Worldpay is to float at 240p per share, giving a prospective market capitalisation of £4.8bn. This makes the company’s Enterprise Value over £7bn, justifying the VC owners’ decision not to go for the trade sale proposed by French company Ingenico (see Giants of the Payments jungle…..).
The IPO will also raise around £950m for the company and open up new sources of capital. This is expected to lead to a faster pace of acquisitions, with larger targets probably being sought.
In the five years since the company was carved out of RBS, the management has not been idle, having invested over £1bn in technology and capabilities. They have also been active in the M&A market, buying at least six specialist companies and may now be looking to increase the pace of change.
Looking ahead the management will be intent on continuing the growth of the Global eCom division (19% of group revenue) and leveraging its vertical expertise and growing scale. A further priority will be to address the relatively low level of profitability across the group, particularly in the US operation (48% of revenue but with only a 5% EBITDA margin in 2014).
The top management team, now headed by Sir Mike Rake (see Rake’s Progress….), may find it difficult to radically and quickly improve overall returns in a very dynamic and competitive market. Nevertheless the industry is ripe for structural change and a more aggressive Worldpay, with access to additional capital, has the opportunity to make a significant difference over the medium term.
Following its listing, Worldpay could well prove to be one of the more dynamic of the payments giants and its progress should make for interesting reading.
Posted by Peter Roe at '09:42'
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As indicated in its prelim results, SaaS digital marketing provider dotdigital pulled off another strong year in 2015 (ending June 30) - and it was all organic because although it looked at potential acquisition targets, none of them made the grade. Growth was also aided by international expansion, which is one of its growth indicators.
Marketing software and services is a high growth sector and dotdigital sits squarely in the middle of this demand, which resulted in revenue growth of 32% to £21.4m and EBITDA up 45% to £6.8m. With £11.9m in cash (up 28%) and no debt, it is in robust health.
What is striking about its performance is that it is improving the foundations. For instance, the average monthly spend per client rose 41% to £445. It is also signing customers up to longer contracts (although longer contracts in this context only means between 12 and 24 months) and is improving its retention rate. These factors all work together to increase the lifetime value of its customers. Although its core high margin email and multi-channel automation SaaS platform is at the heart of its progress, its Magento connector business is also growing strongly, as is the professional services part of the business. Looking to future, it is planning to expand its channel operations (see Turbos remain activated at dotdigital) which will add another growth spur. With healthy and growing top and bottom lines, what’s not to like about dotdigital.
Posted by Angela Eager at '09:35'
SAP may come from the old school of software but it is finding a place in the new cloud school. Q2 results showed the progress it was making (see SAP Q2 shows cloud progress and strain), something last night’s Q3 prelims reiterated.
Preliminary figures indicate an impressive 116% increase in cloud revenue for the period to September 30, although in revenue terms that equates to a modest €600m out of total expected revenue for the quarter of €4.98bn.The Concur acquisition contributed to cloud growth but even with its contribution stripped out SAP says it still achieved double digit growth. Total revenue was up 17%, on the back of activity in SAP’s mature markets. The company even grew its on premise licence revenue by 7% to €1.01bn which is quite an achievement in the current cloud-centric market.
Operating profit is expected to be up 5% to €1.21bn but the operating margin is set to drop 2.9pp to 23.4%—which is all part of the cost of the cloud transition. The prelim figures did not show net profit, which is another casualty of the transition to cloud—that will be revealed when the full results are released on October 20. SAP lowered its profit forecasts for the period through 2020 back in January but has maintained them so far since then, indicating it is on top of the pattern of change. The prelims backed that position as FY15 guidance was reiterated, which includes cloud and software growth of 8%-10% cc, and operating profit in the €5.6bn-€5.9bn range, which would be flat to +5%.
The prelims show the progress SAP continues to make with its cloud offerings, even though the bulk of its cloud revenue comes from previous acquisitions such as SuccessFactors. It added to its roster of cloud acquisitions yesterday with the purchase of Paris-based SaaS HR software provider Multiposting. Terms were not disclosed but this is a tuck-in acquisition that adds the ability to automatically post jobs online to multiple locations. Licence sales also held up during the quarter and it will be interesting to see where the activity was when the full results are released—our bet would be customer experience.
Posted by Angela Eager at '08:50'
London-based app prototyping startup Marvel has made its first acquisition, bringing on board the IP and co-founder from design and animation tool developer, Plexi. Terms were not disclosed. It appears Plexi was very early stage as I can’t seem to find either a website or a Twitter feed. Founded at the end of 2013, Marvel raised $2m a couple of months ago (see here) after a rather hairy start on funding in its early days (see You have to ‘Marvel’ at their tenacity!). Good stuff.
Posted by Anthony Miller at '08:38'
Continental Europe recorded its best quarterly performance for nearly four years at UK-headquartered recruitment firm Michael Page International (aka PageGroup), though the UK market was no slouch. While EMEA gross profit in Q3 (to 30th Sept.) rose by over 13% in constant currencies (4.3% headline), UK GP grew by 12.5% albeit a couple of points lower than in H1 (see UK bright at Michael Page). Group GP grew by 4.8% at the headline level as weak foreign currencies took their toll.
Pagegroup’s results echo those of peers Hays and Robert Walters suggesting that the recovery in the UK recruitment market, though slower than in H1, is still proceeding apace.
Posted by Anthony Miller at '08:11'
As expected, Michael Dell has put other people’s money where his mouth is, with confirmation that his Silver Lake-backed, eponymous PC and server company is to buy EMC for over $60b, the biggest ever tech sector acquisition. EMC’s 80%-owned virtualisation software subsidiary, VMware, will remain publicly traded.
The press comment made by one Erik Gordon, clinical assistant professor at the University of Michigan's Ross School of Business, almost exactly reflects my view voiced last week (see Dell/EMC – again?). Prof. Gordon was quoted as saying, “Dell wants to become the old IBM Corp, a one-stop shop for corporate clients. That model fell apart a couple of decades ago. Reviving it would be a stunning coup for Dell.” I’d only substitute the words ‘stunning coup’ with ‘hopeless quest’!
Or to put it another way, a private equity firm buys into a disk storage manufacturer and marries it to a PC manufacturer because someone thinks this is the future of IT.
I beg to differ.
Posted by Anthony Miller at '14:34'
Telit is evolving from just providing components for machine-to-machine communication (m2m) to now underpinning clients’ entire Internet of Things (IoT) activities. In a brief trading update, Telit's revenues for the nine months ended 30 September 2015 rose by 15.1% yoy to $236.1m.
Earlier this month Telit secured a $30m contract to supply components to an unnamed smart electricity meters provider in the Netherlands. Contracts to enable devices to send and receive data over cellular and non-cellular networks are the foundation of Telit’s business. The company is now extending its offering to encompass the entire IoT value chain; in other words integrating the data generated into systems, apps and dashboards.
Telit’s components and IoT platform services have been deployed by Buckinghamshire based Cresatech to help them monitor and protect telecom providers and rail networks from metal theft. While Cellolocator, a division of Israeli based Pointer Telocation, is deploying Telit’s IoT Platform in its CelloTrack Nano system to provide real-time status monitoring of goods in transit.
In July’s trading update (see Telit pushing IoT as a Service) Telit guided that revenues in Calendar 15 would grow by 20% to around US$350m (2014: US$294m). However annual guidance has now been trimmed with revenues forecast to be between $330m and $340m. Adjusted EBITDA is expected to range between $40m and $45m. Delays in customer projects and customers waiting for LTE CAT-1 to be certified by operators were cited as causes.
Providing both components and IoT platforms will help Telit provide a compelling proposition as it looks to become a one stop shop for companies looking to harness IoT’s potential.
Posted by Michael Larner at '10:01'
A brief Q3 trading update (to September 30) from talent and learning management provider NetDimensions indicates its SaaS transition is continues to gain pace with invoiced sales up 40% to $2.8, while revenue was up 24% to $2.6m. There was no insight into the bottom line which cast a shadow over its H1 results (see here) and included rising operating losses of $2.49m, plus a high rate of cash burn.
NetDimensions is not alone in taking the pain of the move to SaaS. New customers are critical and the news that it is attracting new clients is positive, with gains in the financial services, healthcare and life sciences industries. The average value of first year contracts has increased by 5% yoy which is another promising metric.
It is operating in an expanding market where both mid market SaaS HR providers such as Fairsail and enterprise focussed companies like Workday are experiencing sustained high growth as organisations recognise the value in up-skilling their workforces and initiating talent management programmes to attract and retain staff (see our research into the market in Six Reasons to Pay Attention to SaaS HR). But that also makes it a expensive market to operate in because the pressure is on to invest to deliver continual innovation.
Posted by Angela Eager at '09:33'
This week’s episode in what is becoming the saga of eServGlobal reveals the likely extent of the revenue and EBITDA hits following delays in closing several “high margin orders” and significant cost overruns. (Readers can catch up on earlier episodes here and by working back).
Full year figures for the year to end October are forecast to show revenues of €17.5-18.5m and an EBITDA Loss of €5-6m. This compares with pre-announcement expectations of around €20m revenues and €1.7m EBITDA Profit.
The “streamlined and revitalised” management team is now heralding better cash collection, revenue growth and a more predictable EBITDA margin. They state that a lot of work has been completed to launch the new mobile payments platform (PayMobile 3), to improve sales processes and to slash overheads by 30% to €9m. Revenues of over €20m and an EBITDA profit are the targets for Fiscal 2016. Much will depend on the growth of the subscriber numbers and speed of adoption of the company’s Mobile Money solution as subscribers buy air-time and use their mobiles for other transactions.
eServGlobal’s other business, the HomeSend venture is now majority owned by MasterCard. This provider of international remittance services is developing a broad range of partners and is expanding its service portfolio. This business is apparently growing very quickly but is loss-making. There is significant long term potential, but the market is increasingly competitive and the eServGlobal team have little control over the fortunes of this business.
The actions taken by the eServGlobal management to rationalise and focus on the new platform appear logical and they will look to drive continued progress and generate some positive news flow. However, for the main determinants of the company’s fortunes to swing in their favour, they too will have to remain patient.
Posted by Peter Roe at '08:53'
The acquisition history of privately held conglomerate Rigby Group makes interesting reading, with much of it in recent years focused on building up the services side of its reseller business, SCC.
Such is the rationale behind Rigby Group’s latest investment, a minority stake in London-headquartered comms service provider, SIPCOM. Founder and CEO Daniel Allen remains SIPCOM's majority shareholder. Terms were not disclosed.
This looks all very sensible will undoubtedly push SCC further up the rankings in the UK infrastructure Services market (and see SCC: Services investment paying off).
Posted by Anthony Miller at '08:27'
It was certainly an ‘interesting’ quarter for Bangalore-based Infosys, with mixed news on the growth front and yet another top exec bailing out.
The good news on growth was that it was higher than the prior quarter in US$ terms, with headline revenues for FY16-Q2 (to 30th Sept.) up by 8.7% yoy/6.0% qoq to $2.39b, as compared to 5.8%/4.5% growth in FY16-Q1.
However, management reduced FY16 US$ growth guidance to between 6.4-8.4% after raising the forecast last quarter, pushing back the probability that FY16 will be Infosys’ first $10b year (see Infosys inches closer towards $10b year). Nonetheless, FY guidance is a still a tad higher than originally predicted 6 months ago (6.2-8.2%). FY16 forecast growth in Rupee terms has remained constant at 10-12%, though still below Indian IT services industry association Nasscom’s expectation of 12-14%. Infosys’ operating margins at 25.5% were 60bps lower yoy but 150bps higher than in FY16-Q1.
Infosys also announced the departure of CFO and executive VP Rajiv Bansal ‘to pursue other entrepreneurial projects’. A couple of months ago Infosys exec VP Sanjay Jalona left to lead L&T Infotech, the soon-to-be-IPO’d IT services subsidiary of Indian industrial conglomerate Larsen & Toubro (see Infosys exec jumps ship to lead L&T Infotech).
The rest of the Indian majors report over the next couple of weeks and we will do the ‘compare and contrast’ as usual in the next edition of OffshoreViews.
Posted by Anthony Miller at '07:58'
So Facebook is not going to introduce a ‘Dislike’ button. See To Like or Dislike. Apparently it would bring too much ‘negativity’ and ‘not be in the spirit of the product we are trying to build’.
Instead Facebook are introducing six new emojis as follows:
I suppose the ‘HaHa’ will avoid some of the embarrassment people of my age have with LOL. But ‘Yay’? What exactly is the ‘emotion’ that is meant to represent?
Posted by Richard Holway at '16:20'
Elon Musk – The Biography
I’ve written many times of my views on Elon Musk. Indeed In Awe of Elon Musk probably gives a clue. Last month I read Ashlee Vance’s biography of the man. I expected tales of a rather disturbed character. But actually I was inspired by the man. Whereas Steve Jobs ‘’just’ wanted to change our lives by bringing us the iPod, iPhone and iPad, Musk wants to colonise Mars and solve this Earth’s climate change issues with solar power and electric cars. Jobs said to John Sculley, then with Pepsi, when trying to persuade him to become the CEO of Apple ‘Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?” I wonder what Musk would have said to Jobs?
There are, of course, huge similarities between Musk and Jobs. They both managed multiple innovations whilst most mere humans struggle with one. Both ran more than one major company at the same time (Jobs with Pixar and Apple, Musk with Tesla and SpaceX as well as chairing SolarCity) Both had what appear to be flawed personalities when it comes to following the norms of social intercourse. On the surface these behavioural problems seem unacceptable. But then you realise that both men were driven and, bluntly, would not have made their achievements if they had actually cared what people thought of them. Apart from lacking the genius of these two men, my major problem is that I DO care what people feel about me. A major weakness!
Elon Musk, Apple and cars
After reading the biography, I did smile at the reports in the German newspaper Handelsblatt yesterday where Musk claimed that Apple’s auto sector hires had been of people fired by Tesla! Adding “If you don’t make it at Tesla, you go work for Apple’. Musk dismissed Apple ever being a serious competitor to Tesla saying that building a car was somewhat more complex than a Watch.
Actually I doubt that Apple will build a whole car. But I do see Apple ‘stuff’ being a significant part of many auto manufacturers' offerings.
So, would you like to meet and hear Elon Musk?
Well now you can at the
The Prince’s Trust and EMC Leadership Dinner - 28th January 2016, 7:00pm -10:45pm, London
This special dinner is a key event in the UK business calendar, bringing together 600 business leaders from a range of industries. Hosted by Channel 4 and long-standing Trust Ambassador, Jon Snow, the evening’s highlight will be an intimate interview with Elon Musk.
Taking place at the Hilton on Park Lane, tables of 10 are priced at £7,500 with some VIP packages also available. This high-profile dinner will kick-start a year of events marking The Prince’s Trust 40th anniversary and celebrating nearly 1million disadvantaged young people having been helped. The evening will also feature a champagne reception, sumptuous three-course meal, exclusive silent auction and the chance to hear from a Prince’s Trust Young Ambassador.
The Prince’s Trust and EMC Leadership Dinner is usually reserved for corporate partners of The Trust. However given my involvement I am able to offer this exclusive invitation and encourage you to purchase a table at this great event!
To secure a place at this exciting dinner please email Becca Saunders for a booking form - firstname.lastname@example.org .
Hope to see you there.
Posted by Richard Holway at '15:43'
A fair proportion of the world’s bankers and their SITS suppliers will converge on Singapore next week for the annual SIBOS chatfest. They should have a very busy time with key topics including innovation, payments transformation and cross-industry collaboration
The record investment levels in FinTech and how incumbents can embrace innovation will be important topics, with SWIFT’s own Innotribe pushing advances in financial inclusion and the increased role of big data and “crowd intelligence”.
Faster Payments will also take centre stage as incumbents seek to re-establish their value proposition in the face of powerful newcomers in the payments and money transfer markets. FinancialServicesViews subscribers can read our comments on Faster Payments in our June Payments Bulletin. Payments is also fuelling interest in Distributed Ledger technologies (Blockchain, etc.) but the implications and influence of this new technology will be much more far-reaching. It was at SIBOS in Boston last year that this phenomenon came to many people’s notice and we have already seen an acceleration in its adoption, for example with announcements from Earthport and Ethereum.
The greater use of industry-wide utilities should also feature in the SIBOS debate (you can read our views in Evolving Delivery Models in FS). SWIFT with its broad member base is well placed to push the envelope for sector utilities, but it seems to move slowly in an increasingly dynamic sector. It also has a key role in standard setting. Its ISO 20022 initiative to harmonise financial messaging is vital, but can the standardisation process keep pace with the change across financial markets?
SWIFT is in a unique position to show some real leadership as the sector faces significant uncertainty and change. We look for something substantive to come out of Singapore, but more out of hope than expectation.
Posted by Peter Roe at '10:11'
The city of Bristol is a member of a consortium with San Sebastián and Florence, which was awarded €25m through the EU’s Horizon 2020 innovation programme. The consortium - REPLICATE (REnaissance of PLaces with Innovative Citizenship And TEchnologies) will look to create solutions to tackle traffic congestion, poor air quality and unsustainable energy use. Collaboration is key to the city's ambitions.
Academics from both the University of Bristol and the University of the West of England (UWE) who have expertise in high performance networks, developing smart city concepts, citizen engagement plus intelligent transport systems will be involved in the project’s research and evaluation work.
Bristol is a hotbed of Smart City activity. Bristol City Council is bidding to become the UK’s first Internet of Things (IoT) Demonstrator city region (see Cities get £10m encouragement to get Smart). While Bristol is Open, a joint venture between Bristol University and Bristol City Council, is pioneering the introduction of smart city technology with sensors being linked to a high performance computers.
The smart city projects involve a wide range of private sector firms including NEC, Ernst and Young, GE, Atkins Global, Imtech UK, Esoterix Systems, Zipabout and Zuora.
Improving transport networks and the environment will have wide ranging benefits. Bristol’s ability to build consortia bodes well for Smart City and IoT projects to evolve from concepts to reality.
Posted by Michael Larner at '10:03'
Civica’s relationship with Gloucester City Council continues to flourish. The original seven year revenues and benefits partnership was signed in October 2011 (see here) and has saved the council around £200K per year by improving efficiency in processing benefits claims. Civica has also increased the authority’s council tax collections. The council envisages that the three year extension to 2021 will deliver an additional £100K in savings.
Civica has already grown its wallet share at the council. Last year Civica was awarded a six year contract to take over the running of the council’s IT services and retain the exisitng IT staff (see Civica expands Gloucester City relationship into ITO); responsibilities include the administrative, back office, transactional and corporate support processes. In addition Civica has set up a service centre with the Council, which is delivering services to almost 50 local authorities across the UK.
By delivering efficiencies, innovation and retaining jobs for clients such as Gloucester, Civica is successfully managing the conflicting pressures on local government SITS suppliers. As a result Civica is one of the fastest growing suppliers in our top 20 UK SITS Rankings 2015 on an organic basis.
Posted by Michael Larner at '10:00'
Video search and advertising technology provider blinkx is doing its best to adjust its portfolio to align with the shift to mobile in its market (see here) but it is tough going. Although today’s trading update indicates H116 will be in line with expectations, those expectations are not particularly reassuring.
Revenue is expected to come in at c$90m but with an adjusted EDITDA loss of approximately $7m. In the year ago period the company had the painful task of reporting how a healthy profit had crashed to a $11.9m loss (see here). blinkx has been rationalising its portfolio and investing in new products but the fruits are some way from ripening—the timeline for a return to profit is within the next 6-12 months. Cash is still looking healthy however, at $82m.
Revenue from programmatic trading is rising, but again in line with expectations, and the RhythmOne platform seems to be progressing. However, blinkx is still reforming and its final picture has yet to be defined.
Posted by Angela Eager at '09:08'
It’s a little unclear from today’s trading update whether AIM-listed business IT and communications service provider Alternative Networks actually ‘hit the numbers’ for the FY just closed (to 30th September) as management had predicted at half-time (see Alternative Networks: Robust H1, announces new CEO).
Each of Alternative Networks three divisions had its ups and downs in second half, and it’s hard to tell how they all net out. The only specific number reported was the reduction in net debt to £18.7m which looks good news. But we’ll have to wait till we see the ‘full monty’ results in early December to understand whether Alternative Networks was able to “maintain (its) growth trajectory and even accelerate it” as prior management expected, a statement that recently promoted CEO and industry veteran Mark Quartermaine did not reiterate.
Posted by Anthony Miller at '08:15'
November 5 TechMarketView's Chairman, Richard Holway, will participate in the Analyst Relations Forum in London. Richard will share his views on the future of the IT research industry and whether he thinks 'traditional' analyst firms need to evolve their business models to survive and thrive.
The AR Forum features a line-up of speakers from firms like Accenture, Wipro, Deloitte and many more, and welcomes a global crowd of AR professionals, analysts and c-level executives who get the value of IT analysts.
We have made special arrangements for a $100 (£65) discount to the event (with promotional code JoinTMV). Join TechMarketView there! Tickets and more information can be found at www.analystrelationsforum.com
Posted by Kea Company at '08:14'
European TMT deal flow in September bounced back from the August lull with 292 acquisitions announced, according to latest data from corporate finance firm Regent Partners. Trade deal valuation multiples remain stable with the Price/Sales ratio slightly up at 1.4x from 1.3x and the Price/EBITDA ratio up to 11.9x from 10.3x. Listed company valuations continued to be adversely affected by the general uncertainty in global stock markets with the UK TechMark index falling another 3% in September.
The bounce-back was very much in evidence in the UK software and IT services market, most notably with the news that Carlyle Group is to take a controlling interest in UK-headquartered management consultancy, PA Consulting (see here) in a deal which values PA at some $1b.
It was good to see a TechMarketView Little British Battler (LBB) on the international acquisition trail, with the purchase of South African software developer Attix5 by UK-based data backup and cloud services provider Redstor (see here). LBB’s are also proving popular targets themselves, witness the acquisition of specialist secure applications systems integrator Web Technology Group by public sector-focused Civica (see here).
There’s more besides, and subscribers to the TechMarketView Foundation Service can read our summary of corporate activity in the UK SITS sector each quarter in IndustryViews Corporate Activity.
Posted by HotViews Editor at '07:48'
AIM-listed Idox is acquiring the UK business of ‘digital consultancy’ Reading Room in a bid to accelerate the development of its new online platforms and support the improvement of the user experience in its existing products.
Idox, a supplier of document management collaboration solutions and services to the public sector and highly regulated asset intensive industries, is paying approximately £5.6m for Reading Room (minus its Asia Pacific subsidiaries) funded from its existing debt facilities. The business being acquired turned over c£9.8m in the year to end March 2015, reporting an EBITDA of c£0.3m, a loss before tax of c£0.1m and net assets of £1.4m. The valuation of 0.6x reported revenues and 19x EBITDA sounds about right. Reading Room will be fully integrated into Idox in the medium term and ‘synergies’ are predicted, so expect some cost cutting along the way from both businesses.
This acquisition feels more about transforming Idox’s own digital platforms than a move into strategic digital consultancy. Founded in 1996, Reading Room describes itself as a digital consultancy but its focus is on delivering websites and digital services ‘that enable its customers to make critical shifts into digital business and client engagement’. That said Reading Room comes with a pretty impressive client list that Idox will be keen to target. These include public sector organisations such as HMRC, the NHS and West Yorkshire Police, and large corporate including Skoda, Nationwide Building Society and Taylor Wimpey. However, it will be a while before we know whether the acquisition, a ‘major step in its strategy’ according to CEO Richard Kellett-Clarke, has the desired transformational effect on Idox’s business, which is yet to fire on all cylinders (see Contrasting performance at Idox and work back).
Posted by Tola Sargeant at '09:53'
London Local Enterprise Partnership’s (LLEP) decision to award Escher Group a contract to provide a digital communications platform reinforces Escher’s efforts to expand its customer base through the adoption of its RiposteTrEx technology.
LLEP’s platform will be known as the Growth Hub and is part of the Greater London Authority's plan to facilitate collaboration amongst local and national businesses. Growth Hub will provide London’s SMEs with a single point of reference for government and local business support.
The RiposteTrEx platform (which includes federated identity, secure messaging, license management and transactions services) is gaining acceptance in the market following Escher's wins at Ireland’s Local Government Management Agency (see Escher delivers Irish national contract) and The North East Local Enterprise Partnership (see Escher: growing the digital business).
While Escher provides the underlying technology, Browser London (a London based digital agency) will be responsible for the hub’s design. Tie ups such as this will be critical for SITS suppliers to deliver a compelling customer experience. Subscribers to ESASViews will have read about the potential influence of digital agencies in ESAS Supplier Landscape 2015.
LLEP will be another reference customer for Escher as it evolves from supplying point of sale software to being a provider of digital communication hubs. A win at a council should be the next priority for the company.
Posted by Michael Larner at '09:37'
It’s great for us to be able to watch the progress of our previous Little British Battlers. This week we have heard from cloud services provider Carrenza (see UKHotViews archive for more on the company) as well as from provider of Government-certified encryption services, Egress Software Technologies (also see UKHotViews archive).
Carrenza, which has provided the infrastructure for GOV.UK’s ‘preview’ operations since 2013 (see LBB Carrenza bags GOV.UK hosting contract), has announced that GDS has now moved the majority of GOV.UK’s ‘staging’ and ‘production’ environments to the Carrenza Cloud. This has been possible because Carrenza has, since the initial win, opened its second UK datacentre and achieved OFFICIAL security accreditations (see LBB Carrenza announces next step on Government journey). CEO & Co-Founder Dan Sutherland and new MD Matthew McGrory (who was previously Carrenza’s Sales Director) will be hoping to use the GOV.UK success as a foundation to grow the company’s public sector business. We will be catching up with Matthew in the next couple of weeks.
Meanwhile, Egress can now point to a client reference, which highlights how organisations can extend their usage of the Switch encryption services platform. TechMarketView readers may remember that Egress was founded as a provider of a secure email encryption solution (see Little British Battler: the Fourth Generation). However, it has expanded its offering over the years adding additional pillars of functionality, such as Secure Workplace, to the Switch encryption platform. Croydon Council has recently successfully expanded its usage of Egress Switch to meet additional secure communication requirements. In this case, having previously adopted Egress Switch Secure Email in 2011, the Council identified the need to automate the secure transfer of confidential files, including highly sensitive social care records. This is exactly the type of cross-selling that Egress aims to achieve across its client base.
Posted by Georgina O'Toole at '09:32'
London-based ‘talent mobility’ (i.e. employee relocation) SaaS startup, MOVE Guides, has secured a further $15.6m funding in a Series B round led by existing investors New Enterprise Associates and Notion Capital. This brings total funding so far to nearly $30m. MOVE Guides was founded in September 2011 and received its first tranche of angel funding in July 2012. New Enterprise and Notion led a Series A funding round in October last year (see MOVE Guides mobilises another $8m).
MOVE Guides plays to the enterprise HR theme which is surprisingly lively at the moment. Indeed to find out why this is so, can I commend you to our recent research note Six Reasons to Pay Attention to SaaS HR. Of course, you’d need to subscribe to our ESASViews research stream to read it, but this can be easily arranged for a most modest subscription fee by contacting email@example.com.
Posted by Anthony Miller at '09:19'
Almost exactly a year ago the rumour mill was buzzing with the prospect that Dell would make a play for storage giant EMC given that HP had apparently decided not to make a bid for the company and instead announced it was to split itself in two.
Well, the media is buzzing again with much the same story, which frankly makes as little sense now as it did then. While HP is in the process of partly ‘de-conglomeratising’ itself (IBM having started along that path rather earlier), Dell, it seems, wants to go back to the future and recreate itself as a soup-to-nuts IT systems vendor.
Dell’s acquisition track record prior to its $25b take-private by Silver Lake (see Dell ding dong done and dusted) makes bizarre reading, none more so than its $3.9b purchase of ailing IT services firm, Perot Systems back in 2009 (see Dell, Perot try the Texas Tango). There followed a number of software acquisitions, including the $2.4b deal in 2012 for IT management and security software firm, Quest (see Dell continues Quest for software growth) – all part of Dell’s bid to move from commodity PC hardware to become a purveyor of ‘enterprise solutions’. Hmmm.
By the way, this is not the only speculation around the future of EMC. For example, a couple of months ago there was talk of its 80%-owned software subsidiary VMware buying out the parent!
This is all just another sign of panic among ‘old guard’ IT players trying to make sense of ‘new world’ IT. Bulking up with other old guard players is really not the right answer.
Posted by Anthony Miller at '08:39'
A year ago, UK-headquartered international recruitment firm Hays kicked off its new FY (Q1 FY15) with double-digit growth in net fee income (NFI, i.e. gross profit) for UK & Ireland, and 22% growth in IT recruitment (see IT recruitment boost at Hays UK). But it was a rather slower start this year (Q1 FY16) with UK&I NFI increasing by 6%, within which IT staffing NFI still reached double-digit growth (11%). Across the group, headline NFI grew by 3% (8% like for like), just a tad slower than the prior year’s 4% (9% LFL) growth. Hays CEO Alistair Cox was sanguine about prospects for the year, seeing “generally consistent conditions overall”.
The slowdown at Hays was nothing really to frighten the horses, and was much in line with smaller peer Robert Walters (see FX keeps UK on top at Robert Walters), which nonetheless still achieved double-digit UK NFI growth.
Posted by Anthony Miller at '07:46'
Identity and credential management software provider Intercede Group has revealed that it has experienced strong revenue growth in H1, making continued progress with existing customers and signing a number of new contract wins.
Revenues increased by a not insubstantial 35% to £5.5m. Backed up by an enlarged sales and marketing team, the company has bagged a number of contracts in the US: an enterprise-wide contract with one of the largest US healthcare corporations, a mobile-derived credential solution contract with a major US federal agency and new agreement with a US West Coast bank.
Intercede had a tough full year 2015, during which revenues fell and the company swung into the red. More than half of Intercede’s business comes from the US and it is there that it was experiencing problems (see Intercede swings into losses). Today’s statement suggests that things have now turned around. Intercede now thinks it will meet market expectations for the full year (FY16 to end March); consensus forecasts are for revenues of £11.6m (which would be an increase of around 32%). But as Intercede continues to invest, for example in the recruitment and training of specialist technical professionals (the team has grown 10%), forecasts suggest a pre-tax loss of £0.2m.
Posted by Georgina O'Toole at '09:17'
It had looked like the worst of Adobe’s transition to the cloud and subscription model was over (see Adobe: SaaS transition over, journey just beginning); evidently it is not. Last night share slumped by up to 11% on the back of a profits warning, although they did go on to make a partial recovery.
Revenue for the year is forecast at $5.7bn vs. street expectations of $5.95bn, while pro forma EPS is forecast at $2.70 vs. expectations of $3.17. The company says that moving the rest of its major products to the new model will drop $100m from the revenue line in FY16, while FX rates will take another $200m out.
As we have said several times previously, Adobe stood out among the traditional software suppliers because it was managing the cloud transition well and we had thought the negative effects had done their worst and things were improving. It seems the cloud journey has met a bump in the road with a substantial rump of customers/products yet to make the move, a situation compounded by the FX issue. This should be treated as a bump rather than anything more serious however as its three year plan is promising and based on cloud process to date, looks achievable.
Posted by Angela Eager at '09:05'
Microsoft held a Windows 10 hardware fest in New York yesterday, where the star of the show was its first laptop, the Surface Book. This thin and light 13.5in touchscreen device with a detachable screen is a laptop first and tablet second and by all accounts competes with Apple’s MacBook and Air on design and outdoes them on performance.
The laptop was not the only actor on stage—there were new tablets, phones, and the new version of Microsoft’s fitness band, all designed for Windows 10. And that is the point because Microsoft is showcasing what can come about when the OS and hardware are designed together and when the devices connect together (via the cloud). Hardware and software in sync has worked for Apple and is partly why it is able to deliver a combination of beautiful design and cross device experience, which also enables it to set high price points. Microsoft was pushing the design and connected aspects yesterday, and experience is one of CEO Satyal Nadella’s guiding principles.
The company also will be hoping the Surface Book and other hardware will open up a fresh revenue stream in which hardware and cloud software sales reinforce each other. The Surface tablets have had a troubled time, including significant write downs on unsold stock, but have been picked up (see here).
Microsoft’s challenge is managing the relationship with PC/laptop manufacturers now that it is operating squarely in their market. Despite an element of mutual dependency, whereby Microsoft needs them to spread Windows 10 far and wide and they need Microsoft because there is no alternative high volume OS, the relationship will require careful handling. An explosion of Windows 10 applications to drive sales of all types of Windows 10 hardware would help smooth the relationship. Such applications are in short supply at the moment—maybe the pretty and powerful hardware paves the way for the higher sales that will persuade developers to take a fresh look at Windows 10.
Posted by Angela Eager at '08:32'
And why not a review site for professional services? That’s what Twickenham-based startup, vouchedfor is all about, and prolific tech investor Octopus Ventures thinks it has legs (so to speak).
To which end Octopus has led a $5.4m Series A funding round for vouchedfor, bringing the total raised so far to some $7.4m. Founded in 2012, vouchedfor received an initial £150k angel seed funding in early 2013, with follow-on funding in 2014 led by DN Capital along with Octopus and Samos Investments.
vouchedfor is transparent about its revenue source. The ‘How we make money’ section of its website explains that they charge professionals a small fee for each enquiry they receive through the website but makes it clear that these payments do not influence the user reviews.
It’s seems like a good idea and a nice, clean business model but of course needs scale if it has a chance to become real success.
Posted by Anthony Miller at '08:14'
Capgemini joins a long line of companies investing in Wales. Capgemini has had a presence in Wales since 1998 but it has now announced its intention to create another 100 “highly skilled jobs” over the next three years at a new application delivery centre in Treforest, South Wales. The company’s £17.1m investment over five years is being backed by £1.4m in Welsh Government Business Finance Funding. The site, opening in January 2016, is set to become the primary development site for Capgemini’s public and private sector contracts that require a UK-based centre to delivery security-sensitive projects.
Welsh Government Economy Minister Edwina Hart has done an impressive job of attracting inward investment. According to UKTI, 2014/15 was a record year; Wales attracted 101 foreign direct investments (FDIs) (up 27% on 2013/14), creating 5,085 new jobs and safeguarding a further 4,520. At TechMarketView we have written about a number of ICT companies attracted to Wales over the last couple of years. They have included CGI, which recently committed to creating 620 new jobs in South Wales over the next five years (see CGI cyber securing entry level jobs in Wales); First Source which announced plans to hire 300 people to support its largest customer Sky (see here); and Little British Battler Genfour which recently moved its operations to South Wales (see LBB Genfour moves to South Wales).
Hart highlights that there is a growing security cluster in South Wales and that the region is developing a strong reputation for expertise in the area. Companies are attracted by the skilled workforce as well as local universities and high performing schools from which to hire young talent. “Excellent” transport links also provide an advantage.
Posted by Georgina O'Toole at '21:54'
CGI has won a five-year £15m contract with Market Operator Services Ltd (MOSL). “Who?” we hear you cry (well, at least it’s what we initially said)... MOSL is working with DEFRA and regulator Ofwat as part of the ‘Open Water’ programme in the UK. The programme will introduce competition into the non-household water market from April 2017. CGI will design, build and operate a central market system, utilising its secure commercial cloud, to support the operation of the English Water market from that date. The system will facilitate interaction among all the participants (retailers and wholesalers).
The Telco & Utilities markets are target markets for CGI and account for 15% of global revenues. Though the UK has only had a small base of revenues to date (Government and Manufacturing, Retail & Distribution (MRD) dominate in the UK), we understand that the sector has performed strongly in the last couple of years. Tara McGeehan is the VP, Energy & Utilities for CGI UK, and has also been heavily involved in CGI’s Smart Meter contract as the DECC Data & Communications Company (DCC)’s data services provider (see Capita and CGI amongst smart meter winners).
CGI has significant experience in central market systems for utility markets globally. Most relevant, though, it that it has partnered with Bridgeall to develop and operate the central market systems for the world’s first competitive water market in Scotland. On this latest deal, CGI is once again working with Bridgeall; Bridgeall will deliver the subsystem that calculates the primary charges for water and waste services and allocates them appropriately. CGI also has transferrable IP. Its central market system has been implemented for the Danish & Dutch central energy markets and will be configured to meet the specific requirements in the English Water market.
Notably, McGeehan points to a “very tight timescale for delivering the system”. Sounds like it will be another good test for CGI’s Management Foundation, designed to keep a tight control on projects like this.
Posted by Georgina O'Toole at '20:37'
Advanced Computer Software (ACS) has appointed a new MD for its Advanced Business Solutions division. Nick Wilson joins Advanced from Capita to replace Dean Dickinson, who led the impressive growth of the Public Sector & Enterprise division after the acquisition of COA Solutions in 2010. The move follows hot on the heels of Advanced appointing a new CEO – also a Mr Wilson (see ACS has a new CEO) - and the company’s acquisition in March this year by private equity firm Vista Equity Partners for an enterprise value of £750m (see Vista set to take ACS private).
Nick Wilson has a strong understanding of the UK public sector and plenty of experience in outsourcing, which should complement CEO Gordon Wilson’s software expertise. Nick was most recently MD for Capita IT Enterprise Services’ Public Sector & Health business, which turns over some £90m. Prior to that, he was Director of Government, Space & Defence Outsourcing at CGI, where clients included University College Hospitals NHS Trust and Defence Medical Services. At Advanced he will be expected to continue to deliver strong growth from the Business Solutions division, which provides business applications and supporting managed services for customers in both the public and private sectors in the UK.
Posted by Tola Sargeant at '18:09'
England Rugby League (who as the name indicates plays league not the union game of the RWC) is tapping into Qlik Technologies visual analytics to help extract value from the mass of data it has on players, matches, competition, performance (and many, many more metrics).
It is using QlikView to provide visual insights into what the data means, which is then used to drive data driven decisions such as selecting the team that best matches the skills of the opposing team, and implementing the most effective training programme to prepare them for the specific match. One of the goals is to use QlikView in real-time to inform decisions about tactics and changes - which could generate interesting dynamics during half time. Read our take on visual analytics in Visual Data Discovery.
Sports analytics is emerging as a strong case study area for analytics and visualisation. 2014 football World Cup winner Germany says it benefitted from SAP technology, and Manchester City is also tapping into SAP analytics for player and match preparation. It was a contributing factor for Germany; lets hope it is as effective for England Rugby League (and could it find a place within other England teams)?
Posted by Angela Eager at '16:32'
Logicalis is stirring. A few short weeks after appointing Ben Gale to head up the UK operation (see Gale set to whip up a storm at Logicalis UK), comes the announcement that the Group has acquired Jersey-based Lekscom for an undisclosed sum.
Lekscom provides networking and collaboration technology services within the Channel Islands and has particular skills in Cisco technology and managed services.
Logicalis has made the acquisition to extend the capabilities of its Channel Islands business which is based on professional and managed services, but Lekscoms’s roster of blue chip customers that include “a number of highly important offshore clients” who bring “new and important customer relationships to Logicalis with significant annuity revenues” will have been just as attractive as it saw revenue dip c1% in FY15 (see here). Since then it has been taking action to reshape and reposition. This acquisition is not a game changer but it looks like it will boost revenue and provide access to a new set clients for cross sell purposes.
Posted by Angela Eager at '16:22'
When we first wrote about London-based Ometria back in March last year (see Mitchell & co get into a huddle with Ometria), we rather wondered whether the world really did need yet another retailer analytics startup.
Well, apparently the answer was ‘not quite’, so the founders did the proverbial ‘pivot’ thingy into a marketing automation platform and has since raised a further $2.5m in a funding round led by Inventure Partners, along with existing investors SaatchInvest, new investors Force Over Mass Capital, and various angels. Indeed Ometria’s investor list is rather extensive (see the newly enhanced TechCrunch database), including Huddle co-founders Alastair Mitchell and Andy McLoughlin. This brings the total funding raised so far to around $5m.
Founded in 2013, Ometria is far from the only game in town for marketing automation, but it’s good to see that it has its believers.
Posted by Anthony Miller at '09:45'
It was more the timing of the announcement that surprised, given that it was only two months ago that IGATE CEO Ashok Vemuri joined the Capgemini group management board subsequent to the company’s acquisition earlier this year (see Capgemini invites iGate CEO Vemuri to the top table). But now Vemuri’s off “to pursue other interests outside of Capgemini.” There was no news of a possible successor.
It’s pretty much par for the course for the CEO of an acquired company to move on in the fullness of time, but I didn’t think Vemuri’s time had reached its fullness just yet. To be sure, IGATE had been suffering a similar growth malaise to its Indian peers (see IGATE follows the crowd) but Capgemini management would have known that anyway. Methinks there’s another story lurking there somewhere.
Vemuri was recruited from Infosys to lead IGATE almost exactly two years ago after the less than glorious exit of prior CEO, Phaneesh Murthy (see iGate snaps up ex-Infosys exec for CEO job). A year later he brought across Srikanth Iyengar, previously Infosys’ UK lead and head of Financial Services in Europe, as SVP and head of Europe and Australia for IGATE (see iGate scoops Infosys exec to run Europe). Iyengar essentially took over from Derek Kemp who moved to lead IGATE’s global strategic deals team. As far as I know, both are still with Capgemini.
According to Capgemini CEO Paul Hermelin, the integration of IGATE is on track, though it’s not clear now which track that might be.
Posted by Anthony Miller at '09:21'
Amazon is expected to release an additional service for Amazon Web Services this week. Codenamed Space Needle, it will provide analytics capability to enable customers to make more use of the data they keep within AWS and Amazon will be hoping it will encourage more customers to put more of their data into the AWS environment.
This is a move into an adjacent area and one that takes AWS further up the application stack. It will also put it into contention with established analytics providers although we don’t yet know whether it will be offering advanced analytics that will stack up against the likes of IBM, or focus on the visualisation part of the market that Qlik Technologies and Tableau have laid claim to. As a user of advanced analytics, AWS certainly has access to smart technology. The question is what level it will be pitching its offerig at and whether its aim is to make it available as a tool for technical experts or an application accessible by business users.
Another question is the type of customer it wants to attract. Where heavy duty analytics is called for, it is advisable to locate the tool near the data (rather than move large chunks of data around). Customers who keep large volumes of business data on AWS via hosted business applications are an obvious target and would benefit from access to analytics tools, as would SMBs who are in general receptive to cloud based services for core business functions. However, the majority of large organisations still keep most of their applications and business data on-premise (see UK SITS Market Trends and Forecasts 2015 for our stats on cloud and SaaS revenue vs. the rest of the market) so at this point it is hard to see the immediate appeal from their perspective. The longer term AWS plan could be to make the overall offering more compelling through the addition of enough additional services, that larger organisations will move more of their data to AWS.
Space Needle is unlikely to be an immediate game changer in the analytics market but has the potential to be a disruptive force, particularly if AWS comes in with commodity-level pricing, so it bears watching.
Posted by Angela Eager at '09:14'
Virtually everything we do adds to the exponentially expanding treasury of data that exists about us and unsurprisingly many companies are building their growth strategies around exploiting this data.
Financial Services companies can now easily use this data to concoct financial products (formally “Packaged Retail and Insurance-based Investment Products”) that would be attractive to us to generate commission. Obviously, this practice has been done since Adam Smith was a lad, but with Big Data, automation techniques and the Internet, the potential scale of the business is huge.
Industry-wide competition, coupled with low margins and narrow spreads are already driving companies to use automated methods and Big Data algorithms to service customers, generate revenue and keep costs down. The greater fragmentation of individual investment pots adds to the difficulty of making a profit and to the attractiveness of using these techniques.
However, the collective European Supervisory Authorities overseeing the Financial Services industry (the EBA, EIOPA and ESMA, presiding over Banking, Insurance and Pensions and Securities Markets respectively) are looking to add some balance. Their workplan for 2016 includes the setting of limits in this area by building additional consumer protection.
Companies will therefore have to tread carefully not to overstep the (probably blurred) line between providing advice and over-selling. At the same time they will have to avoid mis-selling claims that could make the PPI fiasco look like a storm in a teacup. This will require comprehensive and timely audit trails, activity monitoring and regulatory compliance together with appropriate rules-based workflow management. Consequently there are substantial opportunities for SITS suppliers with the appropriate domain expertise and commercial nous.
FinancialServicesViews subscribers would have been able to read about this issue as early as July 2014, in “Hot Topics and Opportunities in the Insurance sector”.
Posted by Peter Roe at '09:03'
The weak euro knocked 10 points off gross profit (GP) growth on the Continent for UK-headquartered international recruitment firm Robert Walters last quarter (Q3 to 30th Sept.), slashing the 15% constant currency growth to just 5% at £11.4m as reported. As a result, UK remained the group’s fastest growing region, with GP up 14% to £21.5m. Overall group GP rose by 6% as reported to £60.4m, representing 11% growth in constant currencies.
Group GP growth was slower than in first half (see UK storms ahead at Robert Walters) though broadly in line with UK-based peer Harvey Nash (see Profits up at Harvey Nash despite currency headwinds). Robert Walters’ eponymous CEO sees the group set fair to make the FY numbers.
Posted by Anthony Miller at '08:22'
Last week's announcement from top ten UK business process services (BPS) supplier Equiniti, that it is to float on the London Stock Exchange, is a really good thing for the UK tech scene and UK BPS sector in particular.
Equiniti’s move will be the first such IPO we have seen in the UK BPS for a long while, and reflects the growing prospects within Equiniti's markets for Platform BPO, predominantly within the public and financial services sectors.
TechMarketView subscribers can read our UKHotViewsExtra analysis of Equiniti's prospects post IPO in Equiniti to float on LSE (update).
If you're not yet a subscriber, please contact Deb Seth (firstname.lastname@example.org) who will be happy to help.
Posted by John O'Brien at '08:12'
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Posted by HotViews Editor at '00:00'
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