at '08:38' - Tagged: results   outsourcing   SMAC   megadeal  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 25 February 2015

AO World shares crash

AOAs readers know we have been disturbed by 1)  the increasing number of companies described as ‘tech’ companies where, at best, there businesses are just ‘tech enabled’ and 2) the hugely inflated valuations those companies get.

There was no better example of this than AO World. AO World basically sells white goods like fridges online. Like Curry’s without the shops. They IPOed a year back at 285p with a valuation of c£1.2b. This equated to a forward PE of 72! ‘North of Stupid’ might have been our reaction. Conventional white goods resellers would be lucky to get a PE of a tenth of that. It got even worse as AO World shares soared to 329p as recently as a fortnight ago

Today AO World has warned that they will not make expectations for the year to 31st Mar 15. Revenues will now be c£475m and EBITDA a mere £16.5m. As you might expect, shares have crashed in early trading today and are now 180p or 36% off their IPO price a year back and 45% off their price on 9th Feb 15..

Don’t get me wrong, I greatly admire new disruptive businesses and AO World was certainly in that category. It is the valuations that they are given that are crazy. AO World is not the only such company. The ‘problem’ is that we will now get headlines saying ‘tech company crashes’ whereas AO World isn’t a ‘tech’ company in any accepted definition of the term.

Footnote - If you are in anyway surprised by any of this - you shouldn't be! I've warned countless times. Even in the FT and on the radio. See AO.com - the day after or any of the other countless other articles in the archive.

Posted by Richard Holway at '08:34'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 25 February 2015

CSC inks major apps contract with Amey

LogoCSC has inked an $87m, seven year contract with engineering consultancy Amey, which will see the IT services firm provide application development and management services across all of Amey’s business units in the UK, covering its SAP applications and a large estate of custom applications.   

The size of the deal is substantial and relatively unusual in the current environment but it is the intentions that stand out because Amey is looking to CSC to provide “the flexibility we need today and into the future.” CSC’s role is essentially to provide the application environment and modernisation approach to enable Amey to operate in a more modern and effective way. Notably, it will be putting forward is next generation applications platforms (which include its cloud portfolio, mobile and big data offerings) to deliver on that goal.

As we said when assessing CSC’s recent Q3 results (see here), growth in next generation platforms such as big data offerings (and applications modernisation) only partially offset the impact of the repositioning of CSC’s consulting business and contract completions within the Global Business Services unit, where revenue was down 8.5% yoy in constant currency terms. Contracts like Amey will go some way to redressing that and provide CSC with a valuable “next generation” reference site.

Posted by Angela Eager at '08:24' - Tagged: contract   ApplicationServices  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 25 February 2015

‘Confidence’ boosts Hays UK IT recruitment

logoAlthough growth at UK-headquartered international recruitment firm Hays came in a little under that previewed last month (see Currencies to hit Hays FY profits), the 24% leap in net fee income (NFI – i.e. gross profit) in its UK IT recruitment practice is rather impressive. Indeed, IT recruitment NFI grew twice almost as fast as that for Hays’ UK business in total (+13%), which was accompanied by a more than doubling of UK operating profit. However, Hays CEO, Alistair Cox, was a little more circumspect about UK growth prospects this year in the face of the upcoming General Election.

To put some colour on the numbers, Hays’ worldwide revenues in H1 (to 31st Dec. ’14) grew by 3% to £1.91bn. NFI grew by nearly 6% to £384m, lifting gross margins by 40bps to 20.1%. Operating profit grew by 22% to £81.5m lifting operating margins from 3.6% to 4.3%. Pre-tax profit grew by 24% to £77.3m.

As with all recruitment businesses, confidence in the economy is a major determinant of staffing demand. For now, at least, this augurs well for the UK.

Posted by Anthony Miller at '07:50' - Tagged: recruitment   resullts  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 25 February 2015

Investec launches Voice Biometrics

logoSome South African Private Banking clients should feel a little more secure this morning as Investec launches a new security system for their telephone banking customers. In turn both the customers and the Investec executives should feel happier as they don’t have to go through interminable security questions before getting down to business.

Investec has worked with OneVault, a specialist South Africa-based voice biometric company to deploy Nuance’s voice biometrics solution which goes live in the Johannesburg office today. This is the first deployment of this type of system by a South African bank, the project having taken only six months to go live. A global roll-out will follow with an initial target of 300 employees (and many thousands of clients) within the telephone banking team and further deployments across the Group in prospect. The system’s “FreeSpeech” technology analyses the customer’s voice patterns during the normal conversation to verify the caller’s identity, or to prompt additional security questions if the voice analysis is inconclusive.

Investec has realised that the use of voice biometrics can significantly improve the overall security level and enable more efficient use of time for both customer and banking team. There should be a clear ROI on the system’s use as well as the significant, but less quantifiable, benefit of a better customer experience, highlighted in our recent “Market Trends and Forecasts” report as a key driver of SITS spend in 2015. This deployment is another example where a relatively small, specialist company can make a real difference to key processes in a financial institution. This concept is central to our recent report on “The changing face of SITS Partnerships in the Financial Services sector”. If you don’t subscribe to FinancialServicesViews, find out how you can, here.

Posted by Peter Roe at '07:40' - Tagged: security   customerservice   contactcentre   banking  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 25 February 2015

EXL buys insurance analytics player for $74m

lOffshore business process services (BPS) provider EXL Service is on the M&A trail again, expanding its presence in the fast growing business process analytics space.

It is acquiring US-based insurance analytics specialist RPM Direct for up to $70m in cash and $4m in shares. RPM’s financials aren’t available, so it’s difficult to get a sense of the price being paid, but together EXL has splashed out well over $100m in cash for three businesses in the past six months, including Overland Solutions and Blue Slate Solutions in Q2 (see here). This significant ramp up in M&A comes with integration risks.

RPM specializes in analysing ‘consumer data sets to segment populations, predict response rates, forecast customer lifetime value, and design and execute targeted, multi-channel marketing campaigns’. It apparently has a database on over 250m consumers and 120m US households, focused on the property & casualty, life and health insurance sectors.

RPM will become part of EXL’s analytics practice, which now employs over 1,500 ‘data scientists’. Analytics is the fastest growing part of EXL’s business today – it grew 44% in FY14 to reach $66m. Analytics sits in EXL's ‘analytics and business transformation’ practice where Q4 revenues were up 37%. EXL’s other division, operations management (outsourcing) grew 2.7% to $103.1m – so it’s clear to see where most of EXL’s growth is going to come from going forwards. Indeed CE Rohit Kapoor wants EXL to become a ‘leader in analytics’.

In the full year, EXL just missed the half-a-billion dollar milestone. Revenue was up a modest 4.3% to $499.3m. Operating margins however slumped to 6.8% vs. 14% last time, down largely to ‘disentanglement costs’ following a contract termination in 2014 related to its previous big acquisition of OPI. This should be run out of the system during 2015, by which time EXL’s margins should start rising again.

EXL is expecting revenues to pick up steam in FY15, to between 8.5% and 12.5% (9%-12% organic). 2015 will be a much better year for EXL if all the M&A integration goes to plan.

Posted by John O'Brien at '07:38' - Tagged: results   manda   analytics  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 24 February 2015

'Exciting' highs and 'Boring' companies

After 15 long years, it finally happened. Today the FTSE100 closed at a record 6953. Beating the previous closing record of 6930 set on the last day of the last millennium – 31st Dec 1999. Back then the newly launched techMark100 was 3779 – almost exactly the same as the 3774 close today. But not a record high – that was 4330 reached in early Apr 00 just before the Dot.com bubble burst.

Interestingly the FTSE IT SCS Index was 4303 on 31st Dec 99 and went on to peak at 4900 in Apr 2000. It then kept falling consistently for THREE YEARS before it hit 490 – ie 90% lower – in mid 2003. BTW – it is still only 1450 today. Which just shows how NORTH OF STUPID - a headline attributed to me in the FT in early 2000 when I was asked about Sage shares hitting £10 with a P/E of 180 - SITS valuations really were back in 2000.

I thought you might be interested in the Share Review I wrote in the Jan 00 edition of SH Jan 00SystemHouse (I’ve been doing EOM share reviews now for over 25 years…How sad) Sage had risen 381% in 1999 as it was christened ‘the UK internet stock’. Of course it had absolutely nothing to do with the internet then! Maybe Stephen Kelly can achieve a similar 381% price increase by getting Sage christened ‘the UK’s Cloud/SaaS stock’?

But look at the Top Ten rankings of share price movements in 1999 on the RHS. Headed by Recognition Systems and including such companies as Baltimore, AIT, Torex. Most of the companies on the list went broke or were bought at fire sale prices. They were the 1999 equivalents of 2014s ‘Froth stocks’. That’s why we have issued so many warnings!

If you had invested in almost any of the 120 quoted SITS stocks we covered in Dec 1999, you would have lost money (indeed most of your money) on practically everyone. Except one. Long time readers will immediately know the answer when I describe them as ‘Boring’.

Capita shares were 565p on 31st Dec 99 – they are double that at 1185p today. I love ‘Boring’. This came as a result of a misquote by Alan Cane in the FT in 1992. I meant to say the results were ‘Boringly consistent’ but he wrote they were just plain ‘Boring’! Capita have NEVER had an earnings reversal in any year since their IPO in 1989; the only FTSE100 company – let alone the only tech company – to hold that record.

I wonder where they will all be in another 15 years?

Posted by Richard Holway at '16:52'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 24 February 2015

HP signs mega-deal with Deutsche Bank

hpIn a brief statement issued this morning, HP and Deutsche Bank announced a ten-year multibillion dollar IT infrastructure deal which will prove extremely significant for both parties.

Under the deal, Deutsche Bank will use HP’s Helion Private Cloud solution to supply dedicated data centre services on demand including storage, platform and hosting for its wholesale banking business. Deutsche Bank will continue to drive IT architecture, application development and information security. Through this deal, Deutsche Bank will future-proof its IT infrastructure and at a stroke drive significant cost savings. HP in turn wins a flagship customer, a large-scale deployment of its Helion solution and massive credibility in the Financial Services sector.

dbAs discussed in FinancialServicesViews reports over the past year, the use of Cloud has been gaining ground and widespread acceptance. The HP team have been pushing this concept hard, as well as leveraging their expertise in operational risk and resiliency and building their domain expertise. (See our detailed company report on HP’s Financial Services operation, here). Deutsche will also be able to rationalise its legacy application stack and deploy innovative applications more speedily as it can access additional infrastructure as needed. Applications will be moved onto the HP platform so Deutsche can focus its internal IT resources where they can drive most benefit.

Deutsche Bank has long had a more centrally-driven and structured approach to IT than many other banks, who may find it more difficult to move to such a delivery model. However, banks are looking for further cost savings and need to focus on leveraging their core banking expertise rather than devote precious resources to the provision of IT infrastructure. This deal by Deutsche is a clear signal to other banks of the value of such a move, and a large feather in HP’s cap.

Posted by Peter Roe at '10:43' - Tagged: cloud   infrastructure   legacy   banking  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 24 February 2015

Too much of a good thing in UK ‘tech’?

picJust returned from hols and was leafing through the barrage of announcements of recent UK ‘tech’ startup funding rounds. I got the feeling that, for investors at least, you can never have too much of a ‘good thing’.

I refer to shopping portals ($11m for ‘social’ shopping site, Shopa, from Octopus Investments and Notion Capital), hotel booking sites ($2m for Triptease from Episode 1 Ventures and Notion Capital) and ‘on demand’ laundry services ($265k for Lavanda from various ‘angels’ who, I assume, do want their dirty laundry aired in public).

These ventures illustrate our theme that UK tech is the place to be, even if that is giving a rather broad definition to ‘tech’ (a topic we will return to in future posts).

The real question is whether any of these ventures have more than an ice cube’s chance in hell of gaining a foothold in the market and giving a return to investors.

These entrepreneurs have undoubtedly developed great IP to drive their e-commerce platforms. That is ‘real’ tech. But the value is surely meant to be in the customer proposition (more relevant shopping choices, cheaper hotels, clean undies).

For most of these ventures – and so many others like them – the real deal for investors is the wild hope that a bigger player in the market will buy the IP if not the client base. Few would actually bet that the startup itself will become a market leader.

Less the case, though, for ‘real’ UK tech. Just look at Oxford-based security software firm Sophos (see Sophos to IPO? You read it first on HotViews!). Or Alertme, the Cambridge-based ‘smart home’ tech company acquired recently by British Gas for £44m (and see Smart Meter Madness (Part 4)). We do real tech real well. Long may that last!

Posted by Anthony Miller at '09:03' - Tagged: funding   startup  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 24 February 2015

Ideagen’s Gael lands contracts worth £1m

LogoIdeagen, supplier of information management software to highly regulated organisations, acquired Gael (see Ideagen to gain scale with Gael) in December. Today’s new contracts announcement demonstrates that being under new ownership has not hindered Gael’s ability to win new business; between 2011 and 2014 the company enjoyed 14% compound annual organic revenue growth.

Gael supplies integrated Compliance, Risk and Safety Management solutions to the healthcare, manufacturing sectors, plus over 300 airlines. The contracts, with a UK based regional airline, an African national airline and a Malaysian aviation services company, are worth a combined value of approximately £1m, although it's not clear over what period of time. Ideagen posted H1 revenue of £5.65m, so the contracts are a notable addition.

At the time of acquisition we described the deal as a merger of equals (the last financials for the separated firms showed revenues of circa £9m). While individual contract wins make for good headlines, for Ideagen to be more than a sum of its parts management needs to identify opportunities to cross fertilise expertise into the client base.

Posted by Michael Larner at '08:54' - Tagged: software   contracts  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 24 February 2015

dotDigital turns on the turbo

logoAccelerating dotDigital, is switching into turbo mode. The SaaS digital marketing provider is embarking on an “accelerated investment plan to scale the business further through both geographic expansion and product innovation” and will invest up to £3m over the next two years.

It will expand the US business (where revenue rose from $456k to $1.14m in the six months to December 31 2014), and set up a channel team in Australia as the entry point to the Asia-Pac market. It is continuing to build on its core email marketing software but the dotmailer Magneto ecommerce connector will be an important driver for growth. This is a smart area of diversification because it hooks it into the mid market retail sector ecommerce market and joins the dots between marketing and ecommerce but also provides dotDigital with access to the extensive Magento channel and another way of expanding its own channel network. In H1 dotDigital’s Magneto related business reached annualised revenue of c£2m from 150 customers.

Expansion is possible because of several periods of good organic growth (see the HotViews archive here), once it had closed down dotAgency, its marketing services business. In H1 revenue from continuing operations was up 32% to £10m, and with recurring monthly SaaS usage revenue from the dotmailer unit up 28% to £7.4m. The bottom line is continuing to grow with operating profit before tax up 17% to £2.5m and it is still generating cash - £1.4m in H1 taking net cash to a respectable £9.5m.

The bottom line will no doubt change as investments ramp up, and the cost of sales has already jumped from £491k to £1.2m yoy. As we have said before, dotDigital is operating in the marketing automation sweet spot so there is room for growth and it is scaling the business to capitalise on the opportunity.   

Posted by Angela Eager at '08:44' - Tagged: results   software  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 24 February 2015

Positive notes in Phoenix update

phoenixPrior to the close of its financial year, Phoenix has provided a few details on its performance. Group trading is “comfortably in line with market profit expectations”. At the half way mark, the EBITDA margin had improved slightly from 12.4% to 12.6% (see here).

The company is focused on improving cash and profit and a key strand of the strategy is to move contracts in its Partner Business from resource-based to Service Level Agreements. It has already transitioned TCS from a dedicated headcount resource model to a service level model, and today Phoenix reports that a second (very long-standing but unnamed) partner will also be moved onto this model.

In terms of wins mentioned today, Phoenix has inked a new contract with Redmayne-Bentley (an independent UK stockbroking and investment management firm) to provide a WAN across its 38 branch offices. Phoenix also says the Partner Business has recently secured a three-year deal with a “major customer” to deliver desktop project services to the entire end-user base – this is in addition to it already being the central IT provider to the partner. Terms of the deals were not disclosed.

Phoenix has seen some progress in its cloud business having signed its biggest win to date for CloudSure (its proprietary public cloud offering). This is part of a three-year deal whereby the company will also provide a range of other IT services. Notably, the cloud component “will form a significant element of the overall customer solution and has been central to the quick implementation …. of that solution”. Now a Microsoft Cloud Solution Provider, Phoenix also has Office 365 in its cloud portfolio, which broadens options for customers.

All of the above is good to hear, in particular the SLA and cloud development. However we’ll have to wait for the full year results to get the full picture on performance and prospects.

Posted by Kate Hanaghan at '08:36' - Tagged: cloud   tradingupdate   infrastructureservices  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 24 February 2015

PROACTIS signs Inspired deal

logoFollowing last week’s trading update, see here, which showed the beneficial effect of three acquisitions on growth rate and profitability, the AIM-listed provider of spend control and eprocurement software PROACTIS (AIM: PHD) has signed another deal. This time the agreement is with Inspired Capital, to develop and deploy an accelerated payment facility for SMEs. The idea is to use the PROACTIS eProcument Platform, linking a community of blue-chip companies with a host of SME suppliers, to enable faster settlement of suppliers’ pre-qualified invoices. This Accelerated Payment Facility will be launched later this year. Commercial terms have yet to be finalised for this exclusive collaboration.

PROACTIS also recently signed a deal with the US Fifth Third bank to collaborate on developing solutions into the US regional banking industry, see here. This should add to the company’s growth potential from its recently launched “Activate” trading network and from the extension of its activities beyond software provision into supply chain finance enablement.

Inspired Capital plc (previously Renovo, AIM: INSC) is a provider of funding solutions targeted at small business whose January trading update showed they had 1,300+ clients (up 36% on the year) and outstanding loans of £67m, up 60%. This deal could prove to be a significant element in realising Inspired’s ambitions, which are crucially dependent on building the customer roster for their portfolio of SME lending products.

Posted by Peter Roe at '08:31' - Tagged: payments   markets   financing  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 24 February 2015

Netcall calls in slower growth

lAfter updating on H115 last month (see here), customer engagement software and services provider Netcall has reported modest revenue growth of 2% for the period to 31 December, to £8.60m. This compares to 5% headline growth and 9% underlying growth the previous year (see here).

At the operating level, profits were up a modest 0.8% to £1.36m (margin flat at 16%), although adjusted EBITDA (before the nasty bits) were up 8%. Cash from operations was the real star, with growth over 50% to £2.07m during the half, helping push Netcall’s cash position to £13m. This is going to be used to pursue further M&A in the months to come.

Netcall is going through a transition as it attempts to convert new and existing customers across to its next generation cloud-based Liberty platform – where it continues to see cross and upgrade sales from clients. New customers are also coming on board, like London Borough of Hackney and Cofunds during the period. Liberty will contribute to growth in FY15 and along with growth in recurring revenue to 64% of business, is the reason Netcall is buoyant about the outlook this year.

Liberty is an end-to-end customer engagement and business process management (BPM) platform, which puts Netcall in a sweetspot for organisations looking to transform their customer experience services.

Posted by John O'Brien at '08:13' - Tagged: saas   bpm   customerexperience  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 23 February 2015

Lead generation specialist MVF scoops Bridgepoint investment

LogoEuropean private equity firm Bridgepoint Development Capital’s latest investment is another of example of it investing in well managed companies in interesting growth sectors. It has taken a substantial 40% stake in five year old UK headquartered MVF, a digital native who provides online customer acquisition and lead generation services enabled by its own software IP. Accolades include a Queens Award for Enterprise in 2014 and the title of the fastest growing UK tech company in 2013 by the Sunday Times Tech Track.

What it interesting about MVF is its ability connect separate markets though its blend of data driven analytics technology and digital marketing expertise, channelled through online marketplaces that connect brands to high volumes of potential customers. It also has a handle on mobile digital advertising spend, an area that is undergoing change on multiple fronts from the use of bluetooth beacons to the challenges around the emerging concept of ‘micro moments’ (see ESAS Predictions 2015). It is also very much a data driven company, using technology to monetise data.

Marketing companies like WPP are moving into the software environment on the back of the disruption caused by the digital wave, creating new competition for software providers, and MVF is illustrative another layer of competition with its outsourced lead generation service. Competition in online lead generation will be fierce and early movers will have an advantage so MVF plans to use the BridgePoint investment to accelerate growth and continue international expansion as well as funding potential acquisitions.

Posted by Angela Eager at '14:33' - Tagged: acquisition   software   ApplicationServices  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 23 February 2015

MXC buys Calyx Managed Services from Better Capital

mxcIn a deal announced today, MXC Capital has acquired Calyx Managed Services (CMS) from Jon Moulton’s private equity firm, Better Capital. The deal does not include the other component part of the Calyx Group, m-hance, a mid-market business software provider

A number of parties were involving in a “competitive auction process” for CMS, with MXC emerging the victor. CMS was sold for an enterprise value of £9.0m. After costs, £7.8m will be returned to the fund.

Better Capital’s view was that CMS was sub-scale, and it didn’t want to plough further funds into the operation to address this. m-hance, meanwhile, continues to trade “in accordance with expectations”.

Calyx Group has a colourful history. It started out as an Irish-based firm that was taken private by Alchemy in 2008. Jon Moulton parted ways with Alchemy and set-up Better Capital. When Calyx went into administration in 2010, Better Capital bought Calyx from the Administrators. We reported at the time that it “had paid £17m in total for the debt and business and to fund the restructuring and working capital requirements”. At that time Calyx had revenue of c£65m, but over the years the company has seen this drop to the c£20m it is today. All in all, a rather a sorry tale.

So what next? In our view, MXC could take one of two routes: Use CMS as a platform to build a larger managed services entity (about half of revenues are managed services – the remainder break/fix and network services). Or, break-up CMS and pull the parts (or some parts) into its existing operations (other MXC technology investments include Castleton Technology and Redcentric). Either way, MXC believes CMS is capable of generating cash from the point of acquisition.

Posted by Kate Hanaghan at '10:37' - Tagged: acquisition   managedservices  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 23 February 2015

Audioboom turns up the volume for 2015

logoWe wrote about Audioboom (formerly One Delta Plc) for the first time in December, in Audioboom, sounds like progress as we were intrigued by their digital, on-demand streaming platform play in providing targeted audio content. The company joined AIM in May 2014 with the impressive ticker “BOOM”.

They have now published audited results for the 11-month period to end November. Revenues for the truncated period totalled only £51k and the company racked up a loss of £3.8m. Nevertheless, the company’s management have been able to make several steps forward to realise the potential in this market.

User numbers are up 64% over the year to 3.1m, with App downloads exceeding half a million even with very little marketing. The list of content partners is up to 2,000, from less than 300 a year previously and the leveraging of these more niche and specialist providers will probably be where Audioboom will make its mark. There are many other ways to access the BBC or Sky Sports but listeners who want to catch up via podcasts on specialist sports and hobbies or from particular celebrities (like the newly signed-up Russell Brand) will be prepared to use services like Audioboom. They may also be prepared to pay (a little) for the access.

Audioboom has also expanded its US sales team, strengthened the Board and set up an advertising syndication network. They have also signed deals with several partners, including Amazon, to generate revenue from the onward sale of additional digital content, also with Nobex to expand marketing via US radio stations and with Cloud Africa, to further extend it global reach. At end December they had £8m in cash.

There is a lot to do, but we will be hearing more of Audioboom in 2015.

Posted by Peter Roe at '10:06' - Tagged: media   cloud  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 23 February 2015

Rosslyn gets a foothold in US Higher Education

Rosslyn logoCloud analytics platform provider Rosslyn Data Technologies, has announced that its US subsidiary, Rosslyn Analytics Inc, has signed an agreement with  E&I Cooperative Services to provide cloud-based spend analytics services. This continues the firm’s push into the US higher education sector having already signed a deal with The State University System of Florida last month (see here).

E&I provides supply chain advisory services to the US higher education sector on all manner of products and services including software, furniture and medical equipment (see here). Rosslyn's RAPid Cloud Data Platform will underpin E&I Consulting Group’s endeavours to help its members ‘better understand how they spend and what efficiency options are available to them’.

Higher education in the United States is at a tipping point; institutions can no longer pass on escalating costs to students and so need to find savings internally or face bankruptcy.  Higher education bodies in the UK face similar pressures (see UK Education SITS Market Trends & Supplier Landscape 2014-15).The two engagements in the US should be good reference points both in the US and UK.

Posted by Michael Larner at '10:03' - Tagged: education   analytics  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 23 February 2015

Have you got what it takes to be a Little British Battler?

LBB logoSince we launched the programme in November 2012, some 300 privately held software and services companies have applied to join the ranks of the TechMarketView Little British Battlerbrigade. Sixty companies – all punching above their weight in their respective markets – have so far been selected to participate in the programme.

We’re now looking for the next twelve ‘battlers’ to join their ranks.

The sixth TechMarketView Little British Battler Event will be held in London on Wednesday 22nd April 2015. Twelve more companies will have the opportunity to share their aspirations and challenges, and get valuable opinion and advice on their business plans, in confidential sessions with TechMarketView research directors and senior partners of MXC Capital, the tech focused, AIM quoted merchant bank that actively invests in and advises companies in the UK tech sector.

And as usual, it’s absolutely free.

Candidate companies must be headquartered in the UK (i.e. not subsidiaries of foreign firms), privately held (though may have accepted external funding), with annual revenues under £20m. Companies must derive the substantial majority of their revenues from software, IT services or business process services.

We’re particularly looking for companies that play to our 2015 theme, “Joining the Dots. In other words, your products and services help connect everything (or everybody!) to everything else – and make sense of the information flow that these connections enable. 

This is a broad brief which touches all on all aspects of the ‘digital transformation’ agenda. Your products and services should be differentiated and aim to disrupt the marketplace.  You may not be fast-growing yet – but you want to get there.

To apply, just click here and fill in the registration form. You may apply again if you were previously unsuccessful.

The deadline for registrations is Friday 6th March. We aim to notify successful applicants by the end of March.

Should you have any questions, please email us at lbb@techmarketview.com.

The TechMarketView Little British Battler Programme is run in partnership with MXC Capital, the tech focused, AIM quoted merchant bank that actively invests in and advises companies in the UK tech sector.

Posted by HotViews Editor at '09:13' - Tagged: events   lbb  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 23 February 2015

NEW RESEARCH – Monitise Strategy Update

logoIt has been a busy few months for UK-based Monitise since FinancialServicesViews published a big report on the company’s strategy of building a broad ecosystem of partnerships in mobile banking and m-commerce which continue to be priority areas for investment for the banks.

Fundamental changes in the market as well as a consistently falling share price have precipitated a formal Strategic Review by the company and prompted questions about its future independence. At the Capital Markets Day last week the management clearly outlined their view of how to achieve their medium term forecasts and to exploit their market position. Their ability to realise their potential is substantially increased by their partnerships with companies such as Santander, Telefonica and MasterCard.

ibmHowever, in our view, their success will be fundamentally dependent on the move to a Cloud-based platform and the company’s partnership with IBM, enabling them to access the scalability, agility and cost base with which to meet the challenge. You can access our AnalystView giving an update on Monitise’s strategy and current position here.

FinancialServicesViews also recently published a report on the wider subject of Partnerships in the Financial Services sector and subscribers to this research stream can access the report here. If you are interested in learning more about subscribing to FinancialServicesViews or any of our other research streams, please contact Deb Seth of our Client Services team.

Posted by Peter Roe at '08:56' - Tagged: cloud   partnerships   mobile   big+data   mcommerce   banking  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 23 February 2015

Quindell extends offer to Slater & Gordon

lEmbattled insurance business process services (BPS) provider Quindell has extended its ‘exclusivity period’ for lawyers Slater & Gordon to consider acquiring its professional services division (PSD) through till 31 March.

Quindell said the terms being discussed would imply a ‘significant premium’ to Quindell’s market cap at the close of trading on 20 February 2015. It also said that there’s no certainty an actual offer will be made.

Shareholders have been on a white-knuckle ride with Quindell (see here and work back). Its shares have plummeted almost 90% year to date. So this sell-off could at least give them something.

PSD accounts for the majority of the Quindell business. It made £293m in the six months to 30 June, 2014, on total revenue of £357m. PSD is made up of Quindell’s legal services, BPS and health business assets.

It's clearly the legal services division that Slater & Gordon are most interested in. It now claims to be the largest personal injury legal business in the UK. It made revenue of £179.6m in H114.

Any disposal of legal services would prove how difficult it has been at Quindell melding the worlds of software and business process services and legal services. Quindell was the first UK company to take legal services firms public via its spate of acquisitions in the space. This experiment has fallen almost as soon as it began.

Posted by John O'Brien at '08:26' - Tagged: bps   legalservices  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 23 February 2015

Bumper year for UK tech VC funding

chartDespite a slightly more subdued final quarter than in 2013, venture capital investment in UK tech businesses hit an all-time high in 2014, according to latest data from corporate finance firm Ascendant.

The market grew 57% in value and 31% in volume with £1.46bn being invested in 343 deals of over £0.5m.  The first 3 quarters were very strong – all showing substantial growth in value and volume over the comparable periods in 2013.  In Q4, £269m was invested in 86 deals which was still up in volume but down in terms of value when compared to the last quarter in the previous year.

TechMarketView Foundation Service subscription service clients will be able to see where some of this money went by reading our regular quarterly synopsis of the UK VC software & IT services scene in the next edition of IndustryViews Venture Capital.

Posted by HotViews Editor at '08:03'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link





© TechMarketView LLP 2007-2015: Unauthorised reproduction prohibited see full Terms and Conditions.