AIM-listed iomart has notified the market that it received, and rejected, two offers from Host Europe in June. The offers were for 275p per share, which then increased to 285p. iomart shares have already hit 285p this year (11 February) and are currently trading at 252p.
Host Europe was founded and sold (to Pipex for £30m in 2004) by current Daily Internet CEO, Abby Hardoon (see Acquisition drives Daily Internet growth). A year ago private equity firm, Cinven, acquired Host Europe from Montagu Private Equity for a total consideration of £438m (see Cinven acquires Host Europe from Montagu Private Equity). Montagu originally bought Host Europe for £222m in 2010. Host Europe had a CAGR (revenue) from 2010-2013 of 16%. iomart hit topline growth of 29% in FY14 (see iomart drives up the profits).
The question is whether Host Europe will put in an increased offer; we certainly think it would be worth it. iomart’s financial performance has been good and management is confident of continued growth. iomart would add scale to Host Europe as both companies provide domain name and managed hosting services.
Avid readers will remember that at the beginning of the year we predicted much change of ownership in the small and medium data centre services space, and we haven’t been disappointed. Investors see much potential to leverage market growth or cash in investments made several years back. (For more on the topic, see Mid-market Data Centre Services: Opportunities and Competitors.)
If Host Europe wants to increase its offer further it must do so (under the City's Takeover Code rules) by 5pm on 21 August.
Posted by Kate Hanaghan at '09:48'
Add a comment
Q2 results from Citrix show revenue up 7% year-on-year to $782m. Non-GAAP net income was $142m ($0.83 per diluted share), compared with $124m ($0.66 per diluted share) for Q2 FY13. Strongest growth was in professional services (+15%), closely followed by SaaS at 12%. EMEA grew 8%, outperforming the US (4%). Growth in Q1 was 12%, see Change impacts Citrix's bottom line in Q1.
In June the company announced that CEO, Mark Templeton, would remain at the helm and would not retire next year as previously announced (“After completing our search process, and considering a number of qualified candidates, the Board concluded that Mark is the best leader to drive the Company forward”). That’s good news in one regard, as Templeton knows the business inside out. A key challenge for him will be to drive the level of innovation and competitiveness required to take market share in the enterprise mobility space. Longer term, (Templeton has made a “multi-year commitment”), the company will eventually have to find a replacement – something the Board has thus far failed to do.
Citrix is maintaining its full year revenue growth expectation (8.5%-10%, compared with 18% in FY13 – see Mixed fortunes for Citrix ) but is raising its estimate for EPS to reflect expense and capital structure initiatives.
Posted by Kate Hanaghan at '09:44'
Steria’s UK business is in rude health thanks to its £1bn+ Shared Services Connected Limited (SSCL) business process services joint venture with the Cabinet Office (see Steria UK: SSCL a significant contributor to FY14 growth).
Organic growth in the UK soared to 19.6% in the first half to 30 June (vs. -3.6% last year), pushing Steria UK’s revenue to €424.7m. UK margins are also now in double-digits at 10.7%, up from 7.8%.
The UK's Q2 growth was even stronger at 24%, thanks to the ramp-up in SSCL revenue (see here). SSCL got a further boost in June, with two new central government customers signing up (see SSCL attracts more major departments). This will give even more momentum to the UK BPS business in the second half.
The other area of growth for Steria is Other Europe, which was up 11.1% to €139m thanks to good growth in Scandinavia. France and Germany however, Steria’s two major geographies outside the UK, actually declined 3.7% and 8.4% to €268.4m and €109m.
Germany remains in turnaround, following the introduction of new management in 2013. France meanwhile saw growth in banking and energy, but declines in telecoms and public sector, and was particularly affected by the suspension of France's Ecotax scheme (HGV road charging).
Group-wide Steria delivered 7.2% organic growth (vs. -2.3% last time) with revenue reaching €940.8m. Group margins also nudged up to 5.7% from 5.2% last time, despite declines across Germany, France and Other Europe. So the UK is clearly driving the group’s performance.
Steria does have a few ‘distractions’ to contend with, like its pending takeover by Sopra (see Sopra and Steria a very French rendez-vous). Nonetheless, it expects to deliver FY14 growth of 6-8% and a 10% increase in group margin. We wouldn’t be surprised to see all of that ‘gain’ come from the UK. Just as well, really, as Sopra’s own UK business is subscale and languishing with no organic growth and 5% margins.
Posted by John O'Brien at '09:14'
This is a most unfortunate start of the new FY for Mumbai-based, mid-tier offshore services firm, Mastek. Headline revenues were a little under flat yoy at Rs2.21bn (c.$37m) and down 1% on the prior quarter as problems at a major US client rippled through the P&L. As a result, EBITDA margins halved to 4.1% and net profits sunk by almost 90% to float just above the waterline.
The shape and concentration of Mastek’s US business is quite different from that in the UK, from where it now generates over half group revenues. The news of Mastek’s joint venture with the UK Law Society (see Mastek aims to soar with legal eagles) brings some solace, but this is unlikely to fill the gaping hole across the pond.
Posted by Anthony Miller at '09:06'
Just last week, Bangalore-based offshore services major, Wipro, announced its biggest ever ‘total outsourcing’ deal, at Canadian, energy-focused industrial conglomerate, ATCO, comprising a series of framework agreements expected to generate more $1bn over the next ten years. As is typical in these sorts of deals, Wipro has taken on ATCO’s ‘captive’ IT operation, ATCO I-tek, for a cash payment of $195m. While this bodes well for Wipro’s future revenues, judging by management’s guidance for this quarter nothing much is flowing just yet.
This is all by way of prelude to the announcement of Wipro’s Q1 results (to 30th June) which saw yoy headline growth accelerate to nearly 10% to reach revenues of $1.74bn, though just 1% higher than the prior quarter. Operating margins, at 22.8%, were nearly 3 points better than the same period last year though down nearly two points on the prior quarter. Management also noted that Wipro had renewed a multiyear BPO deal with BT.
It looks like Wipro is finally shaking off its seemingly unending lethargy (see Wipro picks up pace and profit). This is its fifth quarter of accelerating headline revenue growth, and margins are much more presentable. And now a billion-dollar deal. At last!
Posted by Anthony Miller at '07:54'
We have just been reading today's Telegraph article entitled, 'Oh dear, is this another costly IT failure?' The paper claims to have picked up on reports that Fujitsu's long-running legal dispute with the NHS over its £896m National Programme for IT contract has been settled - apparently in favour of Fujitsu. We have no way to corroborate this story (indeed nor does The Telegraph) as neither the Cabinet Office nor Fujitsu are commenting.
Fujitsu won the contract in 2002/2003. In 2008 it was cancelled after the work had been completed, although only some £150m had thus far been paid. Fujitsu subsequently pursued the NHS for a reported £700m in compensation. The trouble for Fujitsu is that, whatever the outcome, it will be seen as the bad guy. If the press reports are correct, it will be criticised for taking a huge amount of taxpayers’ money. But if the opposite outcome were true, it would be criticised for ineptitude on a major Government IT project. In the long-run, we would say that protecting its reputation as an IT supplier to Government capable of delivering on large programmes is preferable. The negative impact of a Fujitsu 'win' will likely pass far more quickly (today's news, tomorrow's fish & chip wrapper).
Actually, the Telegraph article suggests that UK Government may be in for the most bad press. It is being picked up not just for its failure to get value for the taxpayer on major projects an and for the costly legal fees involved in the case, but also for failing to comment on the result of the court case at a time when the Government is aiming to be more 'transparent'.
Posted by Georgina O'Toole at '14:39'
We've now had time to go through the detail of Capita's first half results (see Capita continues to outperform 'the rest'). And while the headlines look very encouraging, there still remain some problem areas, particularly in insurance & benefits and workplace services, where the business is in serious decline.
IT services meanwhile remains a work in progress. But there are encouraging signs that recent contracts and acquisitions will help pull it back into real organic growth. Customer management and justice and secure services are the star performers across the group.
Subscribers to TechMarketView's research services can read the detailed analysis in UKHotViewsExtra here.
Posted by John O'Brien at '13:30'
Following its selection to deliver a new operational policing system for Scotland’s new national force (see here ) Accenture has been awarded a £25m, 5-year contract by West Midlands Police (WMP) and West Midlands Office of Police and Crime (WMOPC). In keeping with many other public sector contracts, payments will be tied to budget savings and what is loosely termed ‘overall force performance’.
The requirement in the West Midlands fits with Accenture Police Services’ engagement model, with the company responsible for business change and system integration services. Accenture will be responsible for improving information sharing across the organisations to help the force anticipate criminal activity and deploy resources appropriately. Furthermore citizens will be able to engage with officers via social media channels and to report and track cases online
The need to deliver savings while protecting front line policing continues to drive investment in analytical tools and information management projects. This is generating various IT initiatives such as the shared infrastructure services arrangements at Cleveland (see Steria extends Cleveland deal) and business process services deals such as at Lincoln (see Lincolnshire Police signs £200m deal with G4S).
Our assessment of the software and services supplier landscape in the UK police market will be available to eligible subscribers in coming weeks.
Posted by Michael Larner at '09:48'
Second quarter revenues announced overnight by EMC show that its core Information Infrastructure (II) business reversed last quarter’s 3% decline (see EMC Q1 margin takes a hit) to grow 1%. II accounts for 74% of total revenue and therefore dictates the overall revenue growth line. In Q2, total revenue was $5.88bn, up 4.7%. Growth was better outside of II, namely in the Emerging Storage business (+52%) and the RSA security business (6.6%) – but both are much smaller than the core storage business.
That 4.7% growth is some way off the performance announced yesterday by EMC“federation” member, VMware (VMware hits Q2 guidance). It is also an indication that EMC’s core business is stagnating, giving fuel to the view held by some that the firm would be able to deliver better value to shareholders should the “federation” be broken apart. The story running in the media at the moment is that activist investor, Elliott Management, has taken a $1bn stake in EMC with a view to doing just that. This would run absolutely contrary to the view held by CEO, Joseph Tucci, who firmly believes in the value of the federation structure. Tucci is of course due to retire next year.
Posted by Kate Hanaghan at '09:20'
London-based social media advertising platform startup Glow Digital Media has secured $7m in Series A funding from Notion Capital and White Star Capital, along with existing investors Project A Ventures and Avonmore Developments (see Avonmore—brothers in arms). Glow received around $1m of seed funding in December 2012.
Glow seems to be making the right ‘friends’, being a Facebook Strategic Preferred Marketing Developer and, most recently, a Twitter Marketing Platform Partner. Glow already operates across three continents.
Glow has canny backers – I suspect we will hear more.
Posted by Anthony Miller at '09:16'
In what could turn out to be a canny deal, City-based. AIM-listed hosting services firm Nasstar has acquired privately held, Northampton-headquartered, Kamanchi, which provides IT support services to the recruitment sector. Nasstar will pay an earn-out linked maximum of £2.5m in cash and shares for Kamanchi, which turned over £1.9m last year (to June 30th) with £270k pre-tax profit. This year Kamanchi turned over £2m with ‘adjusted’ EBITDA of £450k.
Previously loss-making Nasstar is undergoing somewhat of a ‘transformation’ (see Nasstar remodeled for FY14), and mooted a couple of weeks ago that the business is indeed turning around (see Nasstar back in profit). Management said that Kamanchi “is expected to be immediately earnings enhancing” but I suspect that’s in ‘adjusted EBITDA-land’.
Nonetheless, acquisitions of niche players in specialist vertical markets are, in theory at least, ‘a good thing’. Nasstar’s challenge is that Kamanchi runs a broad portfolio of IT services, from project-based application stuff through to hosted desktop services. Clearly Nasstar management sees opportunity to sell its hosting services into Kamanchi’s clients, but they will also have to manage the other services too, quite a different business model to vanilla hosting. If they can pull it off, this would validate the strategy for other deals like it.
Posted by Anthony Miller at '08:38'
A brief first half update from Scisys, the defence, space and media focused SITS provider, confirmed its recent comments about a more stable performance (see SciSys on track for FY14). it now expects results for the six months ended 30 June to be in line with market expectations.
Sales are expected to be ‘in line’ with last year – which we take to mean flat on last year at c£21m (see SciSys H1 mixed fortunes). However, SciSys is entering the second half with a ‘robust order book’, so there should be plenty of opportunity to start growing the top line again. Meanwhile, the business is benefiting from margin growth and operational efficiencies. Encouraging signs then for better times ahead.
Posted by John O'Brien at '07:55'
Facebook produced a stunning set of results for Q2. Revenues increased 61% yoy to $2.9b with profits up a massive 151% to $791m yoy. Facebook now has 1.32b users of which 829m access the site everyday spending, on average, over one hour there. Facebook now has just over 1b mobile users. And that is where Facebook really scores. It really has solved the "How to do mobile advertising" conundrum. Sponsored posts and highly targeted ads (in my case for funeral services and "young women looking for older men") seem to figure regularly).
We have many conversations about whether Facebook is a passing fad. This is normally based on the observation that young kids now would not be seen dead in the same network as their Mum or, indeed, grandfather. But most, in my experience, actually do keep highly censored versions of their accounts for exactly that reason. The real action for them can then take place elsewhere! But Facebook realises that and has invested in buying those new 'down with the kids' sites - like Instagram and, most recently, WhatsApp for a massive $19b. They may not be producing mega revenues or profits yet but Facebook can take a longer view whilst the main site is powering ahead like this.
"Regrets, I have a few.."
You may remember that I wrote an article which went viral about why I did not believe that Facebook was worth $100b on its IPO. I thought half that was the right starting point. Indeed, floated at $38, Facebook then slumped to well under half that. If only I'd then taken my own advice and bought at the nadir! Last night Facebook rose another 5% to $75 - ie roughly TWICE the IPO price. That's a value of around $190b.
Posted by Richard Holway at '07:17'
TechMarketView's latest Quarterly Research Summary is hot off the virtual press – you can download it here for a full round-up of all the reports published by the analyst team over the last quarter.
Q2 culminated in the release of one of our most hotly anticipated reports of the year, The UK SITS Supplier Rankings Report 2014. It's a must read for anyone wanting to find out who are the key 'movers and shakers' making headlines in the sector in 2014. Our other flagship report from the Foundation Service, UK SITS Market Trends & Forecasts 2014, has also just been published and is packed with everything you need to know about the changing shape of the UK SITS market.
The team has also been busy keeping abreast of the latest developments within their individual streams. In PublicSectorViews , research director Georgina O’Toole drilled into the UK Public Sector SITS Suppliers: Cyber Security Offerings and went on to cover one of the hot topics of the moment in UK Government G-Cloud: meeting its objectives?. Also in PublicSectorViews fellow research director, Tola Sargeant, gave us her views on the lessons to be learned from the NHS’ electronic appointment booking system, ‘Choose & Book’.
FinancialServicesViews research director, Peter Roe, published his report Finding the Winners in UK Payments, exploring the changes ahead for this rapidly expanding market. This report follows on from Hot Topics and Opportunities in the Banking Sector, in which he identifies key opportunities for growth in that area of the market.
BusinessProcessViews research director, John O’Brien, reports on the impact of outsourced analytics in his popular report, Outsourced analytics: an emerging opportunity for BPS providers. While in InfrastructureViews, research director, Kate Hanaghan, caught up with two of the big players, Vodafone and Computacenter. In Vodafone powers up its cloud and hosting business piece Kate gives us her views on their growth into hosting services. While in Computacenter outlines “growth plays” she reports on her meeting with CEO Mike Norris - read the full report to find out how they intend to cover target investments, growth and prospects.
Angela Eager, research director for ESASViews, outlines how the SaaS commerical model is evolving in her latest report Evolving the Saas Commercial Model. Angela also covers ESAS hot topic Big Data in Does the market need Big Data driven applications?
We've only had a chance to highlight a few key reports here, to download our full Quarterly Research Summary, whether you’re a subscriber or not, click here.
If you’ve not yet succumbed to the temptation to subscribe to one of our in-depth research streams and you'd like more information, email Deborah Seth on our Client Services team for details of our 2014 subscription packages.
Posted by HotViews Editor at '00:00'
Both CSC and CGI are celebrating recent contract wins in the NHS IT market as they look to maintain and grow their respective UK healthcare businesses.
CSC will be particularly pleased with its win at North Bristol NHS Trust announced today. North Bristol is the first Trust to choose CSC’s Lorenzo Electronic Patient Record (EPR) software outside the terms of the erstwhile National Programme for IT in the NHS (NPfIT). The win is strategically important for CSC which has ambitions to grow its healthcare business in the UK post the National Programme. According to Dr Chris Burton, Medical Director at the Trust, Lorenzo was chosen because it “offered the most scope for future development, whilst at the same time being extremely cost competitive.”
Lorenzo will be replacing Cerner’s Millennium, which was only implemented by BT under the National Programme in 2011. The Cerner implementation did not go smoothly sparking a “crisis” in theatres and outpatients at North Bristol that took five months and £4.6m to put right. CSC will be hoping things go much more smoothly when it delivers Lorenzo, as-a-service, hosted from a secure UK data centre. Assuming all does go according to plan, North Bristol could be a useful reference site for CSC outside the National Programme.
CGI is another supplier looking to strengthen its position in the NHS IT market in the wake of the National Programme. It has rather less ‘baggage’ than CSC in the sector and has had great success in recent months, signing up six healthcare trusts as clients under full IT outsourcing contracts (see CGI UK: building on recent wins and CGI wins ITO deal with CNWL NHS Foundation trust). It’s most recent deal is a five-year ICT infrastructure contract with West Hertfordshire Hospitals NHS Trust valued at £25m. Under the contract CGI will be providing end user devices, storage capabilities, and video conference and communication services. With a continuing strong pipeline in healthcare, we expect CGI to climb up our rankings for the sector in the months ahead.
Posted by Tola Sargeant at '16:15'
Microsoft’s revenues in Q4 revenue jumped 18% to $23.38b including $1.99b of revenue contribution from the Nokia Devices & Hardware business acquired at the end of April this year (see Microsoft buys Nokia mobile). For the full year revenues increased 12% to $77.8b. In Q4 operating income increased from $6.073b to $6.48b despite being dragged down by $692m by the Nokia business (which now resides in the new Phone Hardware segment).
It is still early days for CEO Satya Nadella; certainly too early to say whether his strategy to reposition as a “core productivity and platforms” company has had any impact. However, these results will keep investors, some of whom have criticised his lack of aggression, happy in the short-term. Revenues were up across the board. Device and consumer revenues were up 42% or $2.98b to $10b (including the $1.99b contribution from Nokia). While commercial revenues jumped 11% to £13.48b with Windows volume licensing revenue up 11% and server products revenue, including Azure, up by 16%. Reflecting the company’s move to the cloud (which Nadella calls “aggressive” even if some onlookers don’t), commercial cloud revenues increased by 14.7%, with the annual revenue run rate standing at $4.4b. Office 365 and Azure revenues were both up over 100%.
Under Nadella’s leadership, Microsoft’s corporate focus is on disruptive plays in ‘cloud productivity and enterprise social’, ‘mobility & devices’, ‘cloud platform’ and ‘BI and Mission Critical’. In almost all areas, Microsoft will be the challenger to established players. In cloud, revenues are certainly moving in the right direction, indeed accelerating. In other areas, there are signs that Microsoft has a chance to establish itself as a strong challenger – for example, we recently met with the UK public sector team and they highlighted that after an open evaluation of devices, the Department for Business Innovation & Skills (BIS) and DECC had moved fully to Windows phones. Overall our conversations with Microsoft teams indicate a much more bullish attitude under the new CEO. We will have to wait a few more months though to really see the impact of Nadella’s presence.
Posted by Georgina O'Toole at '10:18'
Yesterday’s National Audit Office (NAO) report into HMRC’s Aspire contract (led by Capgemini) focused on the department’s lack of progress in breaking down its IT outsourcing contract so that it directly contracts with its lead suppliers. We have been aware of this for some time. Most notably, the original plan for Fujitsu’s subcontractor revenues on the contract to be “novated”, i.e. for the revenues to no longer pass through Capgemini was originally scheduled for H212. It was then delayed to Q312.... yet two years later we are still waiting. And we see no sense of urgency on the part of the department to make this happen.
In our view it appears the department sees priorities, such as implementing digitisiation of processes, moving certain applications to the cloud and tackling fraud through better use of analytics, as trumping any fiddling with the mechanics of the existing contract(s). This is a classic case of the Cabinet Office, which sees “novation” as a way to reduce the dominance of Capgemini and spread the spoils more widely, finding a core department pushing back because in reality it doesn’t feel like the most practical move. So far, the NAO states, competitions have been held for just 14 contracts outside of Aspire, with an annual value of £22m. The Capgemini Aspire contract will be in place until 2017. Between now and then, we have the looming General Election. It seems unlikely, therefore, that we will see any material changes to the structure of the existing arrangement in the near-term. Surely more likely that HMRC spends time planning for how things will look in three years time?
Posted by Georgina O'Toole at '10:15'
It’s been a good few months for VMware, with Q2 revenue up 18% (excluding Pivotal and divestitures) to $1.46bn - $12m above the midpoint of its guidance range. Operating income for the second quarter was $200m, a decrease of 26% from Q2 2013 due to the acquisition of AirWatch. Indeed, the acquisition has progressed well with customer numbers increasing from 10,000 (end 2013) to c13,000 now.
Second quarter bookings growth was highest in EMEA (followed by the Americas). There was “consistent broadbase (sic)” growth in EMEA, particularly across Central Europe. There was no specific mention of the UK, but we know from our recent conversations with management that it had a good Q1 with Q2 shaping up well too. Subscribers can see where VMware sits in our latest Supplier Ranking here: UK SITS Rankings 2014.
VMware is of course part of the EMC "federation" of companies (the others being Pivotal and EMC Information Infrastructure). Yesterday the wires were awash with references to a Wall Street Journal piece reporting that hedge fund, Elliott Management, had taken a $1bn stake in EMC, with the ultimate intention of petitioning the company to break itself apart. EMC has long seen the value of this federation structure and we find it hard to believe that it would choose to break it up. However, Elliott Management is a known activist investor whose aim it is to incite change in the companies it buys into. EMC itself reports Q2 results tonight.
VMware’s guidance for the full year is for growth of between 14.5% and 17%.
Shares in Unisys fell 7% in afterhours trading following the release of its Q2 results. The company suffered lower sales in both technology products (i.e. ClearPath) and systems integration (services overall declined 4%). This in turn impacted the bottom line, pushing the company into a net loss for the quarter (operating margin was 2%). Total revenue was down 7% (constant currency) to $806m.
The bottom line performance is in contrast with the 9.8% operating margin achieved in Q4 of FY13 (see Unisys FY13 services margin squeezed), demonstrating the challenges Unisys faces in producing a consistent financial outcome quarter-by-quarter.
However, CEO, Ed Coleman, remains upbeat about the remainder of the year. He is predicting “a strong second half” partly based on a strong-looking ClearPath pipeline. He also says that issues around underperforming services contracts will be resolved, positively impacting the second half of the year.
It’s not all doom and gloom in the UK, however. In April the business announced a biometrics deal with the Passport Office - see here and read more about security in Government here: UK Public Sector SITS Suppliers: Cyber Security Offerings. For FY13, we estimate that Unisys in the UK declined 3% to £240m (subscribers can see its place in our latest rankings here: UK SITS Rankings 2014).
There’s no stopping recently crowned UK SITS leader Capita,which continues to outperform, and undoubtedly stretch its lead over the other major players in the market (see UK SITS supplier rankings 2014).
First half revenues for the period to 30 June were up 13.9% at the headline level to £2.071bn, 11% of which was purely organic. This compared to organic growth of 3% this time last year. Operating profits grew by 14.7% to £260.2m, which kept margins more or less the same at 12.6%.
Contracts signings in H114 were down at £1.4bn, against a record H1 last year when Capita signed £2bn worth of new business, including its largest ever contract with O2, worth £1.2bn (see here). Those H113 revenues have of course helped boost the numbers this time round.
Though the pace will slow in H2, management still expects FY14 organic growth of 8%, in line with last year. Maintaining high-single digit organic growth on revenue c£4bn is no mean feat. There should be plenty of opportunity to continue growing at a healthy rate in 2015/16 too, since the bid pipeline has crept up again to £5.7bn, from £5.5bn in February. In fact, Capita said it has the ‘highest ever level of prospects behind bid pipeline.
Yesterday we met with Peter Hands, exec director for IT Services, who told us that the business was now performing better, thanks to growth from recent contracts such as the Scottish Wide Area Network SWAN (see here), BAE submarines (see here) as well as legacy migrations across to Capita’s cloud IT services offerings.
We will provide more colour and movement later in UKHotViews Extra, for TechMarketView subscribers.
Posted by John O'Brien at '09:35'
London-based, cross-sector private equity firm, Mobeus, has led an MBO at Lancashire-based print management software firm, Tharstern. Terms were not disclosed. Tharstern was founded some 30 years ago yet only ran revenues of around £4m. Tharsten has some 530 customer sites globally, which by my reckoning averages about £7.5k per site.
Tharstern looks like a sweet little company firmly entrenched in the print services market. You’d just have to believe that there is much more potential in this play; its new owners and Mobeus clearly think so too.
By the way, like so many others in recent times (eg Samsung), Tharsten’s website is a triumph of style over substance. Why do companies think that huge images and oversized typefaces make it easier to sell their message when in fact you are forced to scroll down every page to see the story? Let’s keep websites simple and useable, please.
Posted by Anthony Miller at '09:32'
Sage presented its nine-month management statement today. Growth had slowed to 4.3% in the third quarter, down on the 5% level of the first half, reported in UKHotViews here. However, the management remain confident that they can achieve their targeted 6% growth rate in 2015, despite pressure on the payments business, particularly in North America, mid-market declines in Europe for software sales and forex headwinds.
Pure cloud-based competitors are growing faster, albeit from a lower base, and although Sage has a strong position in many customers, it cannot rest on its laurels. While acquisitions such as this week’s purchase of Exact in Germany, see here, will provide additional opportunity, it will need quite a few similar deals to make a measurable difference to the company’s outlook.
Sage CEO, Guy Berruyer, has announced his impending departure, by the latest in March 2015. During his tenure Sage eventually woke up to the importance of cloud and started the process of transformation. Shareholders will now be beginning to look for an early sight of M. Berruyer’s replacement and to learning of his/her plans to take the company’s broad span of businesses forward, and at a faster rate.
Posted by Peter Roe at '09:25'
The shares of ULS Technology plc will begin trading on AIM on 28th July (Ticker: ULS). Behind the uninformative name is a provider of online B2B platforms for the UK conveyancing and financial intermediary markets. The central proposition is a SaaS online comparison service to support transactions in the residential housing market. Registered users can compare mortgage providers, solicitors, surveyors etc. and the platform provides a clearing house for clients and competing service providers.
The market background appears favourable. Transactions surrounding house purchases are generally stressful, involve large sums of money and require the coordination of many moving parts. Service quality and pricing of both incumbent and new providers are typically opaque. If the eConveyancer platform can give the house-buyer more control and oversight over the process then it will provide a useful function.
ULS' market capitalisation at IPO will be £25.9m, a multiple of 1.6x on revenue of £16.3m in the year to March 2014. EBITDA margin was 18% for the same period. ULS claims a market share of 4.5% of UK conveyancing completions. With growth in the underlying market and an increase in market share expected, the management are confident of further growth. Growth should also be driven by attracting more users, distributors and service providers to its eConveyancer platform as well as through the introduction of a broader range of services.
The management team of this 11-year old company has broad experience of the worlds of relevant financial services, technology and private equity.
The company claims first-mover advantage in this market area, the idea appears sound and the market background favourable. Execution will of course be key, but this IPO (on a modest revenue multiple compared with some recent valuations) is interesting, showing how online platforms can disrupt and galvanise an important services market.
Posted by Peter Roe at '09:22'
After a couple of quarters of sequential revenue decline (see here), Mumbai-headquartered mid-tier IT services firm Hexaware reverted to plan with Q2 headline revenues (to 30th June) growing by 6.4% qoq to $102m, almost 8% up yoy.
The story was not nearly so bright on operating profits, which plunged 23% yoy, and 11% lower than the prior quarter, leaving operating margins over 7 points down yoy at 14.9%, and 250bps down qoq. That’s a heck of a slug!
Clearly Hexaware management is having a little trouble finding the right settings for the company’s operational ‘levers’ – pull one up and another flies down. This is much to do with customer concentration – Hexaware’s top 10 clients account of half its revenues, about than twice the level of larger offshore players – but not unexpected for a mid-tier player.
There are plenty of operational levers that offshore players can play with. Finding the right ones and the right settings involves consummate skill and a measure of good fortune.
Posted by Anthony Miller at '08:43'
Depending on whether you are pro or anti Apple, their results last night would give succour to both camps.
Profits surged another 12% to $7.75b - ahead of expectations. IPhone sales surged 13% to 36.2m units. Amazing when you consider that Apple has all but announced a new iPhone 6 with larger screens from Sept. China fell in love with the iPhone after that deal with China Mobile. China sales were up 48% and other BRIC sales soared too.
But iPad sales were down 9% at 13.3m units. They managed sales of 28m in the Christmas quarter. Tim Cook was a bit defensive over this pointing out that they have sold 225m iPads since the 2010 launch and how the iPad was now embedded in so many businesses. Qantas now has 15,000 and the Swedish government 100,000 apparently. But many believe the peak has been reached with so many much cheaper alternatives.
Overall, revenues were up 6% at $37.4b - which was a tad lower than expected. This led to a minor 0.5% dip in the shares after hours. They are still up 20% in the last three months though.
So all eyes turn to the next product launches. R&D has surged in the last quarter. Not only is a new iPhone on the cards, with component orders pointing to the biggest prelaunch production ever, but that much rumoured iWatch - or is it iTime?- now very likely before Christmas thus solving many people's Christmas pressy choices. Apple said they would end the year with the best product line up ever.
I admit to being both a long term Apple fan and shareholder. I bought in 2004 at $20 and rode joyously to $703 before watching them crash to <$400. Anyway they are now back to close to their high (remember they have done a 7 for 1 split a few months ago, so multiply current share price by 7 for previous comparisons). I'm still as much a fan and loyal shareholder as I ever was.
Posted by Richard Holway at '08:19'
The recent FT article on the ongoing HP/Autonomy saga yet again shows there is still considerable confusion about acquisition valuations.
The ‘received wisdom’ is that trade buyers should pay more for a company than its market valuation because of the potential 'synergies' with their own businesses (though history shows that the larger the deal, the less likely this is).
I say it should be quite the other way round.
Trade buyers should only pay the 'operational value' of the target company, not what investors reckon the company is worth (and 64% more, by the way, in the case of Autonomy).
I look at it like this.
The objective of the CEO is that the company should make more money; the objective of the investor is that the stock should make more money.
These objectives are different and will usually give rise to quite different valuations, as the HP/Autonomy deal (and so many other ‘failed’ acquisitions) amply demonstrated.
Irrespective of the claims and counterclaims on Autonomy’s accounting practices, what the HP board should have asked themselves is ‘how much more money can we make with Autonomy than without’? If they had given a long, hard look at the operational aspects of the deal – e.g. HP had never before been in the enterprise database business – then it’s hard to see how $11bn could have possibly been the ‘right number’.
Posted by Anthony Miller at '14:04'
- 1 comment
A few days ago the Cabinet Office issued a tender seeking a Crown Hosting Service (CHS) provider. The tender seeks a private sector partner to take a majority shareholding (up to 75% less one share) in ‘DatacentreCo’, a new private company to be established by the Cabinet Office to provide Data Centre Colocation Services (data centre space and the related services necessary to provide the operating environment for physical computing infrastructure). The operating environment has to be capable of housing computing infrastructure initially handling OFFICIAL security classification information (essentially up to IL3 Confidential under the old security classifications, and representing the vast majority of Government data) but potentially SECRET and TOP SECRET. Any successful provider will be required to provide the infrastructure from at least two separate locations.
The framework contract is expected to be awarded in 2015. The founder clients of CHS are expected to be DWP, the Home Office and the Highways Agency (see Highways Agency awards more ‘Tower’ contracts). There is a four year period during which Government departments and other Public Sector bodies can enter into call-off agreements. The value of the framework is put at between £50m to £700m.
In UKHotViewsExtra Georgina O'Toole considers the implications of this contract for the UK Government ICT strategy and for hosting and datacentre providers to UK Government. TechMarketView subscribers can read 'New Crown Hosting Service: the implications' now. If you are not yet a subscriber please contact Deb Seth to find out more.
Posted by Georgina O'Toole at '10:14'
After updating on its full year back in May (see here), compliance-based information management software provider Ideagen has delivered an impressive set of results for what is its first full year of trading since admission to AIM on 2nd July 2012 (see here).
Headline revenue for the year ended 30 April was up 38% to £9m, and pre-tax profits were up 36% to £2.6m, which kept the margin steady at a healthy 29%. Of course Ideagen has been making acquisitions over the past year or so notably in the UK healthcare and compliance sectors (see here and work back). Nonetheless, organic growth was still 13%.
It appears that all the organic growth was from Ideagen's healthcare (NHS-focused) business, which grew organically by 16%. This was helped by the release of a new product, dart/KW, an enterprise scale Patient Information solution, and re-organisation, moving sales and technical resources from its commercial business into the NHS team.
Dart/KW looks set to be a significant new opportunity area for Ideagen. Management estimates that only 25% of the 192 NHS Trusts in the UK have implemented a trust-wide patient document repository – Ideagen has supplied 10 trusts to date, or 5% of that addressable market. Last month's acquisition of EIBS (see here) should also help since it adds capability in the area of web portals. Ideagen now intends to bring this capability together with Dart/KW to offer 'trust wide information portals that can offer a single view of patient information from multiple data sources'.
This sounds like Ideagen will be edging closer towards much larger rival EMIS, which is carving out its turf in ‘connected health’ (see EMIS strengthens secondary care footprint).
Posted by John O'Brien at '08:39'
Eligible TechMarketView subscription service clients can download IndustryViews Corporate Activity Q2 2014 to read our quarterly summary of the UK software and IT services corporate activity scene, including significant trade acquisitions and private equity deals.
Posted by HotViews Editor at '07:54'
Figures for the half year to end-June for Big Data aspirant Microgen showed overall pre-tax profits down 32% to £3.05m with Group revenue declining by c.2% to £14.7m. The pre-tax figure was hit by the provision of performance-related options (cost £400k) and £300k of finance costs as a result of the new capital structure which ring-fences the Financial Systems business.
In UKHotViews we commented on the February full-year figures and the transition envisaged in the 2013 Strategic Review. The Microgen management now proclaim “satisfactory progress”, but obviously they didn’t set the bar too high before making this statement. Certainly they have refreshed the Aptitude Software product portfolio with a Hadoop capability and the launch of a solution for IFRS 15 requirements, but these are hardly in the top-right quadrant of any leading-edge/strategic importance matrix. The revenue mix has shifted just one percentage point in favour of recurring revenue.
Strategic progress in Financial Systems is likewise pedestrian, with no acquisitions and only a 2%pts shift of revenue mix, to 54%, towards the targeted Wealth Management sector as revenue in this division declined by 5%. Nevertheless this business still reported operating margins of 50%, an interesting statistic to quote when targeting a cost-conscious and financially aware customer base.
The third leg of the company’s strategy is to acquire additional businesses. The least said about the half year performance, the better, given the failed suit for Elektron Technology, see here.
Microgen shareholders have been patient as they awaited the outcome of the strategic review, the shares having been becalmed in the 120p-140p range for over 2 years. Now, the management should reasonably expect to have their feet held to the fire to deliver a faster transition. Let’s hope for more decisive action in the second half.
Posted by Peter Roe at '13:22'
The good news is that 2014 should turn out to be a better year for suppliers of software and IT services (SITS) to the UK market than 2013 – in fact, even better than we had forecast this time last year. Indeed we expect the UK SITS market to grow by 2% in 2014 – about 25% faster than we expected a year ago – adding over £850m of net new spend.
But we temper this good news with the view that, in real terms (i.e. eliminating the effects of inflation), the UK SITS market will barely grow over the next few years. In fact, by 2017 we expect that the UK SITS market will only be the same size as it was in 2012 although at the headline level the market will appear to be 12% larger.
But whichever way you want to look at it, the ‘pie’ may be getting a little bigger, but the fight for a slice will be just as fierce – if not fiercer.
In our keynote UK SITS Market Trends and Forecast 2014 report published today, we explain how the Race for Change theme that we introduced at the beginning of the year (see Predictions 2014—Race for Change) is playing out. This is a race in which we predicted that all suppliers—especially large-scale ‘generalists’—will be compelled to pick up pace in order to meet increasingly demanding requirements from their customers, while confronting more specialised—and usually cheaper—niche competitors and startups. Those suppliers that can’t keep up will fall by the wayside.
In UK SITS Market Trends and Forecast 2014, we look at the trends and opportunities in the key market segments (Enterprise Software, Application Services, Infrastructure Services, and Business Process Services) and in two key verticals – Public Sector and Financial Services – which together are responsible for half the market spend. Plus we include our highly respected estimates for the size and growth of the UK SITS market, also available as an XL download.
UK SITS Market Trends and Forecast 2014 complements our recently published UK Software and IT Services Rankings 2014 report, in which we rank the leading suppliers of software and IT services to the UK market. Together, these reports give suppliers and other ‘stakeholders’ in the UK SITS market the essential foundation to understand which way the market is heading and who is leading the race.
UK SITS Market Trends and Forecast 2014 and UK Software and IT Services Rankings 2014 are available for download now for eligible TechMarketView subscription service clients. If you are not yet on the racetrack, then contact Deborah Seth on our client services team who will lead you to the starting gate.
Posted by HotViews Editor at '10:05'
Following the positive trading update last week, see here, Earthport, the cross-border payments provider has added Eurogiro, the global payments network for postal organisations, banks and financial institutions, to its list of partners.
Earthport will thus be able to connect to the customer base across the Eurogiro infrastructure, particularly extending the company’s position in low value payments and broadening its reach in terms of harvesting potential transactions.
This is another step forward in terms of scale and reach, giving additional confidence in the company’s growth potential. Subscribers to FinancialServicesViews can read our review of the company in “Finding the Winners in UK Payments”.
Posted by Peter Roe at '10:01'
FY14 was all about Healthcare for Allocate Software, the provider of workforce and compliance optimisation solutions that has just reported its strongest ever set of results. Total revenue increased by 8% organically to £40m in the year to end of May 2014, and Healthcare revenue increased by 18% organically to £34.7m. There was also good news on the profits front with Allocate reporting a PBT of £2.9m, compared to a loss before tax of £2.4m the previous year.
UK Healthcare revenue grew by 19%, exceeding management expectations, as Allocate signed 147 major agreements across its applications portfolio and continued its 100% success rate on HealthRoster renewals. Healthcare bookings were £41.2m, £6.5m greater than Healthcare revenue, which bodes well for the future. We were particularly pleased to see an accelerated adoption of Allocate’s Cloud offering without any impact on the underlying business (39 customers took the cloud service in FY14 taking the total to 37% of the HealthRoster installed base); and a strong uptake of its SafeCare product, which fits well with the government’s focus on safe staffing levels in hospitals.
There are challenging areas within healthcare for Allocate, which is still finding it harder than previously expected to sell the RealTime products (see here) and Health Assure, for which PCTs were an important part of its customer base before the NHS reorganisation. There are encouraging signs on both these fronts though and we expect them to contribute to revenue growth in the year ahead.
Outside Healthcare, the Maritime and Defence businesses, which together account for 14% of turnover, continue to operate profitably and contribute cash despite declining revenues and a limited focus on trying to generate new business. Defence remained challenging as western nations cut government spending and there were no new licence agreements in FY14. Revenue from Defence declined by 29% to £3.6m as a result, whilst revenue from Maritime dropped by 37% to £1.7m.
Overall, Allocate can be justly proud of a ‘record’ set of results that provide good revenue visibility and provide strong momentum as we go into 2015.
Posted by Tola Sargeant at '09:57'
Sage, the accounting software provider, is to buy the German payroll business of Exact Holding business, paying €16.3m (12.9m) for a business turning over €10.5m (£8.3m). This deal will mean that the expanded Sage operation will be in the top two players in the German payroll market.
Individual deals like this are not likely to shift the needle for this company that turned over £657m in the first half (to March 2014) but may be indicative of the group’s strategy as it goes forward under its new CEO, as and when he/she is appointed. See “Change at the top for Sage”. The company is striving for a target of 6% revenue growth over the next couple of years (after 5% at the half year) and although this represents an improvement on the recent past, it still falls well short of that produced by Cloud-based competition. Sage is shifting its services to cloud, but it will be looking for other ways to build its growth rate and market position. Hoovering up reasonably sized local competitors may well be a route to more-cross-selling, deeper customer relationships and increased potential share of wallet.
By buying customer lists and then providing a wider range of services, the management of Sage would expect to see a route to growth in both revenue and profit and a more stable outlook in an increasingly competitive market. Although the company had net debt of £384m at the year end, it had returned over £570m to shareholders by means of dividends and shares repurchases and had free cash flow of £268m. Perhaps we should expect a shift by the management to invest more of this cash flow into similar deals in the future.
Posted by Peter Roe at '09:43'
Today’s joint announcement by Monitise and IBM will do much to dispel concerns surrounding the strategy of the mobile money solutions provider that were brought into focus by the cautious trading update earlier this month, see “Testing Times for Monitise”.
Monitise and IBM have expanded their multi-year global alliance, by linking IBM’s MobileFirst portfolio and expertise in Financial Services and Retail with Monitise’s mobile banking and payments capabilities.
This deal represents a major step forward in de-risking Monitise’s strategy. The success of Monitise’s bank, buy, pay strategy depends on the speed of roll-out and its widespread acceptance. We consider that the deeper link with IBM provides clear access to scale and global reach as well as real credibility in the target customer base of larger banks and big retailers. The link also gives Monitise access to IBM’s analytics and campaign management capabilities and a wider developer eco-system which should improve speed to market for elements of value-add and differentiation.
The Monitise Central Platform will run on IBM’s Softlayer infrastructure. The use of the BlueMix development environment together with the development of pre-configured applications should also speed implementation of the Monitise solution into the systems stacks of the larger financial institutions. The deal will also give Monitise additional impetus in the important US market.
The Monitise management still has much to do. Aligning the objectives and clock rate of the Monitise team and that of IBM Global Business Services will require significant effort and investment. There is a lot going on at IBM (See IBM 2Q: Positive signals?), but this agreement is clearly mutually beneficial, giving IBM access to a leading edge mobile commerce portfolio and further strengthening its mobile credentials after the Apple alliance announcement last week. This is a very positive move for Monitise.
Posted by Peter Roe at '08:44'
Netcall, the AIM-listed customer engagement and business process management (BPM) software player, updated the markets with very encouraging news that it is seeing double digit new sales growth from both existing and new customers.
This strong growth includes the first orders for its new social media and PCI payment solutions, which it gained from the February acquisition of social media monitoring player Sentiment (see Netcall takes on social media sentiment).
Cash is also on the rise, reaching £11.4m by 30 June, from £10m at the end of December 2013. So it should 'comfortably' meet expectations for its full year ended 30 June.
Customer engagement is an area of increasing importance to end users right now, as they drive to make investments in new digital channels and services that can drive the all-important improved customer experience. Netcall is doing the right thing expanding its breadth of products and services to meet this demand, while a blended SaaS and premise delivery around its core Liberty customer engagement platform provides the much needed flexibility.
Posted by John O'Brien at '08:41'
Delighted to report that Jacqueline de Rojas has been appointed as VP Northern Europe at Citrix – reporting in to Carlos Satorius GM EMEA. As Jacqueline said "My decision to join Citrix was clear from the outset: the future of work is mobile'. Well, at least someone's been listening!
We’ve known Jacqueline for a fair number of years – most recently as GM UK&I at CA Technologies. She’s also held roles at McAfee, Novell, Cartesis, Business Objects and Informix.
But it is via her roles both on the Committee of the Prince’s Trust Technology Leadership Group and on the board of Intellect/techUK that we’ve got to know her best. And indeed rate her highly.
Posted by Richard Holway at '14:38'
The troubles of the UK banks are being added to by the announcement that the UK competition authorities are to launch a wide-ranging probe into their lending activities and the lack of differentiation in current account services. This seems to be at the wrong time, certainly for the established banks. New challenger banks are coming out of the woodwork at a rapid rate and are beginning to take market share. For example, Investec reports that challengers have 29% of the market for mortgages and this proportion is forecast to double over the next four years. Current account switching is also accelerating after the introduction of the Faster Switching service, although not yet at the rates earlier predicted. The established banks are between a rock and a hard place as their legacy infrastructures, system spaghetti and a barrage of new regulation limit their ability to change and their speed so to do.
Elsewhere, in the insurance sector, Stephen Hester, the newly-appointed head of RSA (ex-CEO of RBS) has announced his intention to cut costs by almost a tenth over the next three years. Technology modernisation will be an important part of this programme. Nevertheless the insurance sector faces its own problems of legacy infrastructures, regulation and satisfying an ever-more demanding customer base.
Subscribers to FinancialServicesViews can read about the problems that banks and insurance companies face in our two recent publications; Hot Topics and Opportunities in Banking and Hot Topics and Opportunities in Insurance. If you are not a subscriber yet, please contact Deb Seth in our Client Services team.
Posted by Peter Roe at '09:58'
IBM’s results for the second quarter give the optimists some ammunition, but not over much. Earnings were slightly ahead of market expectations at $4.32 per share and up 34% over the year as cost cutting and share buybacks continued. Revenue was also a tad better than forecasts at $24.4bn, but still down 1% across the Group when adjusted for currency and divestments, no change from first quarter figures, reported in UKHotViews, here.
Revenue in the US was ahead by 1% , but Europe and Asia Pac showed year on year declines of 3% and 6% respectively. “Growth Markets” showed a revenue decline of 4% in constant currency with sales in the BRIC countries just ahead.
The targeted transformation of IBM will be brought about by a shift in business mix. The proportion of revenue from hardware (Systems and Technology) is certainly declining, with revenue down 12% over the year (@cc). Software sales (27% of revenue) were flat. The more difficult part of the re-balancing act is to grow Services revenues. Global Technology Services (39% of revenue) was up 2% (adj.) but the Global Business Services operation (18% of revenue) retreated by 2%. The 3% decline in Services order backlog is a further sign of much still to do.
Nevertheless there are some positive signals. Cloud revenue is up 50% ytd, new hybrid cloud services over the SoftLayer infrastructure have been announced and there is good growth in analytics, mobile and security. The Apple deal, see here, shows a new pragmatism. A recent briefing by Global Business Services in London also gave significant grounds for optimism in terms of domain expertise and potential in Big Data and working with customers to transform legacy environments. Some good stuff, but it will all take time.
Posted by Peter Roe at '09:11'
Well, it has to be said that it’s not that usual to see one of the mid-tier Indian offshore services firms growing faster than the market leader. But that’s just the case for Bangalore-based Mindtree, which kicked off its FY (to 30th June) with headline revenues of $141m, 20% higher yoy and over 6% higher than the prior quarter, pacier growth than TCS (see TCS starts as it means to go on). Mindtree's EBITDA margins expanded nearly two points yoy to 20.0%, though down 150bps on the prior quarter.
All in all that’s a heck of a result. I shall delve deeper and will have more to say in the next edition of OffshoreViews.
Posted by Anthony Miller at '08:33'
There was no shilly-shallying at the start of the FY for India’s most successful offshore IT and business process services firm, TCS. Headline revenues for Q1 (to 30th June) soared by nearly 17% to $3.7bn, 5.5% higher than the prior quarter (the best sequential growth for three years) and a little faster than it kicked off the prior FY.
Operating margins eased back 70bps yoy to 26.3%, though nearly three points lower than the prior quarter, as (I assume) annual wage rises kicked in. TCS’ UK business was no slouch either, growing by over 10% to c. £390m. ‘Adjusted’ attrition spiked to 12%, the highest for over two years.
So TCS still keeps its growth and margin advantage over Infosys (see Infosys just about holds the line – but not the people) – and, it seems, its people advantage too.
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 '08:04'
Yesterday Microsoft announced the loss of 18,000 jobs equivalent to c14% of its 127,000 workforce. The bulk – 12,500 – come from its Nokia division and caused deep shock in Finland.
One can only conclude that Satya Nadella does not share the same enthusiasm for getting into mobile hardware that drove Steve Ballmer to spend £3.2b on that acquisition so shortly before he announced his departure. Just as Google has quickly got rid of its hardware division after purchasing Motorola, it would come as no surprise if we reported a similar disposal of Nokia in the year to come.
The only advice we can offer is to ex-Nokia CEO Stephen Elop (now SVP of Microsoft's Devices & Services) is not to travel to Finland in the near future as he might find himself on his own ‘burning platform’ with nobody around to save him this time. See Nokia slipping into icy waters. Finland’s Finance Minister has accused Microsoft of ‘deceiving the people’ with the promises made to the local workforce.
Worth adding though that the market loved it all. Microsoft shares hit $45 – their highest since the dotcom days of early 2000.
Posted by Richard Holway at '07:32'
Google’s revenues in Q2 grew 22% yoy to $16.8b but profits grew just 6% to $3.4b - below expectations. As you can guess, that’s because operating costs rose much more rapidly with R&D up 27% and admin costs up 28%. Google has added 2,500 people since March 14
It was Google’s advertising which underpinned the results. Paid clicks were up 25% but the ‘cost per click’ continued to decline (by 6% this time) as Google’s users move to mobile. But eMarketer has reported that Facebook is denting Google’s growth in mobile. Google’s share of US mobile ad spending dropped from almost 50% in 2012 to 41.5% in 2013 but Facebook increased sharply where market share of US mobile ad revenues jumped from 9% in 2012 to 15.8% in 2013. Google's non-advertising revenues – which include things like sales of Nexus devices and revenue from Google apps and cloud services – are also growing well, up 53%
Non US revenues are now 58% (was 55% in Q2 2013) of Google’s revenues. UK revenues were $1.62b; the same ‘10% of total revenues’ as reported last time. But a chart in the Google presentation shows that this growth reduces to just 1% after excluding exchange gains as the £ has strengthened considerably in the period.
All-in-all these are pretty good results and the market reacted positively marking Google shares up 1.2% in after hours trading.
Posted by Richard Holway at '06:41'
T 01252 781545
Website Terms & Conditions
The TechMarketView name and logo are registered trademarks of TechMarketView LLP
® | © Copyright TechMarketView 2007- 2014
You can change your cookie settings at any time but parts of this (and other sites) may not work as a result.