Tuesday 01 September 2015

Right said Thread!

logoI know that the burning question for all males out there (as it is for me) is “will my pecs look good in this”? Burn no more, as London-based startup Thread will help us make sure they do. Just answer a questionnaire on the Thread website, upload some of your photos, and through the wonders of algorithms you’ll get back personalised style recommendations from fashion retailers such as Liberty, Harvey Nichols and Urban Outfitters. Free.

To further its sartorial ambitions, Thread, which was founded in 2012, has just raised £5m in a Series A funding round led by Balderton Capital, along with many ‘high profile’ backers including Wonga founder Errol Damelin, Lovefilm co-founder William Reeve and Michael Birch of Bebo.

It’s not clear how Thread makes any money from the service – I assume if you purchase clothes from a recommended retailer through the Thread website they get a cut. But of course you could buy direct from the retailer and bypass Thread altogether. Emperor’s new clothes?

Posted by Anthony Miller at '08:44' - Tagged: funding   startup  

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Tuesday 01 September 2015

*NEW RESEARCH* ESAS Supplier Landscape 2015

ImageThe 2015 edition of the Enterprise Software & Application Services Supplier Landscape report is now available - download it here.

In this report we track the latest developments in the digital journey, including the rise of advanced analytics as the leading digital enabler, adoption trends, and the importance of digital design and the UX, alongside the impact they are having on the supplier landscape and performance of the top ESAS suppliers.

Digital transition demands a dynamic environment in which suppliers are under pressure to reassess and adapt on a continual basis in order to juggle digital developments alongside existing business lines which generate the bulk of today’s revenue and are often the foundation for digital growth.  The net result is the need to wrestle with two very different styles of business - requiring different tools and technologies, operational, commercial and delivery models - running at different paces. The ESAS Supplier Landscape report, which includes the Top 20 supplier rankings across the combined ESAS sector plus Enterprise Software and Application Services breakdowns, provides a window into how the leaders are handling the situation.

ESAS Supplier Landscape 2015 is only available to ESASViews subscribers – if you haven’t taken out a subscription yet, contact Deborah Seth for the low down on how to.  

Posted by Angela Eager at '08:37' - Tagged: software   rankings   ApplicationServices   supplierlandscape   digital  

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Tuesday 01 September 2015

Digital Barriers wins new Asia Pac contract

Digital Barriers logoDigital Barriers has announced another contract highlighting its progress in Phase 3 of its development: geographical and product expansion. The first two phases were ‘Acquisition’ and ‘Integration and International Expansion’ (see Knocking down Digital Barriers to profitability). The good news from the provider of advanced surveillance technologies comes in the form of a £1.0m contract to provide TVI vehicle-borne video surveillance to a major law enforcement agency in Asia Pacific.

As is common with Digital Barrier’s client relationships, the award follows a previous initial £0.8m contract, for the first stage of the fleet upgrade programme, which was secured in February this year. Further contract awards are expected over the years ahead. Digital Barriers has had significant success with its TVI surveillance technology, which offers the ability to stream usable live video using 60% less bandwidth than standard technologies. The law enforcement agency in question apparently stated the solution was the only one that met their specified performance requirements. Each new contract means Digital Barriers is one step closer to achieving break even, which management told us it would be “tracking towards” by the end of this financial year.

Posted by Georgina O'Toole at '08:31' - Tagged: contract   police   security  

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Tuesday 01 September 2015

Innovation agrees £500m deal with Carlyle Group

lIt must have been a busy long weekend at The Innovation Group (TIG) HQ. No sooner had we commented Friday afternoon on ‘advanced discussions’ with Carlyle Group (see here), come Tuesday morning, and ‘the deal is done’.

Carlyle Europe’s investment subsidiary Axios Bidco Ltd agreed terms with TIG’s board for an all-cash deal at 40 pence per share, valuing the insurance software and business process services (BPS) provider at £499m. This is a 13.5% premium to TIG’s closing price prior to Friday’s announcement.

The deal is still dependent on agreement from the shareholders. And there's always the prospect of a rival bid coming through. 

The timing of the deal is the key. It comes shortly after TIG’s biggest ever software deal with Co-op General Insurance worth £46m (see here), and ahead of big changes at the top, with CE Andy Roberts’ going ‘part-time’ from the end of 2015. This points to significant change ahead, and potentially more uncertainty.

Going under the wing of private equity would give TIG the scope to make changes away from the glare of the financial markets.

Posted by John O'Brien at '08:25' - Tagged: manda   bps   insurance  

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Tuesday 01 September 2015

CSC – one down, one to go

logoAnd so the plan moves to phase two even before phase one is complete. CSC CEO Mike Lawrie has engineered an acquisition by the soon to be demerged North American public sector unit – currently referred to as Computer Sciences Government Services (CSGov) – of smaller, private equity-held peer (and Virginian neighbour), SRA. CSGov will pay $390m cash to SRA whose shareholders will then own just over 15% of the combined organisation. Lawrie will take the chair of the new board.

All sounds terribly sensible. I wonder how long will we have to wait for a similar deal for CSC’s global commercial unit? You already know my views on the runners and riders (see here) but there could be one or two ‘dark horses' in the race too.

Posted by Anthony Miller at '07:55' - Tagged: acquisition  

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Tuesday 01 September 2015

Share Indices September 15

SIBad things always happen when I go away on holiday. Just finished the most hair-raising week on the markets I can remember. Patrick Hoskings in The Times 29th Aug 15 described it as:

  • Manic Monday
  • Turnaround Tuesday
  • Wobbly Wednesday
  • Thrilling Thursday
  • Flip-Flop Friday

World stock markets lost $1 trillion in value last Monday mainly due to the realisation that growth in China had really declined which sent shock waves around the globe. Although by Friday most markets had recovered their weekly losses, all the indices we follow were down overall in August. The FTSE100 fell 6.7% and gave up all the gains – and more - of 2015. Now down 4.9% YTD.

NASDAQ was off 7.2% but still showing a modest 0.9% rise YTD. The FTSE UK SCS Index, that most closely tracks the UK HQed stocks we cover, was down just 2.2% but is still up an impressive 21% YTD. The FTSE Hardware Index fell 6% and is now down 3% YTD. ARM is the largest constituent in this index and fell 7.3% on fears that the growth in the smart phone market was slowing.

Despite the slump, a quarter of the stocks we follow recorded share price increases in Aug.

Leading the pack was Triad with a 33% increase. Indeed Triad has doubled YTD after veteran chairman John Rigg reported their ‘strongest performance in ten years’ for the year to 31st Mar 15. Revenues increased 19% to £23.5m and Profits rose form £130K to £460K. I seem to have covered Triad from my very first days as an analyst some 30 years ago.On several occasions,  I thought they might not survive…but here we both are!

Innovation Group (TiG) powered ahead by 18% on news of the potential ‘take private’ deal with Carlyle Group. See Innovation confirms Carlyle bid talks. Monetise did some bouncing back – up 15% in Aug but still off a massive 77% YTD. Really pleased to see the UK’s two latest IPOs - Kognos and Sophos (See Sweet Q1 for secure Sophos) - continuing to do well with 15% and 8.4% rises in Aug respectively. So that a 69% rise since IPO for Kainos and 20% for Sophos. Pleased to report that I bought in at IPO in both!

Amongst the global stocks, the only increase of note was at Sopra Steria – up 7.8% after a reassuring Q2 statement. Indeed the UK is powering ahead for them. . See Sopra Steria looking for medium term growth.

The fallers are too numerous to mention. Sad to see Fidessa getting the wooden spoon in Aug with a 22% decline. Interim results disappointed with a profits decline even though we thought that the hard work was beginning to pay off. But less than surprised that some of the froth stocks - Blur (down 22%. See Blurring the bounds of credibility), Quindell (down 15%. See Noose tightens around Quindell’s neck and work back through this rather sordid tale. Never good news when the FCA instigates an investigation) and Outsourcery (down 10%) - are there as investors moved up the quality chain. .

Serco was down 12.3% - 30% YTD. H1 results this month showed recovery not yet in sight.

Amongst the global stocks, Intuit fell 18.9% on disappointing results and the decision to put its Quicken product up for sale. Unisys was down 17% (53% YTD) on more disappointing results and now a $53m restructuring charge.How much restructuring can one company take?. But all the biggest stocks like Apple (down 7.0%), Accenture (down 8.6%), HP (down 8.1%) and IBM (down 8.7%) were hard hit too.

So what next? Are we out of the woods yet? Can Holway relax? Somehow, I think not. I do however think that the ‘quality’ tech stocks – those that continue to grow, make decent profits and are cash generative - are fairly valued. Indeed many think that the recent falls are ‘buying opportunities’. It’s the others that I fear for…

Posted by Richard Holway at '06:59'

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Monday 31 August 2015

Those were the days...

ComputingI spent one day of the wet Bank Holiday clearing out my garage and came across a 30 year old press cutting I had saved from the 24th Sept 1985 edition of Computing. After setting up Hoskyns Business Centres in 1980 – which became the largest reseller of PCs to the corporate sector for a time – I had left in 1984 to become the Managing Director of Wootton Jefferys and had quickly moved them into that market by buying a local micro distributor.

The article is an interesting history lesson in itself as DP Dept heads muse about which users might benefit from a PC on their desks. Consensus at that time seems to be about 20% - not really surprising when the PC+Software would cost north of £6K each. Software (rather a shortage thereof), rather than hardware, was the major concern. DP Departments were still the gate-keepers. But as one interviewee for the article suggested, ‘there are jobs that the PC makes possible which would never be considered by the centralised DP Dept’.  It was the beginning of the end for such centralised DP decision making.

My contribution to the article was to note that we were now dealing with purchasing departments more than DP departments and that ‘the PC is now a commodity – like desks and chairs’.

I have to give myself a belated pat on the back for that prophetic remark – made only 4 years after the launch of the IBM PC and only a year since the launch of the Apple Mac.

Posted by Richard Holway at '12:57'

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Friday 28 August 2015

Innovation Group confirms Carlyle Group bid talks

lInsurance software and business process services (BPS) provider The Innovation Group (TIG) has confirmed that it is in ‘advanced discussions’ with US private equity giant The Carlyle Group regarding a takeover of the business. TIG’s shares rose over 7% on the announcement.

Carlyle Group is considering paying 40 pence per share in cash for TIG, which would equate to a purchase price of c£500m, c10% up on TIG’s share price prior to the offer. Carlyle now has until 25 September to make its move.

TIG’s profile has risen significantly in recent months following its landmark £46m software win at Co-Op General Insurance in partnership with IBM (see Innovation Group aiming at tier one insurers). TIG has the potential to become a real challenger to the big two market leaders, Accenture Duck Creek and Guidewire.

TIG is also braced to take advantage of the big gap in the UK market opened up by the downfall of insurance BPS rival Quindell (see here and work back). Carlyle Group also acquired the RAC in 2014, which had previously formed a ‘connected car’ telematics partnership with Quindell, before pulling out soon after (see here). This would seem to be a natural area of opportunity for both parties if the deal were to go ahead.

We will keep a close eye on developments here. But as things stand it looks like another successful UK plc. could be heading into the hands of US private equity.

Posted by John O'Brien at '11:59' - Tagged: manda   bps   insurance  

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Friday 28 August 2015

One hit wonders

Angry BirdsFour years ago, in Sept 2011, I attended a lunch addressed by Niclas Zennstroem who had made his fortune from Skype. He had become an investor in Rovio – the producers of Angry Birds – and he outlined the vision whereby the franchise would ‘rival Disney’ in everything from cuddly toys to theme parks. I didn’t exactly ‘buy’ the story.

I’ve oft written in Hotviews about the ‘one hit wonders’ in the gaming sector. Just search on the likes of Zynga (them of the Farmville franchise) or King (of Candy Crush) or the many franchises before them. It really is very difficult to come up with any that have repeated their original success or indeed have any longevity.

Yesterday Rovio announced that it was laying off 38% of its staff. Both Zynga and King have crashed since their 2011 and 2014 (respectively) IPOs.

The lesson here is NOT that gaming isn’t a great industry or even a great investment opportunity. It’s more that it has always been peopled by ‘one hit wonders’. Yet investors always seem to believe they are the exception that will ‘rival Disney’. The real winners seem to be the platforms. Facebook needed Zynga in the early days. Now it doesn’t. The smartphone market needed an addictive game designed for its small screen and Candy Crush fitted the need well. So the lesson is not ‘don’t invest’. The lesson seems to be ‘sell as soon as the first product becomes a massive hit’

Posted by Richard Holway at '11:22'

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Friday 28 August 2015

Momentum in Services at Computacenter H1

logoDespite a currency-hit headline revenue advance of only 0.2%, to £1.44bn, the Computacenter H1 results showed a strong performance in many areas of the business, with pre-tax profits rising to £29.1m, up 13.7%. Exceptional gains in H1 have enabled the management to increase guidance slightly.

UK Services was again a poster child with growth of 9.8%. This was despite the significant reduction in a major contract at the end of Q1. Management are pleased with the smooth run-up of the significant contracts won in a successful 2014 (including Post Office and Royal Mail). The result is a better-balanced business, less dependent on individual contracts and customers. The Lloyds Bank contract has also been re-signed on reasonable terms following a favourable benchmarking exercise.

The Next Generation Service Desk offers potential as Computacenter looks for follow-on sales within its growing customer base. The second customer for this has now gone live. Work is necessary to reduce on-boarding costs and run-up time, but the Group’s approach to automation and fault management aims to reduce voice call numbers by 50% and thus offer significant cost savings.

Elsewhere, Services revenue in France declined as contracts were terminated but the large Sanofi contract and cost reduction helped reduce losses. In Germany new signings are offering the prospect of improved margins and higher growth next year. The Supply Chain business (two-thirds of Group revenue, but a significantly smaller proportion of profit) was flat on a reported basis (up 6.6% in constant currency) but should benefit as the roll-out of Windows 10 picks up speed.

Overall a good performance, led by UK Services, and a promising outlook - prompting management to talk of high single digit growth. And as before, we are confident that Computacenter will outperform the market and its key competitors.

Posted by Peter Roe at '10:25' - Tagged: infrastructureservices  

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Friday 28 August 2015

UK IT recruitment soars at Hays

lInternational recruitment firm Hays delivered 22% net fee income growth from its UK IT division in full year 2014/15, despite seeing a slowdown of sorts in Q4 (see IT staffing on a (slower) roll at Hays).

This helped the UK&I market to top line net fee growth of 11% (like-for-like in constant currency), making it the fastest growing region in the year to 30 June (vs. 8% in APAC and 9% in Germany and rest of the world). UK&I operating profit shot up 75% to £45.7m driven by an increase in productivity and an automated back office lowering admin costs.

Particularly impressive was double-digit net fee growth across both private (11%) and public sector (11%), the latter of which was driven by education and IT. This shows that there remain pockets of growth within public sector, particularly driven by the Government’s digital agenda (see UK public sector SITS market forecasts: Preview). Also encouraging was the shift to more permament roles, which grew 16% vs. +7% for temps. 

Hays’ management sees the UK&I business on track to hit its 5-year target for net fee compound annual growth of 5%-9% through 2018, and to hit its operating profit target of £75m. Cost reduction will play a part - apparently back office costs have been cut by £20m since 2012, and will be kept constant as the business grows.

All encouraging signs. But Hays, like other recruiters, is going to be largely dependent on the continued performance of the wider UK economy to hit these targets.

Posted by John O'Brien at '08:30' - Tagged: results   recruitment   staffing  

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Thursday 27 August 2015

1 billion logged into Facebook on Monday

FacebookMark Zuckerberg has just posted (on Facebook of course!) that 1 billion people logged into Facebook on Monday 24th Aug. That is a record and indeed amounts to one-in-seven of the world's population. Indeed a lot higher if you only count those with an active internet account. At 3.17 billion internet users worldwide, it probably means that nearly a third of all global internet users used Facebook on Monday...

Maybe it was because of Black Monday or the Great Fall of China? Or maybe everyone was on holiday posting pictures of their feet against a sandy beach? Or, in the case of most of my friends, posting pictures of what they were eating that night?

I know that, just like every other communication medium, Facebook has its dark side. But generally I think it is a force for good. I was greatly reassured by the finding that young people who were active on Facebook actually had much busier 'face-to-face' social lives than those who did not.

From a business viewpoint, Facebook now seems unstoppable within the social media market. Indeed, it is Twitter and LinkedIn that really face the problems. And Facebook seem to recognise that they might not be fashionable amongst all age groups/sectors with their purchases of Whatsapp and Instagram etc.

Hats off to them.

Posted by Richard Holway at '22:52'

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Thursday 27 August 2015

Kainos and their Earn as You Learn scheme

KainosWantIn my campaign to create more entry-level jobs in UK tech, I have featured Kainos and their apprenticeship scheme before. But after my article last week – Apprenticeships and Public Sector Contracts – Kainos’ MD Brendan Mooney wrote to update me on their scheme. I am truly impressed with what Kainos is doing in this area. Over the last three years they have taken on 253 ‘entry-level’ personnel. As Kainos’ headcount today is 772, that is the highest proportion in any UK tech company that I am aware of. Happy to give publicity to any that might beat that!

Brendan is particularly pleased with their Earn as You Learn (EAYL) scheme which is aimed at school leavers who decide that college is not the right experience for them (either as a learning experience or because of financial constraints). Under EAYL, Kainos pays the young person a salary, pays their tuition fees at college for a 4 year, part time Computer Science degree, supplies their technology equipment and books and has them working 4 days a week alongside Kainos’ experienced people. Brendan says it is ‘working really, really well’.

So much so that they have made a video. I rarely share such links on HotViews. But it is really motivating. Take a look Click here.

Anyway, if only we could have many more like Kainos. And, of course, their July IPO was a stunning success. See Kainos up 50% since their IPO.

Note – Richard Holway became a Kainos shareholder at their IPO.

Posted by Richard Holway at '22:40'

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Thursday 27 August 2015

Wild card from Wirecard over Worldpay

wpIn June we reported that Worldpay, originally RBS’s payments processing business, was planning to float with a £6bn price tag, see here. However, this could all change as according to Bloomberg, the German payments operator Wirecard is offering £6bn for the business.

wc16 year-old Wirecard published its half year results earlier this month, with revenue up 27% to €340m and generating EBITDA of €98m, continuing the progress which over the past five years has seen revenue consistently advancing at a CAGR of over 20%. However, despite this growth, a wide geographical spread of operations and some interesting technologies this business is still dwarfed by Worldpay.

On a simplistic comparison of reported revenue numbers, Worldpay returned £3.39bn in 2013 compared with Wirecard’s €601m (for 2014). Worldpay also generates more than double the EBITDA and has more than twice the number of employees. In stockmarket terms, the market capitalisation of Wirecard is just €4.5bn (£3.3bn). This shows that to buy Worldpay would prove to be a very big and bold move for the German company. Nonetheless, the Venture Capital owners of Worldpay (Bain Capital and Advent international) may well find this route to a significant profit much more attractive than a risky and time-consuming IPO.

There is a lot of change under way across the payments sector and plenty of funds available to invest in this area, so presumably Wirecard would have little trouble in securing finance for the deal. However, from a UK point of view, an IPO of Worldpay would seem the best way forward – giving the UK a major quoted payments player which could lead the expected consolidation of the sector from the front.

Posted by Peter Roe at '11:17' - Tagged: ipo   private+equity   payments  

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Thursday 27 August 2015

Health & Social Care Servelec’s star performer

lThe half year results for Servelec Group (provider of software, hardware and services predominantly to the UK Healthcare, Social Care, Oil & Gas, Nuclear, Power and Utilities sectors) again highlight that differing buying cycles and drivers in the myriad of sectors they serve can smooth out performance.   Group revenues were up by 20% to £30m and underlying operating profits by 25% yoy (6% organic growth) to £6.3m.

The Health & Social Care division was the star performer with revenues rising to £15.6m in the period (H114 £7.4m) benefitting from the integration of Corelogic and Aura acquisitions. However even excluding these acquisitions revenues were up by an impressive 34%. The revenue growth stemmed from The London Refresh bidding activity with 20 of the 30 trusts choosing to re-confirm Servelec's RiO as their chosen software suite and being named preferred supplier for deployment of PICS (Prescribing Information and Communications System) at Royal Orthopaedic Hospital, Birmingham. Servelec also continues to benefit from trusts exiting the NPfIT.

Going forward Servelec expects Corelogic to expand its market share as two-thirds of councils remain on legacy systems, and the division as a whole to benefit from momentum towards Converged Care. The next stage for the firm will be to deepen their direct relationships with trusts in order to upsell and to build stronger customer retention.

Meanwhile performance in the Automation division was described as a mixed with revenues falling by 18% to £14.4m. Servelec Controls was down by 13% to £6.3m driven by difficult market conditions in the Oil & Gas sector while Servelec Technologies with revenues up by 43% to £2m but suffered from delays in procurement of AMP6 projects by water companies (see here).

CEO Alan Stubbs extolls the virtues of the diversified business model but given the diverse nature of the sectors we still question whether management can dedicate sufficient attention and expertise on both divisions.

Posted by Michael Larner at '09:45' - Tagged: results   software   healthcare  

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Thursday 27 August 2015

DRS: Revenues dive by a third

DRS logoIn the education sector, teachers must focus on the positive and boost a child’s confidence in the classroom. But it’s pretty hard to find the positive in the H1 results of DRS Data & Research, the provider of software and IT services (SITS) to the education, election and census sectors.

Revenues have continued to decline (see Poor marks for DRS), and this time by a quite spectacular 33%, or £1.8m, to £2.54m (compared to H114). The pre-tax operating loss was £1.91m, similar to the loss reported (before an exceptional item of £813K) in 2014. The vulnerable nature of the business is highlighted by DRS’ statement: “approximately £1m of this reduction is the result of timing differences arising from repeat business falling into the second half of the year with the balance arising from the absence of census or election revenue and the continued anticipated decline in legacy print and scanner business”.

In the UK, the core electronic marking business declined by 5.7% to £2.1m, leading to an overall decline of 8.5% in total UK education revenues to £2.3m. This market is now said to have stabilised with no further structural changes in the UK examination system in 2015. Meanwhile, international revenues were intended to provide another cylinder for the company to fire on. But instability in global markets, notably Africa, sent international revenues plummeting in the period – down 45% to £1.1m. It's been a similar story for education provider Promethean World (see Promethan: nerves of steel required), which has now been put out of its misery by acquirer Digital Train (see Digital Train arrives for Promethean).

Management states that cost-saving measures are continuing in order to better align the cost base with lower activity. However, while sales & marketing costs have been brought down by 48%, administrative expenses have only been cut by 5% in the period (and stand at £1.8m) and must be cut further. Moreover, considering the continued development of new products, sales & marketing will be crucial to ensure the uptake of new releases.  

Posted by Georgina O'Toole at '09:39' - Tagged: results   education  

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Thursday 27 August 2015

Workday: as expected in Q2 but weak guidance

LogoIn its Q2 results, HR and financials cloud pure play Workday did what we have come to expect of it - beat street expectations on revenue and posted widening losses. 

Revenue was up 51% yoy to $282.7m and the customer count topped the 1000 milestone on the back of more customers opting for the suite over individual solutions. New additions are being added, the latest being Workday Planning for the financial suite, adding budgeting, planning, and forecasting capabilities that should help Workday increase its share of wallet. The company is also gaining traction in industry sectors, and increasing the level of business in Europe. The operating loss was $67.64m vs. $61.8m and no sign of a reversal. In contrast has started paying more attention to losses (see here).

The market responded negatively to a similar pattern of results in Q1 (see here). This time the share price rose c3% in immediate after hours trading before falling back because although Q3 revenue guidance was broadly in line with market expectations, billings guidance was lower. Workday puts this down to receiving less money in advance for newer contracts. On older contracts it took a larger proportion of the money up front (more than 12 months), which is impacting billings now. With new contracts, the company is not invoicing so much up front. The change does not alter the core appeal of Workday’s offerings and it continues to challenge the software establishment of SAP and Oracle.

Posted by Angela Eager at '09:24' - Tagged: results   cloud   software  

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Thursday 27 August 2015

Sopheon H1 declines

lProduct lifecycle management (PLM) player Sopheon has experienced a disappointing first half as expected (see Sopheon looking at further declines in 2015).

Revenues for the six months ended 30 June were down 8.7% to $8.4m, and operating losses stood at $354m vs. $519m last time.

There is some better news that confirms expectations for a stronger H2. Revenue visibility reached c$15m compared to $12.5m at the time of the AGM on 10 June 2015. This was driven by ‘intense activity’ from the sales teams and included 15 licence orders in the half, albeit down on 17 achieved this time last year. It also included Sopheon’s first substantial software as a service (SaaS) deal.

Sopheon is in the midst of transition from positioning itself as a process automation player to a provider of ‘enterprise class, integrated innovation management solutions’. This has involved forming partnerships with SIs, resellers and consultancies like Accenture, Deloitte and Atos, which has taken longer than originally hoped.

Sopheon is competing in an increasingly competitive market with many new entrants and start-ups offering point automation solutions and services (see Business Process Automation – a brave new world for BPS suppliers). Sopheon is right to be seen as a broader solution provider with capabilities across PLM, workflow, analytics and integration. But seeking major new partnerships has its risks, and Sopheon needs to be careful not to get squeezed further as it scrambles for new sources of growth.

Posted by John O'Brien at '08:49' - Tagged: results   partnership   software   automation  

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Thursday 27 August 2015

Fujitsu buys ACT to accelerate transport revenues

logoFujitsu is improving its strategic positioning in the growing Transport sector with the purchase of Wiltshire-based ACT (Applied Card Technologies Limited). ACT has for several years collaborated with Fujitsu which now looks to invest in the company’s technology to extend its scope and reach.

actACT ( has a broad solutions portfolio offering commercial transport ticketing, concessionary and tourism ticketing systems, loyalty programmes and a citizen smart card. All these solutions conform to the ITSO standard for ticketing systems and are built from a range of modular, proprietary products. Accounts for 2013 showed revenue of £7.4m and pre-tax profit of £624k. The company employs about 90 people.

The underlying market for ACT’s solutions is strong and gaining momentum as travel companies and local authorities look to increase the value of their services to their users. This is driving initiatives to improve inter-operability between transport systems and to widen the range of services available through these schemes. There is certainly a lot of scope as the Fujitsu “Digital-Inside-Out” report published in January made clear. The transport industry was way below other sectors, including the public sector, in terms of the usage of and satisfaction with digital services.

Fujitsu is a careful and only occasional acquirer of companies, highlighting the high regard that the Fujitsu management has for ACT’s people, technology and track record. ACT will continue to be run as a separate, autonomous business subsidiary. We estimate that around 10% of Fujitsu’s UK business is already derived in this sector. In addition, Fujitsu also has a strong presence in the retail sector and technology in several areas of these sectors is converging. Although ACT is quite small in revenue terms it could well give a significant boost to Fujitsu’s fortunes in this increasingly digitalised sector.

Subscribers to TechMarketView’s research services can read a more detailed discussion of this deal in this HotViewsExtra.

Posted by Peter Roe at '08:44' - Tagged: acquisition   transport   retail   payments  

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Thursday 27 August 2015

SQS quintuples US operation through acquisitions

sqsCologne headquartered and AIM-listed SQS has added another unit to its US operation with the purchase of Galmont Consulting. This Mid-West based operation has business not only in Banking and Financial Services and Manufacturing (where SQS has significant capability through its ThinkSoft acquisition and from its German business) but also in government and healthcare. The healthcare activity will supplement the presence of SQS’s April acquisition of Trissential in the US (see here).

galmontThe Galmont Consulting business generated revenues of US$17.1m in 2014 with a pre-tax profit of US$1.1m. The maximum consideration for the deal will be US$22m, suggesting a reasonable valuation which is in the same ball-park as that for the Trissential deal.

Through the two US acquisitions, SQS has now essentially quintupled its business in this strategically important region where it had been significantly underweight. The Galmont deal also provides additional nearshore delivery resources to complement the other SQS facilities in the region. These two moves appear to have fulfilled SQS’s strategic objective of boosting its US presence, at least for the time being.

As businesses everywhere wrestle with new mobile channels and the rise of big data and as they contend with aggressive competition and the need to keep costs down, their requirement for faster, more structured and independent testing continues to rise. SQS is increasingly well placed to meet their needs, particularly now that it has a US operation worth talking about.

Posted by Peter Roe at '08:23' - Tagged: acquisition   testing   software  

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Wednesday 26 August 2015

Morrisons SaaS contract win for Kalibrate Technologies

Kalibrate logoInitially it was a SaaS contract win with supermarket challenger Morrisons, that called our attention to Kalibrate Technologies but a look at the overall company soon revealed its healthy interest in analytics indicating that there was more to Kalibrate than simply another SaaS offering. By combining its domain expertise with data analytics and the SaaS delivery model, Kalibrate is delivering the means for real time data driven business, something we explored in Does the market need Big Data driven applications?  

UK HQ’d Kalibrate, who provides pricing and planning software to petrol station operators, was the chosen supplier when Morrisons decided to outsource the pricing aspect of its business. Kalibrate will manage Morrisons’ competitive fuel prices and demand on a real time basis across 336 fuel stations, using Kalibrate’s SaaS solution.

The contract is notable because although the size was not disclosed, given the number of fuel stations covered it will be fairly substantial and puts an area of the business that is critical in terms of performance and competitiveness into the cloud. The other notable aspect was Morrisons’ decision to outsource the pricing optimisation area for the first time. As highlighted in ESAS Market Trends & Forecasts 2015, more organisations are dealing with the complexity of digital transformation through the outsourcing route.

The combination of software, analytics, SaaS and managed services targeted at a vertical sector appears to be working well for Manchester-based Kalibrate who has 300+ customers and saw an 11% increase in revenue to $15.6m in the six months to December 2014, including recurring revenues of $20.7m, up from $1.1m in June 2014. Underlying operating profit before tax was $1.8m vs. $1.7m in the year ago period, but the company is making the transition to recurring revenue under the SaaS model. 

Posted by Angela Eager at '11:03' - Tagged: contract   saas   analytics  

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Wednesday 26 August 2015

Optimal Payments moving up a league

logoIt looks like Optimal Payments is moving up a league throughout 2015. The purchase of the Skrill network is a key enabler, almost doubling the business, normalising the geographical spread of revenue and further reducing the Group’s dependence on one large customer. The portfolio of propositions has also been broadened, through acquisition and other moves such as in card issuing and merchant acquiring services. Management look to a full listing on the LSE Main Market and a re-branding to set the seal on this progress.

Growth of the Group’s underlying businesses continued in H1, with revenues up 40% to US$223m and EBITDA up 28% to US$49.9m. Acquisitions and the decline in Asian-originated activity from the Group’s largest merchant customer drove a major shift in geographical spread. North American business now accounts for 43% of revenue (in H1 2014 it was 16%) with the Asia/ROW contribution falling from 61% to 38%. Organic growth was at its record lowest level (11% yoy on constant currencies) as Asian business reacted from last year’s World Cup, but outturned at +24% excluding their largest customer. 46% of Group revenue is derived from online gambling merchants.

The €1.1bn acquisition of Skrill was completed earlier this month. Skrill brings scale in digital wallets, stored value propositions and payments processing, together with a significantly bigger position in the North American online gambling market. With cost synergies and cross-sell opportunities the management forecast that the Skrill addition will be earnings-accretive next financial year. The Group reported that Skrill generated revenue of US$173m and EBITDA of US$40m in the period.

Progress has certainly been dramatic and the company has net cash, but it is probably reasonable to expect some tougher opposition and slower progress as they move into the big league

Posted by Peter Roe at '09:31' - Tagged: acquisition   payments  

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Wednesday 26 August 2015

Bank IT Legacy issues highlighted at the Co-op

logoIn June we reported on the IT concerns at the Co-operative Bank (see here). and repeated our call for more disclosure about technology within the vitally important banking sector.

The recent reports from the Co-operative Bank have, as expected, shown the extent of the bank’s IT problems. In a report earlier this month the FCA (Financial Conduct Authority) and the PRA (Prudential Regulation Authority) highlighted the lack of adequate risk management and resilience. Last Thursday the bank reported interim results and again laid bare the issues of significant and sustained historic underinvestment in IT, poor controls and a continued reliance on manual processes

Nevertheless, the management talked of progress in its recovery strategy which includes focusing its business portfolio as well as reinvesting in IT. The Co-op Bank’s mortgage business has been outsourced to Capita in a £325m, 10 year deal, see here, and a large IT outsourcing deal signed with IBM. However, the management then highlighted the execution risk of these major changes, warning that the move to outsourcing would temporarily increase the level of risk. So the bank is by no means out of the woods.

The problems shown in stark relief at the Co-operative Bank are almost certainly not confined to this one problem child. You can be sure that many employees in various banking operations around the UK see similarities to the Co-op Bank’s plight in their own businesses. The issue of legacy transformation is a chronic one which will take a considerable time and significant further investment to solve. Subscribers to FinancialServicesViews can read our recent report “Taking the Initiative: The Supplier perspective” which looks at this issue of legacy and also discusses the greater dynamic for change in the sector. 

Posted by Peter Roe at '08:43' - Tagged: outsourcing   legacy   banking  

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Wednesday 26 August 2015

Daily Internet partners with Epicor for cloud ERP

lCloud hosting minnow Daily Internet has formed a strategic partnership with mid-market ERP vendor Epicor Software within the UK and Ireland. Yet again, it’s Daily Internet’s subsidiary Netplan driving the opportunity. Netplan has proved a very successful buy since the takeover in mid-2014 (see here and work back).

The partnership involves Netplan and Epicor providing joint sales and marketing to new and existing customers around its BisTrack product, which is niche LBM dealer software (for lumber, building materials and construction supplies companies). BisTrack is designed to optimise LBM business operations through sales, inventory, order management and workflow tools.

Epicor is a $900m revenue software business, with UK revenues of c£36m in FY14, and has other products focused on markets like supply chain, manufacturing, distribution and automotive sectors.

Netplan already provides BisTrack as a PaaS offering to customers, and has supported a number of deployments in the cloud. Formalising the partnership is a natural next step to convert more of the pipeline, which Netplan claims is ‘building at a pace’.

Posted by John O'Brien at '08:24' - Tagged: saas   cloud  

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