In a sign that Unit4 has no desire to lose its significant momentum in the UK public sector market, the company has announced the appointment of James Bouch as Head of Public Sector Sales.
Bouch joins from BT where he was Head of Sales for BT Local Government Shared Services. In that role he would have had a lot of exposure to Unit4 and its Agresso ERP solution. Indeed, BT’s VP Local and Devolved Government, Paul Ringham, has been very vocal about about how positively BT views the Agresso solution over solutions from larger competitors. Supporting that view, Bouch talks about the ability of Agresso’s solution to be configured faster and at lower cost. Notably, BT partnered Unit4 when it won the London Tri-Borough contract (see Tri Borough IT services winners: BT & Agilisys).
Bouch will now attempt to leverage Unit4’s recent successes, which has seen the Agresso solution adopted by bigger public sector organisations, including ISSC1 in central government (see Arvato confirmed as DfT’s shared services provider), and BPO partners. At the same time, he will, no doubt, be expected to support Unit4 CEO, Jose Duarte, in his mission to get the Unit4 brand better known in the market (see Unit4: preparing to make its presence known).
Posted by Georgina O'Toole at '13:43'
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Genpact is bolstering its life sciences BPS practice with the acquisition of UK-based life sciences regulatory consultancy Pharmalink Consulting. Although terms of the deal weren’t disclosed, we can see from Companies House records that Maidenhead-based Pharmalink is a £14m revenue business employing 129 people.
Genpact has typically shied away from making big headcount expansion in the UK (see Genpact’s opportunities and challenges in UK BPS). While it certainly isn’t a major deal in terms of size for Genpact, it does show a willingness at least to begin investment into the UK.
From its most recent published accounts, Pharmalink appears to have been under stress. According to its last report for the year to April 2013, turnover was £13.9m, down 18% from £17m the previous year as a result of a large contract coming to its natural end. Pharmalink maintained double-digit margins at 12.9% in FY13 although these were also down significantly from 21% the previous year.
Pharmalink's overseas operations were badly affected - revenue here fell 30% to £6.4m. The UK business, which accounts for just over half the business was less affected with revenue down 3% to £7.5m.
Pharmalink operates as a global player in the life sciences regulation market, and employs staff in the US, the UK, India, Ireland and Puerto Rico. It clearly lacked the scale to operate across all of these markets successfully however. So being part of a much larger global player with significant life sciences consulting and outsourcing resources makes a lot of sense. Genpact for instance counts 10 of the top 25 global life science providers among its customers. Meanwhile, Pharmalink will add capability around Regulatory Affairs & Patient Safety with services like regulatory strategy, filing submissions, complex compliance services and the management of post-licensing activities.
Posted by John O'Brien at '13:41'
Lockheed has announced a win with Accountant in Bankruptcy (AiB), Scotland’s insolvency service. Lockheed will develop and support a new insolvency registration system aimed at streamlining service delivery, replacing AiB’s existing Multifunctional Insolvency Database Administration System (MIDAS) with the new Case Management Information System (CIS). The development phase is due to be completed in March 2015, with additional support continuing until February 2016. The contract was secured through Lockheed’s position on the Scottish Government’s Applications Web Development and Associated Services framework.
This contract is a good sign that Lockheed continues to work well with Amor’s customers. Readers will remember that Lockheed acquired Amor in September last year (see Lockheed acquires Amor). AiB was an Amor client, it had worked with the organisation for five years providing support services for MIDAS and, most recently, delivering a new on-line solution, ASTRA, used to register, advertise and process trust deeds in Scotland. This latest win indicates that the relationship continues to flourish under Lockheed.
Posted by Georgina O'Toole at '13:20'
It’s all go for Sopra on the acquisition front at the moment. No sooner had it announced the proposed acquisition of Steria (see Steria and Sopra in the UK and Atos makes a ‘friendly’ offer), than another announcement pops up. This time the acquisition is of a much smaller scale though; it is announcing the proposed acquisition of IBM France’s HR Access Service Line through its subsidiary Sopra HR Software. The acquisition price has not been disclosed. All being well, the deal is expected to finalise in July. The IBM business offers software, integration services, maintenance and outsourcing solutions for payroll and HR administration.
The acquisition fits neatly with Sopra’s strategic plan to expand its software portfolio. Software currently generates about 20% of Group revenues (see Mixed year for reshaped Sopra). Prior to the Steria news, Sopra had stated its aim to increase the proportion to 30%. Should the Steria merger go ahead, the proportion of combined revenues coming from 'solutions' and 'business process services' would be 25%; but again, Steria and Sopra have stated they would aim to expand that rapidly.
Adding IBM France’s HR Access service line into the fold would also support the Group’s desire to accelerate the deployment of its strategy for HR Solutions. In a similar deal finalised in April last year, Sopra bought Madrid-headquartered Europe-centric HR Access from Fidelity Investments (Fidelity had acquired the business from IBM – again for an undisclosed sum – in 2003) - see Acquisitions bring massive margin boost to Sopra UK. So, Sopra will certainly have a good idea what to expect from this latest acquisition. Annual pro-forma revenue of Sopra’s HR Solutions business would total c€150m in 2014 should all go to plan. If the Steria deal goes ahead too, that would give a further boost to Sopra's HR business, potentially enabling it to rollout its solutions to a broader range of geographies.
For IBM, sell-offs are generally a part of IBM's strategy to focus on business that provides best growth and margin prospects. We doubt this is any different. Though IBM consistently invests in its HR software and SaaS business, for example with its Kenexa SaaS acquistion in 2012, it has made little mention of its HR outsourcing business.
Posted by Georgina O'Toole at '09:46'
GB Group plc, the AIM-listed identity intelligence specialist, has announced another acquisition, of DecTech Solutions of Australia, to expand both into new territories and into new product areas. GB Group is paying £14.3m up front (up to a total £20.5m if targets are met) for this provider of fraud detection, credit risk and customer management solutions. DecTech returned £5.8m of revenue with a 15% operating margin in calendar 2013.
This deal gives GB Group a presence in the growing markets in the Far East and Pacific Rim and additional portfolio in real-time analytics to support GB Group’s existing portfolio. The continued growth of on-line and mobile commerce, the rising tide of regulation and the use of the cloud and data analytics are all driving greater demand for identity verification services which are at the centre of GB Group’s propositions.
GB Group is no stranger to growth by acquisition as this move follows on from the two deals to build a substantial position in criminal records disclosure (see our July 2013 HotView) and 3 deals in 2012. The move does however introduce new and potentially significant challenges as it brings with it overseas customers (particularly Korean banks) and operations. So far GB Group’s customer list and operations have been predominantly UK-based. The company has consequently announced that it will second some senior staff during the implementation process, planning to recruit additional sales and business development staff as well as a CFO to support the DecTech top management.
To part-fund the acquisition, GB Group is placing a further 8m shares (c.7% of the share capital), raising £11m. The management expects the deal to be earnings accretive within a year. A positive move by GB Group to expand its international credentials in a truly global, and growing market.
Posted by Peter Roe at '09:38'
Citrix delivered a strong Q1 (to March 31 2014) but the effects of the increasingly competitive environment are apparent so the outlook for Q2 is more muted and below market expectations.
It experienced growth in all geographies and across its core businesses of mobile and desktop, cloud networking and SaaS, resulting in revenue up 12% to $751m. Net profit was down from $60m to $56m however, due in part to a $10m restructuring charge. Revenue from product and licenses was up 7% to $207m indicating on going demand for virtualisation and mobile products; license updates and maintenance revenue was up 9%. SaaS revenue, which includes its online collaboration products, rose 14%, which is solid but not outstanding and reflects increasing competition around cloud services.
Citrix committed heavily and fairly early to mobile and cloud services and this strategy has served it well over the past few years. On going change is needed to keep up with market and competitive developments and Citrix is acting on this but it comes with a financial cost. Further change is likely as a result of the previously announced decision by CEO Mark Templeton to resign within the year. Evidently, the interview process for the new CEO has started so it may not be too long before the next stage of Citrix’s evolution begins.
Posted by Angela Eager at '09:33'
An update from management on the performance of Computacenter for the current year so far (from 1st January) indicates the period has started well for the UK business. Revenue here increased 20% to £350.4m in Q1. Supply Chain (i.e. resale) revenue was up 27% to £233.3m, with services revenue growing 8% (to £117.2m). There have been positive performances in both Professional Services and Contractual Services (i.e. managed infrastructure services contracts). The former currently has “the strongest … order backlog in the history of our UK business”. Computacenter also says there are a number of “very significant Contractual Services bids that are expected to reach a conclusion over the next few months”. These contracts are the key element of Computacenter’s recurring revenue base, and of course essential to revenue growth.
The UK business has been consistently outperforming the other geographies for a period of time. In Q1, revenue in France grew 10% to £114.7m, masking a revenue decline in the services business of 5% (something Computacenter hopes to rectify in the “medium term”). In Germany, revenue was down 2% to £267.7m, with services up 2%. At the Group level, total revenue increased 9%, with Group services revenue up 4% and Group supply chain revenue up 12%.
Certainly for the UK this is a strong start to the year. But where will growth come from in the longer term? Subscribers to the InfrastructureViews research stream (covering the Infrastructure Services market and supplier landscape) can read this recently published piece examining Computacenter’s future growth plans: Computacenter outlines "growth plays".
Posted by Kate Hanaghan at '08:29'
Mumbai-headquartered offshore services firm Mastek closed its FY (to 31st March) with improved EBITDA margins of 10.8% vs 9.6% the prior year, although headline operating revenues barely moved (+1%) at Rs9.23bn (c.$150m), a near-7% decline at constant currency.
This has been a difficult year for Mastek, though with some notable successes in the UK (see Mastek scores home run at Home Office) which contributes almost half of the company’s revenues.
As usual, we'll have much more to write about the India-centric IT services players – including their UK performance – in the next edition of OffshoreViews.
Posted by Anthony Miller at '08:20'
An interesting research study regarding the state of Big Data initiatives in business has been published by analyst firm The Information Difference. The study, sponsored by Teradata and helpIT systems, contains some interesting (and surprising) stats. For example: how many companies have actually implemented Big Data technologies, and in what areas; how much money and effort are organisations investing in it; what areas of the business are driving investment; what benefits are they seeing; and what data volumes are being handled?
Respondent feedback indicates scepticism about the business case, viability, and practical implementation of Big Data. There does not appear to be a dominant reason for implementing Big Data projects, but the focus is on improving the quality of decision making, followed by meeting customer needs – customer data is the most significant domain for most organisations.
Steve Tootill, CEO of helpIT systems, commented “The Big Data tools now on the market are virtually all serving analytic functions. To make Big Data more actionable, the enterprise needs to mine and link customer data with Big Data – to do this intelligently and efficiently, scaling to huge volumes, is a real challenge for Data Quality tools vendors.”
Click here to read the whole research.
Posted by helpIT at '00:00'
Whichever way you look at it, Facebook’s Q1 results were stunning. Revenues were up 74% at $2.5b with revenue from mobile now accounting for 59% of that total. This is where Facebook has really scored. Profits tripled from $219m to $642m yoy and EPS doubled - that is no mean trick either.
On the eyeballs front, active monthly users were up 15% at 1.3b – or roughly a half of the eligible world’s internet users. A billion now access via their mobiles. Over 800m use Facebook everyday. Once you get to that kind of mass, it is difficult for others to dent your business.
But, as we all know (see Apple below), keeping up ‘stunning’ results year after year, as the numbers get really big, is a near impossible task. Facebook has made some big – and very expensive – bets in the last period. In particular the $19b acquisition of WhatsApp. If it can make WhatsApp work like it has made Instagram work, then maybe Facebook will continue that ‘stunning’ performance for the time being at least. Certainly the market is expecting that with Facebook shares recovering all of the ground lost in 'the great tech sell-off' of the last month.
Posted by Richard Holway at '23:24'
Apple has just announced a rather pleasing set of results for Q2 to end March 14. The markets were expecting the first ever decline in revenues and indeed one commentator this morning said that expectations were so low that Apple could not disappoint!
As it turned out revenues grew 5% to $45.6b yoy – ahead of the $43.5b expected. iPhone sales surged by a massive 17% to 43.7m – compared to the 38m analysts had expected. Looks like sales in China have boomed rather contrary to what the doomsayers had said. Apple also claimed to have boosted market share in the UK, Canada, Germany and Japan. Margins of 39.4% were recorded – again ahead of expectations. But iPad sales declined 16% to 16m; below the 19m analysts had expected. Still, that's 210m sold since launch in 2010. iPod sales slumped 56% qoq to just 2.8m. Not really surprising though. I hardly ever use my iPod anymore.
Corporate news included an 8% rise in dividend, a $30b share buy back programme (funded by debt raised outside the US apparently) and a seven-for-one share split. Share splits always seem to lead to share price rises for some unfathomable reason. Anyway, Apple shares are up 8% in after-hours trading in another boost to the Holway Portfolio.
As I said, these results were ‘pleasing’. But Apple still needs a new product genre or two to get back on a growth track. It hasn’t announced anything really new since Steve Jobs ‘shuffled off this mortal coil’. We are promised new products before the end of 2014 with the iWatch the favoured NBT. But whether it will take off or produce profits in the way that Apple’s other products have in the past is a very tough ask.
Footnote – In my post this morning on ARM (See ARM forecasts ‘significant progress’) I ended saying “ARM chips are used extensively in Apple products so it will be interesting to see Apple’s Q1 results tonight ‘after the bell’ as an important ‘read across’ to ARM’s future outlook”. ARM shares had declined 2.75% today. It will be interesting to see how they react tomorrow on news of these stellar iPhone sales…
Posted by Richard Holway at '22:52'
Workforce optimisation (WFO) specialist AOMi is not wasting any time putting its expansion plans into operation following its recent £5m funding and heavy weight additions to the board (see here and here). It has acquired Irish-based WFO provider RedOwl Technology. RedOwl ticks several boxes for AOMi – accelerating growth, adding new talent, expanding the portfolio, and opening up new areas (field force optimisation) and sectors (utilities).
Terms of the all-share deal were not disclosed but it looks like an easily digestible acquisition – RedOwl founder and CEO Julian Harper says RedOwl’s user footprint is north of 10% of AOMi’s base. Harper will take the role of chief commercial officer – the rest of the RedOwl team will be retained too. His role will be to help put WFO in front of C-level executives as well as line of business managers with a proposition based on business performance change - via a consulting-style optimisation method supported by software to enable the optimisation of business operations.
AOMI’s recent moves are a step-change. WFO is a very niche market and viewed as a tactical solution. By stressing the business change impact to higher-level execs, AOMi is looking to establish WFO’s strategic credentials but changing perceptions will not be an easy task. However, as AOMi co-founder and chief knowledge officer Neil Bentley told us, the company is offering more than technology – it brings an optimisation method plus a top-to-bottom WFO stack – centralised top down planning from RedOwl plus front line bottom-up/tactical planning and control from AOMi. That does provide the basis for more of a strategic play.
Workforce optimisation is attracting more vendors because it is an area of underinvestment but that means vendors have to differentiate themselves. AOMi is putting some space between fellow UK WFO player eg Solutions, who is focussing on back-to-front office optimisation. Differentiation can only help both players, and separate them from non-UK players like Verint Systems and NICE.
Posted by Angela Eager at '12:02'
Today, CEOs from the twelve companies selected to participate in our fourth Little British Battler Day (see Little British Battlers – the Fourth Generation for the list) are coming to London to meet the TechMarketView team and discuss their achievements, challenges and aspirations for their businesses.
We will be publishing highlights of each company in UKHotViews in coming weeks and will we publish a more detailed analysis of the companies in our next Little British Battler report.
Because today’s event sees the entire TechMarketView research team out the office from the crack of dawn, there will be a limited UKHotViews service this morning. But fear not - we will be back tomorrow as usual talking about the things that really matter in the UK IT scene.
Posted by HotViews Editor at '07:40'
ARM has reported a 9% profits rise in Q1 to £97.1m on revenues up 10% at £186.2m. Indeed because of the $/£ exchange rate, revenues in dollars was up 16% at $305m.
Processor licence revenues were up 35%. Indeed ARM signed 26 processor licences in Q1 across multiple end markets from mobile computing to enterprise networking and chips for Internet of Things devices.
ARM always reports a drop in demand in Q1 but was looking at positive indicators for an improving environment in the second half when 'significant progress' is expected..
Footnote – ARM chips are used extensively in Apple products so it will be interesting to see Apple’s Q1 results tonight ‘after the bell’ as an important ‘read across’ to ARM’s future outlook.
Posted by Richard Holway at '07:35'
New Jersey-based (though India-centric) offshore services firm Cognizant has dipped its toes into the digital video pond with the acquisition of Atlanta-based itaas. Terms were not disclosed but itaas only employs around 200 staff in North America and India, so we can’t be talking big bucks.
Cognizant is one of the most acquisitive of the offshore brigade, concentrating mainly on small fill-in deals. Itaas does development, integration, testing and support for the TV and wider video industry, with solutions that of course encompass mobile platforms too. Looks like another canny buy.
Posted by Anthony Miller at '07:30'
Sanderson has issued a positive trading update this morning. Results for the six months to 31st Mar 14 show underlying revenue growth of 20% to £7.9m. This was manly due to the acquisitions of Catan Marketing in Aug 13 (See Sanderson builds out in ecommerce) and One iota in Oct 13 (See Sanderson cares more than one ioto about multi channel). Without those acquisitions underlying revenue growth was 4%. Profits (‘before all the other stuff’) was up 20% at £1.2m. Our love of cash as a measure was rewarded with an increase in cash balances from £4.5m to £5.0m yoy
Going forward, Sanderson ‘has detected some improvement in business sentiment from its customers’. It reported a large order book (£2.46m compared with £1.58m last year) for delivery in H2.
Sanderson has been part of the ‘Holway Portfolio’ since their IPO in 2004.
Posted by Richard Holway at '07:28'
The Race for Change: An Evening with TechMarketView
Date: Wednesday 17th September 2014
Time: 18.00p.m. – 23:00p.m.
Venue: BAFTA, 195 Piccadilly, London W1J 9LN
Join TechMarketView’s analyst team at the annual TechMarketView Presentation & Dinner on Wednesday 17th September 2014 to hear how the ‘Race for Change’ is impacting all areas of the UK software, IT services and business process services market. Last year’s inaugural event was a huge success and this year’s promises to be an equally high profile date in the UK tech calendar.
Whether you’re a supplier of software, IT or business process services, an investor in the sector or an end-user of SITS services, the insight and analysis provided by TechMarketView will prove invaluable as you plan for a future in a world that is changing rapidly. Learn more about trends such as the rise of the data driven business, the advent of business process automation or the era of wearable computing, and hear firsthand which suppliers we think will be the winners and the losers in 2014 and beyond.
The evening will kick off with presentations from TechMarketView’s analyst team, led by TechMarketView founders Richard Holway MBE and Anthony Miller. Throughout the evening you’ll hear the candid views of TechMarketView’s experts on software and application services, infrastructure services and business process services, and get an update from our well-respected UK public sector and financial services SITS market analysts. You’ll gain insight into what’s really happening in the UK SITS scene and the implications for your organisation in the years ahead.
After an opportunity to quiz the speakers and mingle with your peers at a drinks reception, sit down to a sumptuous dinner in the magnificent surroundings of BAFTA in Piccadilly to continue the debate and network with senior colleagues from across the UK SITS sector. The audience is set to include CXOs and senior managers from a broad spectrum of suppliers and end users in the sector, including public sector organisations.
Tickets cost £395+VAT for TechMarketView subscription clients and £495+VAT for everyone else.
Last year’s event was a sell out, so don’t miss your chance to be there in September 2014.
Reserve your place now by clicking here or by contacting Tina Compton at techUK who is organising the event for us (email tina.compton@techUK.org).
Posted by HotViews Editor at '07:00'
Management at Hampshire-headquartered buy-and-build insurance business process services player Quindell came out with all guns blazing this afternoon to refute claims about alleged financial reporting irregularities published by research firm Gotham City Research. Quindell’s shares plummeted by 39% on the news. Quindell founding CEO Rob Terry said the company was seeking legal advice and will issue a more detailed response later this week.
Gotham City, according to its website, ‘focuses on due diligence-based, special situation investing. As of the publication date of our articles, we may have long or short equity positions in the companies covered’. One can only speculate on which way it might have placed its bets in this case. The company has since tweeted its response to Quindell’s rebuttal thus: “We find Quindell's response (unsurprisingly) lacking in details. We also find their response defamatory to the Gotham City Research brand.”
In my recent post on Quindell’s FY results (see Quindell proving its point) I repeated my mantra that ‘the truth is in the numbers’. Of course, this assumes that the numbers are true in the first place. And on this point I am in absolutely no position nor qualified to comment. Gotham City evidently believes it is.
Posted by Anthony Miller at '22:22'
We are seeing more enterprises with the desire to make better use of their data. The obvious uses are improving decision making as a route to competitive gain, reduced risk and plain old (but still valuable) cost-saving internal efficiency. But there is also a growing appetite to ‘productise’ data so that it can become a revenue driver in its own right. These requirements are the background for the emerging class of data driven applications (DDAs) that extract the value from complex Big Data sets and make it intelligible and actionable across enterprises.
Both types of use cases dangle the prospect of new revenue so are attracting the attention of established ESAS suppliers. But they are also drawing new types of vendors close, from data-owning telco’s and financial services companies and non-IT organisations with data assets they want to exploit, to marketing and digital agencies well versed in exploiting data. Established ESAS providers cannot assume they will be the recipient of DDA investments.
The latest research from ESASViews, Does the market need Big Data driven applications?, looks at this emerging area, how the market is structured in terms of suppliers, and provides insight into how two of the established application services providers – Atos and CGI - are approaching the opportunity. Our view is that DDAs are low revenue currently but strategically important because of their impact on Big Data adoption, the types of services ESAS providers need to think about providing, and how they need to build resources and go-to-market models. TechMarketView ESASViews subscribers can click here to download the report. If you have not subscribed to this forward-looking research stream as yet, Deborah Seth will be happy to help.
Posted by Angela Eager at '18:33'
After announcing the retirement of Services president Lynn Blodgett last month (see here), Xerox has now missed its services revenue target for Q114 and seen a further drop in operating margin.
Services revenue was flat at $2.9bn (against an expectation of 1% growth) and operating margins fell almost 1 ppt to 8.6%, despite efforts from its ‘5-plank’ services strategy’ to cut costs (see Xerox services goes into reverse (update)). Like the previous quarter, BPO was the problem, with revenue down 2% to $1.77bn due to the continued run off from the discontinued US student loan contract. Document outsourcing and ITO helped however with revenue up 4% and 1% respectively.
Services signings are a good indicator of future performance, but unfortunately, here things look really bleak. Total contract value (TCV) of new signings was down 20% on the same period last year at $3bn. BPO, the biggest part of the services business, was down 25% to $2.1bn, meanwhile DO was down 18% to $650m. The single bit of good news was from ITO, where signings almost doubled to $200m, due to Xerox benefitting from the Affordable Care Act (Obamacare) where it won a number of new IT services contracts in the quarter.
ITO is such a small percentage of the services mix though (13%) that even better progress here won’t stem the declines in BPO and DO. Indeed Xerox is predicting services to be down 3% in FY14, and a mid-single digit decline in the heritage technology business. Restructuring looks set to continue in 2014. What’s really needed is root and branch change.
Posted by John O'Brien at '17:08'
Many congratulations to Postcode Anywhere founding CEO Guy Mucklow who will be off to Buckingham Palace to receive the Queen’s Award for Enterprise Promotion for his voluntary work in promoting enterprise in Worcestershire and beyond.
Mucklow also leads the SME Forum (and is my fellow board member) at industry association techUK and is also involved (along with our very own Richard Holway) with the Code Club, an excellent ‘not-for-profit’ network of volunteer-led after school coding clubs aimed at giving 7 – 11 year olds the chance to learn how to code.
A richly deserved award indeed.
Posted by Anthony Miller at '16:31'
Colt has updated the market on its performance for the three months ending March 2014. At constant currency, revenue increased 1.2% to €399.8m, compared with a decline of 0.7% in Q1 of last year. Across its four business lines, the performance was mixed. Data Centre Services grew 8.1%, reversing last year’s decline of 3.4%. Voice Services revenue was all but flat (0.8%), but nevertheless better than 2013’s 4.6% decline. Meanwhile IT Services revenue grew 15% (up from 4.3% last year) – although this was largely due to increased levels of equipment sales. Network Services registered a flat performance (0.4%), down from last year’s growth of almost 2%.
Notably, the EBITDA margin reduced from 20.5% to 18.5%. A number of factors contributed to this, including changes in the product mix. For the full year, Colt expects EBITDA (before restructuring charges) to be c5%-10% below current consensus estimates of €325m.
Colt faces the significant challenge of countering slower growing and/or lower margin business with revenue that is stronger growing and/or more profitable (Colt FY13 flat in a “challenging year”). Solving this is neither straightforward nor painless. The company is currently undertaking a strategic business review and has today announced it will reduce its carrier voice business to free up capacity for more profitable enterprise business. It says this will improve Group profit margins over the next few years but will result in the loss of c€175m in annualised revenue. The second half of the year will also see some “workforce restructuring” – with benefits to profitability expected to flow through in 2015. Colt is certainly feeling the pain of challenging market conditions and a complex transformation process. The question is whether 2015 will see more gain than pain.
Subscribers to InfrastructureViews and our Foundation Service can read this recent research note on Colt: The IT services piece in the Colt growth puzzle.
Posted by Kate Hanaghan at '09:28'
London-headquartered mapping app developer Citimapper has scored $10m in a Series A funding round led by Balderton Capital, along with other VCs and ‘angels’. The app is currently live in London, New York, Berlin and Paris. I must admit to using the app and it looks pretty good to me. Just need them to add Sao Paulo to the list.
Posted by Anthony Miller at '09:22'
Mumbai-based offshore service leader TCS is to boost its presence in Japan through the creation of a joint venture which merges together its existing Japan businesses with IT Frontier Corporation, the IT ‘captive’ of Japanese industrial giant Mitsubishi Corporation. TCS will own 51% of the JV. TCS had previously created a JV with Mitsubishi Corp (Nippon TCS Solution Center Limited) which served as TCS’ ‘nearshore’ delivery centre in Japan. The new entity is expected to generate revenues of $600m p.a., a drop in the carp pond compared to TCS’ $13.4bn global revenues (see here).
Frankly I say ‘ganbare’ (go for it!) – though as I am sure TCS will have already found out, an Indian company doing business in Japan brings new meaning to the term ‘culture clash’.
Posted by Anthony Miller at '08:05'
I was interested to read in the FT (See - Nike’s FuelBand runs into trouble) and many other media that Nike is set to abandon its Fuelband ‘wearable technology’. The reports suggest that Nike will in future concentrate on Apps rather than hardware.
HotViews readers will know of my enthusiasm for ‘wearable technology’ but also my view that none of the current products fits the bill. All seem to be ‘one device – one application’. Whereas what is needed is ‘one device – many applications’. I envisage a wearable device (most likely a wristband) with multiple sensors covering heart monitoring, sweating, blood analysis, movement, positioning (eg whether the wearer has fallen down) and as many other sensors as is viable to fit into something the size of a watch. The market will then be opened up to App developers (now, clearly including Nike) who will give us a wondrous array of applications.
I see alerts of impending heart attacks (as in my much used example of the doctor calling you to warn you that you are about to have a heart attack and "the ambulance is on the way") all the way through to whether your old Mum has taken her daily dose of pills or has fallen down the stairs.
This is the great white hope for any Apple iWatch product launch rumoured for later this year. Could just be the breakthrough wearable technology product we have long predicted
Posted by Richard Holway at '06:58'
Bangalore-based offshore services major Wipro closed its final quarter for the year (to 31st March ’14) with its best operating margin in almost four years, at 24.5%. This came on the back of 8.5% yoy revenue growth to $1.72bn, 2.5% higher than the prior quarter. The Q4 result set Wipro’s FY revenues at $6.62bn, 6.4% higher than FY13, and a faster rate than the 5.0% growth in the prior year. FY operating margin was 22.6%, almost 2 points higher than FY13.
While these results are unlikely to set knees trembling at Wipro’s India-based peers, there’s nothing either that would give them succour. The real challenge is whether Wipro can reclaim share in FY15 in an offshore services market that industry association Nasscom forecasts will grow by 13-15%. That looks like a tough ask.
Posted by Anthony Miller at '19:19'
Eligible TechMarketView subscription service clients can download IndustryViews Corporate Activity Q1 2014 to read our regular summary of the UK software and IT services corporate activity scene.
Posted by HotViews Editor at '18:01'
It was another stonking quarter for Noida-based offshore services major, HCL, with revenues (to 31st March) up 14% yoy to $1.36bn, a 3% uplift qoq. HCL also recorded its best operating margin for over a decade, at 24.6%, yet again beating that of Infosys (see Infosys – too early to call a trend), the once seemingly unchallengeable margin leader.
As usual, we'll have much more to say about the India-centric IT services players – including their UK performance – in the next edition of OffshoreViews.
Posted by Anthony Miller at '11:30'
London based cross-border payments as a service company, The Currency Cloud has just raised US$10 million from a consortium of venture capital companies, further emphasising the rate of change and potential growth offered in this area of the payments market.
The Currency Cloud provides a platform-based payments engine to help customers benefit from automated processing and reduce complexity in sending payments around the world. Customers include payments firm TransferWise, Fidor Bank as well as e-commerce customers and remittance transfer companies such as azimo.
Cross-border payments is an exciting area, attracting lots of capital and offering growth, as international payment flows are boosted by cross-border e-commerce, an increasingly mobile workforce and growing global trade.
We have already written about this dynamic market in our HotView “There’s money in remittances”, and Earthport, the cross-border payments provider with its focus on banks, features in our recent report “Finding the winners in UK Payments”. Facebook is also reportedly targeting the remittance market, see here. The Currency Cloud is yet another interesting player – we will watch with interest.
Posted by Peter Roe at '10:32'
It’s only Q1 14 but SAP looks like it is in for a bumpy year. It is already facing up to the turbulent transition to more of a subscription business model (it had previously pushed out its operating margin targets from 2015 to 2017 because of its cloud shift – see SAP prioritising cloud growth over margins) and today it warned that a strong Euro had impacted Q1 and would hit Q2 as well. Shares fell nearly 4% on the news.
On an IFRS basis, total revenue was up 3% to €3.7bn. Operating profit was up 12% to €9723m and the operating margin expanded from 17.9% to 19.5%. Both were lower on a non IFRS and cc basis but still positive - up 7% and 0.1pp respectively. IFRS net profit was €534m. As an indication of the currency headwinds, on a non-IFRS and actual currency basis, operating profit was up 2% to €919m. SAP says the currency effect will be worse in Q2. The increase in operating profit indicates SAP is keeping tight control on costs, despite acquisitions and the inevitable rise in operating costs that are part and parcel of the SaaS model. Operating cash flow was €2.35bn, a 9% increase, again showing strong control.
Cloud revenue is growing – it was up 60% but that only took it to €219m (€167m and 38% growth non IFRS and at constant currency) although annual billings were up 36% reaching an annual run rate of c€1.1bn. Licence sales are waning as a consequence - software revenue was down 5% to €623m (-5% to €657m on a non IFRS and cc basis). There were no revenue figures for HANA, just customer numbers (3,200 for HANA, approaching 1000 for Business Suite on HANA, although with no detail in terms of revenue/growth and the extent customers are using HANA these numbers are not very meaningful). There was no mention of mobile progress, which along with cloud and HANA is a one of SAP’s growth engines.
Overall it was a workman-like set of results, with notable pain points, that points to the extent of change to come. If SAP can keep control of costs it will maintain the confidence of the market
Posted by Angela Eager at '10:00'
It’s certainly nice to know they’re all friends in France. Atos management confirmed this morning that they had made a ‘friendly offer’ to buy Steria at €22 per share cash, just ahead of the announcement of Sopra’s ‘friendly offer’ to buy Steria (see Steria & Sopra - a very French rendezvous) in an all-share deal which the companies presented as having the same face value though, according to Atos, the market had assessed at somewhere between €18-18.50 per share. Atos’ offer will remain on the table until the Sopra EGM that would ratify the Steria acquisition. Atos management said “we will not make any other move towards Steria … as Atos will always keep a friendly approach”. Only the French!
Meanwhile, Atos reported its Q1 performance (to 31st March) which saw group revenues slip by nearly 2% like-for-like to €2.06bn. Atos UK was once again the growth leader at +1.6% to €396m; every other geo unit went backwards.
I’ve just had a long chat with Atos UK CEO Urusla Morgenstern and will write more about the changing shape of Atos UK in UKHotViews Extra later.
Posted by Anthony Miller at '09:55'
IBM’s Q1 figures failed to alleviate concerns over the company’s transformation to a higher growth/margin business focused on cloud, Big Data, analytics, social, mobile and security. (See our 4Q comment here)
Reported revenue was US$22.5 billion, down 4%, but down only 1% when adjusted for currency and the customer care outsourcing divestment. Net income fell 21% to US$2.4 billion (GAAP), hit by a US$870m “workforce rebalancing” charge, but boosted by $100m profit on the customer care divestment. Gross margin rose by 90bp to 47.6% (non-GAAP).
IBM’s portfolio-rebalancing is furthered by the sale of its standard server business to Lenovo, see here, but hardware sale remain under pressure with a 40% decline in mainframes and 20% declines in Power Systems and Storage. IBM expects investment in more powerful servers (POWER8) and in the OpenPower development alliance to slow this decline in later quarters.
The Software business was up 2%, despite the hit in operating systems as hardware sales declined. The key middleware offering, Websphere, was up again, by 12% and mobile software business doubled.
Global Technology Services grew 2% (adjusted) and IBM is relying on the US$1.2 billion investment in expanding the Softlayer cloud footprint, the introduction of BlueMix platform as a service, and the acquisitions of Aspera, see here, and Cloudant, see here, to boost credentials and revenue in its sub-scale cloud and big data businesses. Global Business Services was flat year-on-year but the Digital Front Office business pushed Consulting revenue up by 5%.
Progress is further hindered by large revenue declines in its “growth” markets, particularly China and Asia ex-Japan, with little sign of a near-term improvement.
IBM pushed hard in Q1 in its Race for Change, but it will take considerable time, and patience, for it to achieve its transformation goals.
Posted by Peter Roe at '09:46'
blur Group has released another (see Blur blurs the numbers) year-end update for FY13, indicating that revenue will be in the $5.3m to $5.6m range (FY12: $2.8m).
The company runs a platform where buyers can submit briefs for a variety of business services (e.g. legal, marketing, design, advertising, IT) for which suppliers can then bid. blur’s technology also helps buyers to select the best ‘pitch’ and then manage the invoicing and payment process. However, the company says that projects submitted to the exchange are getting larger and increasingly complex, which is extending the buying timeline. This means that revenue previously expected to drop in FY13 will now be recognised in FY14 (“and beyond”).
While FY13 revenue looks like it will almost double, bookings in the period leapt 825% to $22.2m. The first quarter of FY14 has seen “high growth” in both the volume of projects submitted to the exchange and average project values. The total value of projects submitted in the first three months of the new financial year was $73.7m, up from $3.89m in FY13 and $1.86m in FY12.
The growth curve in volume and value of projects submitted to blur’s exchange is notable. However, we’ll have to wait for the full release of FY13 results in May to learn more about the progress of the profit line. The company has previously said that it expects to be able to turn the business into profit in 2015 and reach margins in the high-20s by 2020.
Posted by Kate Hanaghan at '09:14'
There’s no change at WANdisco so far in Q1 – but that’s a good thing because it means bookings are still heading upwards at a strong rate. They were up 40% yoy to $4.2m in Q1. The mix of business is showing very early signs of a change however because the company is starting to take direct revenue from big data sales following contracts with British Gas and University of California Health. Big data technology revenue was only £0.2m but it was zero in the year ago quarter. That means the traditional ALM side of the business had $4m in bookings, a 33% increase.
It was good to hear that OEM partner NSN is investing more in integrating WANdisco into its Hadoop architecture and that the relationships with Cloudera and Hortonworks are showing signs of delivering revenue. WANdisco is working with both Hadoop platform providers on evaluations that it expects will turn into live deployments later this year. These are in addition to the Proof of Concepts noted in Q4 (see here). All in all, WANdisco’s momentum indicates that organisations are starting to release budget for big data projects, a trend we expect to see developing over the year. The sums may be small but they are early shoots of growth. We will be taking a more in-depth look at WANdisco in the next month or so.
Posted by Angela Eager at '08:59'
Escrow and assurance software provider NCC Group is showing continuing progress after delivering one of the strongest half year performances for a number of years in January (see Nothing quiet about H1 for NCC).
Revenue for the for the ten months to 31 March was up a substantial 12% to £90.4m, with organic growth at 10%, an improvement on 7% last time. The UK, NCC’s largest escrow division, is performing in line with expectations with growth at 6% (up from 3% last year). Meanwhile, the Assurance software testing business delivered a 15% increase in revenue, of which 12% was organic.
The newly launched Domain Services division (formerly Artemis) is where a lot of management attention will be placed this year as NCC attempts to move from early investment to revenue generation. The intention is to create a secure gated community, for companies, their end users and customers to interact securely over the internet. NCC is in discussions with initial prospects to sign up to the service, which should be available from the start of September.
The Domain Services division is proving a costly exercise, with NCC having spent £4m year to date, and £6.3m in total so far. In February it acquired the .trust domain name from Deutsche Post for an undisclosed amount. Meanwhile, plans to acquire the .secure domain in early 2015 will mean further significant investments to come. Let’s hope NCC can bring paying customers along to the party.
Posted by John O'Brien at '08:58'
Microsoft CEO Satya Nadella had another outing to reveal more of his “mobile first, cloud first” strategy this week, this time focussing on the data driven business and Microsoft’s own need to establish a “data culture”.
This formed the backdrop to the announcement of tools to enable organisations to utilise their own data and Microsoft’s desire to position itself as a key player in gathering, storing, processing and presenting that data. The route is via the combination of its database products (including SQL Server 2014 – the launch provided a platform for Nadella’s comments) and data centre capabilities plus the newly announced Analytics Platform System (a big data-play because it can handle data stored in relational databases and Hadoop systems), and a limited beta of Microsoft Azure Intelligent Systems Service (which is destined to analyse data from the Internet of Things). The Office suite is positioned to act as the interface for this pool of data. This is a valiant attempt to create a framework for handling data and to link the various Microsoft technologies together. The ‘data interface’ is a key component and while Office has the benefit of being a familiar solution it will not answer all the issues – work is needed on visualisations and enabling easy ad hoc data queries. There is also a need to link data to business processes which is not an area Microsoft is strong in.
Since taking the top job Nadella has demonstrated a multi-platform commitment by taking Office to the iPad and other devices (see here), and created a stronger connection between Azure and the rest of the Microsoft portfolio (see here). The latest announcements centre on tools to handle the data flowing through mobile devices and the cloud, without which they would have no value. These three elements are coalescing into a strategy that is all about linking Microsoft’s many interests to create a coherent whole, something it has struggled with in the past. If Nadella can pull that off he will make a meaningful impact on the business and its work to prove that it can remain relevant in the new world order.
Posted by Angela Eager at '08:54'
After what seemed like a relentless slide in tech stocks, yesterday it felt that it might be safe ‘to get back in the water’. That was until Google (and IBM) reported after hours.
On the surface Google’s 19% rise in Q1 revenues yoy to $15.4b looked pretty good. Even better when you look at the ‘big numbers’ involved. Easy to grow a small company – much more difficult when the starting point is multiple tens of billions.
The problem was that the market was expecting even more. In particular, Google is having to work much harder for its bucks. Even though the number of paid clicks increased by 26%, as users turned to their mobiles, the ‘cost per click’ has dived – down 9% yoy. In a problem that seems to inflict so many of the high growth companies, profits growth – at a meagre 2.9% - lagged revenue growth.
Revenues in the UK grew 14% (same as US) to $1.58b; representing 10% of Google’s revenues. However, international revenues grew by 25% to $7.2b; 47% of Google’s revenues.
After a 3.75% rally in Google shares during the day, they ‘plunged’ c6% in after hours trading. If that is the price tomorrow, Google shares will have lost some 12.5% (or over $40b) since the beginning of March.
Little doubt that the market is extremely ‘edgy’ towards the high-flying internet stocks. Google is, of course, the granddaddy of all internet stocks and therefore many will interpret this as proof that the bull run is over. But is Google the ‘froth or the cappuccino?’ Internet search and its associated advertising is now a huge – and increasingly mature – market. It will not go away. Google is highly profitable and cash-generative. It is as secure as they come. But its really high growth days are probably over. All a bit reminiscent of what we wrote about Microsoft ten years back.
Posted by Richard Holway at '06:46'
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