Search through our UKHotViews and UKHotViewExtra articles plus complete research reports
Back in January, several media companies including The New York Times threatened legal action against the use of its content to train OpenAI’s foundation models, fearing significant lost revenues and infringement of their proprietary journalism (See - NYT sues OpenAI and Microsoft). The NYT is not the only ones to go down the legal route, with a number of authors including George R.R. Martin and image hosting site Getty images among those seeking financial redress. However, OpenAI is but one company in a broad AI ecosystem and financial reparations are not going to be a long-term solution. Many media organisations are realising it is far too late to stem the tide of GenAI.
Instead, others are embracing the technology, the latest of which is The Financial Times, who has signed a deal with OpenAI to license its content for the development of AI models and allow ChatGPT to answer queries with summaries attributable to the newspaper. Financial terms of the agreement were not however disclosed. It follows similar deals by OpenAI over the past few months with the Associated Press, global news publisher Axel Springer, France's Le Monde and Spain-based Prisa Media. The latest deal will help enhance the ChatGPT chatbot with archived content from the FT and the firms will work together to develop new AI products and features for FT readers.
Generative AI ultimately poses a huge risk to media organisations and those relying on advertising from internet search. If readers will get answers to their questions (including possibly the important news of the day) all in one place, why go to multiple different sites? For now, using AI tools like ChatGPT in this manner is a way off mainstream use, but you can see the direction of travel. It certainly feels like a ‘Blockbuster’ moment for the media industry, embrace AI and find new ways to add value and generate revenue, or fall by the way side.
Posted by: Simon Baxter at 17:33
Tags: media
New Jersey-headquartered Business Process Services (BPS) specialist Conduent has become the latest SITS provider to announce a Gen AI partnership with Microsoft as it looks to use Azure OpenAI services to enhance its digital BPS offer for clients.
Conduent’s Gen AI strategy will focus on a range of partnerships with “best in class providers” so we anticipate other relationships will materialise in due course. Initially, services will be geared towards “augmentation”, in other words assisting and enabling Conduent agents rather than replacing them on mass with bots. The value add is expected to come from Gen AI helping improve the quality-of-service delivery as well as increasing contract productivity via faster processing.
Conduent has looked at several potential use cases within its service portfolio starting with three main areas, with pilots now underway in each. Firstly, in the Document Management space where Conduent is using Gen AI in understanding and translating text, as well as extracting information from banks of documents and images. The initial use case is focused on using Azure AI Document Intelligence and its OpenAI Service to improve the healthcare claims adjudication process by increasing the quality of data extracted from claims forms, improving the classification of information or in identifying missing information.
The second use case is in the contact centre where Conduent is using Azure AI Language Service, Azure AI Speech Service and its OpenAI Service to enhance the overall user experience. This is seeing virtual agents and agent assist capabilities added to call centers designed to increase accuracy and speed of query resolution, thus boosting agent productivity.
The final use case being piloted is in Search and Analytics where Azure Data Factory and Azure OpenAI Service are being used to help increase the volume of fraud detection in the payments space using improved contextualisation and pattern recognition across both structured and unstructured data sets.
The BPS environment is ripe for digitisation and automation of service delivery. Gen AI offers the latest route to accelerating this trend. Conduent is not the first and won’t be the last to take the step, having sensibly started with a small number of relevant use cases with high potential, where it has deep contextual knowledge and experience. Sensibly, Conduent is targeting not only client services but its transformation of its own internal operations.
Posted by: Marc Hardwick at 15:06
Tags: partnership genAI
In the latest episode in TechMarketView's series of Totally Sust podcasts, SustainabilityViews’ lead analyst, Craig Wentworth, interviews Henry Franks (Chief Technical Officer at Climate Policy Radar) about how they're using AI to extract value and meaning from 100,000s pages of climate regulations and data the world over—and what uses this insight is being put to (and by whom).
The discussion ranges around the issues of having data locked up in PDFs (in multiple languages), the tools required to provide interoperability across myriad sources, and how (and why) Climate Policy Radar makes its data, analyses and platform available for others to use and build on.
An edited (12-minute) version of the podcast is available to stream for free now on SoundCloud and Spotify.
Subscribers to our SustainabilityViews research stream, however, can get access to the full 30-minute episode.
To understand more about how our new SustainabilityViews research stream can help your organisation understand its sustainability obligations, obstacles, and opportunities, please contact Deb Seth.
Posted by: Craig Wentworth at 13:16
Tags: podcast climate data
London-based recycling tech startup Sorted has raised £1.65m in a seed funding round led by Pi Labs with participation from Archipelago Ventures, Circular Plastics Accelerator, Conduit Connect, and Antler.
Founded in 2022, Sorted’s AI-powered tech (leveraging computer vision, spectroscopy, and coloured lasers) helps waste management companies sort their recyclable plastic based on resin and usage. Its solution is designed to enhance the efficiency and effectiveness of recycling operations, reducing the amount of recyclables materials that end up in landfill and incineration (and thereby promoting sustainable practices in the industry).
Customers include waste management and recycling firms in France and the UK, such as Cawleys and Suez UK.
Capturing valuable recyclable materials at end of life is an important component of the circular economy model (easing pressure on natural resources and reducing emissions from plastics manufacturing), use cases from which feature in TechMarketView’s Sustainability Technology Activity Index – our unique take in the sustainability technology landscape.
Subscribers to our SustainabilityViews research stream can download the Index now. If you are not yet a subscriber, or would like to learn more about our sustainability research, please contact Deb Seth for more information.
Posted by: Craig Wentworth at 09:35
Tags: funding recycling circular economy
We have now opened up this piece of research - View from the Chief Analyst - as a 'free-to-view' report. If you'd like to access more in-depth research and analysis from TechMarketView, please contact Deb Seth.
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On 11th April, the Competition and Markets Authority (CMA) published a paper updating on its work reviewing the impact of AI Foundational Models on competition and consumer protection.
It has only been six months since it had published its previous paper. Yet, such is the nature of the market, that in that time, a range of developments have altered the shape of the Foundational Model ecosystem. And the CMA is worried that the GAMMAN companies – namely Google, Amazon, Microsoft, Meta, Apple, and Nvidia - have both the increasing ability and the incentive to shape the market in their own interests.
In this latest ‘View from the Chief Analyst’, Georgina O’Toole (pictured), considers whether the CMA is justified in its view of the GAMMAN companies and the potential for their behaviours to negatively impact competition in the Foundation Models market. She also looks at what evidence there is of damaging behaviour to date. And finally, she considers whether, if the CMA decides to pursue enforcement action against the GAMMAN contingent, it really has the teeth to enact change.
In answering these questions, Georgina also obtains fascinating insight – in ‘A Conversation With…’ - from TechMarketView’s Principal Analyst, Simon Baxter (pictured), during which she explores a range of topics including; fears of hyperscaler dominance, market consolidation of AI foundation models, and the competition amongst suppliers across the AI ecosystem.
Posted by: HotViews Editor at 08:47
Tags: AI hyperscalers competition LLM CMA Foundation+Models
Cloud enterprise software provider IFS published a strong set of Q1 results towards the end of last week reflecting a strong start to the new FY. Headlines include Q1 software revenue of €217m, an increase of 19% versus Q123, recurring revenue of €209m, up 21% YoY, whilst net revenue was €269m, up 16% YoY.
The first three months of the year build nicely on the firm’s performance in FY 2023 where net revenue was up 30% to €1.1bn, and Annual Recurring Revenue was up 26% - with the firm targeting the $1bn ARR milestone this year. New CEO Mark Moffat (see Changes at the top for IFS) is attributing the growth to the firm’s “customer-centric approach is a key differentiator, especially in a world where we see our competitors peddling their own agenda over that of their customers”.
Customer focus certainly seems to be delivering, with IFS continuing to add new names that are moving away from legacy ERP vendors. It is certainly true that IFS offers something different in the ERP market, with industry specialism developed through 40+ years of operation, and with a single solution covering not only ERP but field service management (FSM), IT Service Management (ITSM) and Enterprise Asset Management (EAM). EAM is a differentiator and a growth area benefiting from development in digital twins and Industrial Internet of Things (IIoT). This has seen IFS add Modulaire Group, NGE, Evergy and the US utility company, Exelon in the last three months alone.
IFS Chief Financial Officer, Matthias Heiden, added, “Market conditions in 2024 are still volatile which puts our performance trajectory into context. 26% ARR increase year-on-year combined with strong subscriptions renewals is setting us up for continued steady growth in 2024.”
Posted by: Marc Hardwick at 08:23
Tags: results software
FY24 results out from HCLTech on Friday showed the firm’s revenue growth dampened significantly in the 12 months to end March 2024. Top line growth dipped to 5.0% (to $13.27bn) from 13.7% in FY23. That 5.0% comprises growth of 6.2% in IT and Business Services, just 1.6% in Engineering and R&D, and 2.3% in HCLSoftware. Media reports indicate HCLTech did not hit financial analysts’ expectations for Q4 revenue and margin performance.
However, seen in the context of results from other Indian PurePlays (IPPs), HCLTech’s performance is comparatively good. As readers will have seen recently, other tier one IPPs didn’t quite match that 5.0% headline growth. TCS was +3.4% (but 10% in the UK), Infosys was +1.4%, and Wipro was down 4.4%. Outside of the tier one players, and also reporting recently, was Tech Mahindra, down 4.7%, and LTIMindtree, +4.2%.
The four-year revenue growth CAGR (from FY20-FY24) is 7.5%, masking a trend line that has looked something like a big dipper. The EBIT margin has stayed hovering at around the 18% mark, but down from a recent high of 20.5% in FY22. One of the factors influencing this has been higher wage costs.
Down a level, HCLTech’s Services line (down from growth of 15.8% last year to 5.4% and comprising IT & Business Services and Engineering & R&D) saw a mixed bag of results by vertical. Fastest growing was Financial Services (+12.1%) followed by Manufacturing (+9.8%). At the other end of the spectrum was Public Services (roughly flat) and Technology and Services (-8.6%). Europe Services grew 5.5%, slower than the Americas (+6.8%) but helping to counter to 7.1% decline in the Rest of the World segment.
HCLTech's top 20 clients now account for almost a third of total revenue and the number of clients worth $100m+ continues to tick upwards reaching 22 in FY24. Key GenAI deals announced in the results documents cover a spectrum of solutions but tend to be skewed towards the US and technology clients.
Broader market trends, for example, customer attention on ‘sweating’ existing investments, have impacted HCLTech – as they of course have others too.
For FY25, HCLTech is forecasting growth of 3-5% (constant currency) and an EBIT margin of 18-19%.
Posted by: Kate Hanaghan at 06:55
Tags: results
My HotViews article over the weekend on Darktrace’s acquisition by Thoma Bravo has been viewed over 10,000 times on LinkedIN. Obviously tech readers don’t switch off for the weekend! From the comments, clearly many readers lament the departure of one of the last really exciting large tech companies from the London Stock Exchange. I commented that the only UK holding in the £1.5b Allianz Technology Trust (#ATT) was their recently acquired stake in Darktrace. There are four major UK Tech Investment Trusts:
So here we have UK Investment Trusts with £20 Billion of UK residents’ funds to invest but c0.5% are invested in UK listed tech companies! Most of these tech investment trusts have the Dow Jones World Tech Index as their benchmark. This rose 48% in calendar 2023. Ahead of NASDAQ which was up 43%. But the UK’s Techmark index was up a meagre 4% - although the FTSE UK Software and IT Services Index was up 35% in 2023. Against this #ATT’s NAV in 2023 was up 46.4%, #PCT up 45.9%, #HIT up 36.8% but #SMT down 2%. NONE of the Investment Trusts beat the benchmark index. Ie you would actually have done better investing in an index tracker. But the Investment Trust managers would argue that active management is best. Well, how else to justify their fees? On the surface, all these Investment Trusts did well to steer clear of UK listed stocks. But if they really were good ‘active’ stock pickers they could have done much better investing in selective UK stocks. Like Darktrace which doubled in the last year or ARM which is already up 100% since their Sept 23 IPO. But the real issue here is that we have £20 billion of UK residents’ investments of which practically none is backing UK listed tech companies. Perhaps if they had done we wouldn’t be in the current sorry state.
Footnote - This post has been amended post publication to correct #HIT's UK tech holdings.
Posted by: Richard Holway at 21:54
Yesterday Darktrace agreed a bid from US Thomo Bravo at $5.3b/620p per share. For more info read Simon Baxter’s HotViews post.
I should declare that I have been a Darktrace shareholder since their Apr 2021 IPO at 250p. Indeed I watched in glee as they soon after rose to 945p…before collapsing all the way down to below the IPO price by Feb 2023. But I guess I should be ‘happy’ with a c150% three year return.
So why do I feel so gloomy?
Darktrace was perhaps the last really exciting, large UK listed tech company. They were deeply associated in combining AI and cyber security – two of the most exciting areas in tech right now. Darktrace lashed out saying they believed they had been undervalued compared to their peer group. A peer group that is largely listed in the US. And they are clearly right.
As many readers know I was a director of the Allianz Technology Trust #ATT from 2007 to 2019 during which time it grew from a value of £50m to £1.4b. As a director it was not my job to stock pick. That was a role ably filled by Walter Price - the #ATT Fund Manager we appointed in 2007. But, at nearly every board meeting, I harangued Walter to consider UK stocks. Afterall #ATT investors were pretty much all UK residents. So each time Walter visited the UK he would go see some UK listed companies and (totally at his decision) invested in the likes of Autonomy, ARM, Blinkx, Aveva, Sophos, Blue Prism, et al. Regardless, the UK investments at #ATT never amounted to more than a few percentage points of the portfolio. But the UK listed investments #ATT made did well.
Why?
Because almost every one of them was bought at a sizeable premium!
When I stepped down from the board in Dec 2019, and Walter Price retired in 2021, #ATT reduced its UK holdings to zero.
Despite not being a director I was (still am) a major #ATT shareholder and, as readers know, care greatly for UK tech. So I wrote to the #ATT Chairman and new fund manager, Mike Seidenberg, highlighting the lack of any UK tech investments in the portfolio.
So I was delighted to hear when I attended the #ATT AGM on Wed 24th Apr 24 that the fund had just bought a slug of Darktrace shares representing 0.3% of the now £1.5b #ATT portfolio. It must be the shortest time and highest short term profit of any #ATT investments.
Maybe this is what UK tech has become – the ultimate fishing pond for US companies and investors looking for ‘great tech on the cheap’. But UK tech has always been ‘too cheap’. It really is no wonder that so many are fleeing State-side. Investors – and here I mean UK pension funds and investment trusts as well as retail investors – will only really have themselves to blame if there are no more UK listed tech firms to invest in.
I could cry…
Posted by: Richard Holway at 08:23
In breaking news this morning, UK cybersecurity provider Darktrace announced that it has agreed to sell itself to private equity firm Thoma Bravo, for a value of about $5.32bn. The deal will give Darktrace holders $7.75 in cash, or 620 pence per share. Shares closed at 517 pence in London trading on Thursday, giving the company a market value of £3.6bn.
Thoma Bravo walked away from talks to buy the company in 2022 after the companies couldn’t agree on terms (See - Darktrace takeover talks collapse), but it would seem that the value on offer was too much to pass up this time round. Even with the c20% premium paid the share price is still down c.38% from the highs we saw in 2021. Darktrace will join Thoma Bravo’s already impressive Cybersecurity portfolio which includes the likes of Sophos, Proofpoint, Sailpoint, Sonicwall and McAfee.
Cambridge-based Darktrace, which first listed on the LSE in 2021, lashed out at the state of the London public markets (and rightly so), complaining that its financial performance “had not been reflected commensurately in its valuation” with its shares being consistently undervalued relative to US peers such as Crowdstrike and Palo Alto Networks. The deal represents great value for a business that grew 26.5% in Q3 with an expected acceleration of growth in the second half of the year – See Darktrace up 26.5% in Q3, raises guidance for “H2 of re-acceleration”.
So there departs another of one of the UK’s most promising publicly listed tech stocks. Tech investment prospects still look bleak for those who want to invest in the UK, with the GAMMAN companies – namely Google, Amazon, Microsoft, Meta, Apple, and Nvidia, continuing to be the primary choice for those looking to capitalise on the AI boom, with no comparable UK alternatives remotely in sight.
Posted by: Simon Baxter at 10:26
Tags: acquisition cybersecurity
Faculty has been awarded a £2m contract to help deliver the NHS Artificial Intelligence Deployment Platform (NHS AIDP) pilot for medical imaging diagnostic technologies.
The AIDP will act as a hub for radiological images submitted by NHS trusts, routing these images for interpretation by AI products supplied by a range of vendors. If the results pass performance checks when the pilot is running in shadow mode, trusts will have the option to move to live mode, which will see results transferred back into hospital systems to help support radiologists with their clinical diagnoses.
The pilot is intended to test whether having a centralised platform and deployment processes will: 1) accelerate the safe and ethical deployment of AI across multiple hospital sites; 2) provide a cost and time-effective standard deployment process for AI products for the NHS; 3) provide access to post-market surveillance resources of AI vendors; 4) provide a case study for accelerating the broader adoption of technologies across the NHS; and 5) test the approach before a potential switch to live mode.
Faculty will act as the prime contractor for the delivery of the AIDP. It will work with Cimar (provision of the core AI Deployment Platform), Royal Surrey NHS Foundation Trust (pseudonymisation and post-market surveillance technology) and a range of AI product vendors covering chest x-ray and computed tomography (CT) scans, musculo-skeletal x-ray and prostate magnetic resonance imaging (MRI). The 18-month pilot will work with NHS Trusts in the East Midlands Radiology Consortium (EMRAD) and Thames Valley Radiology Network (TVRN).
London-based Faculty has been heavily involved in the ethical application of AI in the health sector, including helping to understand the biosecurity risk landscape, modelling patient flow, enhancing medical imaging processes, and supporting COVID-19 mitigation initiatives. Its work with the AIDP is an important part of efforts to to make medical diagnostics more efficient and scalable, which in turn should boost NHS productivity and lead to better outcomes for patients.
Posted by: Dale Peters at 10:21
Tags: nhs contract health AI
As expected, AI continues to be a major factor driving revenue growth for Microsoft, with total Q3 revenue up 17% to $61.9bn. Investors responded positively with shares up c.4% in pre-market trading.
Growth across the various segments was broadly in-line with Q2. Revenue for Productivity and Business Processes was $19.6bn, up 12% yoy, Intelligent Cloud revenues were $26.7bn, up 21% and More Personal Computing was up 17% to $15.6bn. Azure growth shows no signs of slowing down, up 31% yoy, with AI services contributing 7 points of growth (up from 6 points in Q2, and 3 points in Q1). Overall Microsoft Cloud revenue was $35.1bn, up 23% yoy. Commercial bookings jumped 29% yoy, driven by growth from large, long term Azure contracts, including a $1.1bn deal with Coca-Cola for Azure cloud and AI.
The number of Azure AI customers continues to grow with more than 65% of the Fortune 500 now using the Azure OpenAI Service. Nearly 60% of the Fortune 500 now use Copilot according to Microsoft, with companies like BP, Cognizant, Moody’s, NVIDIA, and Tech Mahindra all purchasing over 10,000 seats. Microsoft also said that 30,000 customers have used Copilot Studio to customise Copilot for Microsoft 365 or to build their own, up 175% QoQ. Microsoft CFO Amy Hood said during the company's earnings call that the tech giant is seeing near term AI demand outstrip available capacity.
Microsoft also saw an acceleration of revenue from migrations to Azure, with the number of $100m plus Azure deals increasing over 80% yoy. It also highlighted the importance of being the ‘hyperscale platform of choice’ for SAP and Oracle workloads, with Conduent and Medline moving their on-premises Oracle estates to Azure, and Kyndryl and L’Oreal migrating their SAP workloads to Azure.
As well as its significant investment in OpenAI, Microsoft continues to rely heavily on partners to bring customers a selection of foundation models and open-source models, LLMs and SLMs, including those from Cohere, Meta, and Mistral. Earlier this week it announced Phi-3, a number of SLM’s (small language models), which are already being trailed by companies including LTIMindtree, PwC, and TCS.
Over half of Azure AI customers also use Microsoft’s data and analytics tools. TomTom for example is using Cosmos DB, along with Azure OpenAI Service to build their own immersive in-car infotainment system. Microsoft Fabric also continues to gain traction, with now over 11,000 customers. Fabric is integrated with Azure AI Studio, meaning customers can run models against enterprise data that is consolidated in Fabric’s data lake, OneLake. GitHub Copilot is also helping to drive growth, with 1.8 million paid subscribers, up 35% QoQ, and GitHub revenue up 45% yoy.
Posted by: Simon Baxter at 10:15
US headquartered, SS&C Technologies largely maintained the acceleration in growth which built during the latter part of FY23 through the first quarter of the new financial year. The global provider of services and software to the financial services and healthcare industries saw revenue for the three months ended 31st March increase by 5.3% (4.7% organic) yoy to $1.435bn. Net incomefor the period improved significantly rising by a quarter yoy to $158m.
Reporting stronger market conditions, the company cited its Intralinks business, which provides virtual data rooms for M&A, banking and securities, and alternative investments, as the primary driver of the Q1 top line uptick. The first quarter also saw Lloyds Banking Group (LBG) and Schroders select SS&C to support their activities in the UK. The deal related to Schroders Personal Wealth, a joint venture between the two providing financial advice and wealth management services to LBG customers both online and face to face (see: Lloyds Banking Group and Schroders j.v. selects SS&C).
The company, which owns RPA specialist Blue Prism, continues to deploy intelligent automation and generative AI throughout its operations. Commenting on the latest results, Chairman and CEO, Bill Stone stated that SS&C is now seeing real benefits in client service and productivity flowing from these investments.
In February, the company issued guidance for the current fiscal equivalent to 6.6% revenue growth at the top end. The Q1 performance leaves SS&C firmly on track to deliver against this expectation.
Posted by: Duncan Aitchison at 10:12
Tags: results software financialservices IT+services autmation
Tech Mahindra capped off FY24 with another largely lacklustre quarter. A 6.4% constant currency yoy decrease in revenue for the three months ended 31st March (Q3: -5.4%) meant that turnover for the full fiscal of $6.28bn declined by 4.7% against the prior year. The top line softness hit the bottom line hard. EBITDA for the period fell by almost 40% yoy to $599m. This knocked 550 bps off the corresponding margin which fell to just 9.5% from 15% in FY23.
The only bright spot across the offshore major’s sector and regional business portfolio was the Manufacturing vertical. Now accounting for around a fifth of firm-wide sales, revenue from this industry segment increased by over 7% yoy during the last financial year. Turnover from Tech Mahindra’s largest vertical, Communications, Media & Entertainment, shrank by over 12% yoy to $2.3bn.
From a geographic perspective, it was the firm’s Americas territory which proved the most resilient last year. The top line yoy decline in this region, which generates about a half of global revenues, was a modest 1.4%. In Europe, Tech Mahindra saw its sales drop by over 8% against FY23 to c.$1.5bn.
No forward guidance was provided by the company. There were, nonetheless, a couple of more positive indicators in the Q4 numbers. EBITDA margin for the period improved sequentially by 220 bps to 10.9% and net new deal wins increased by c.30% qoq to $500m. Neither of these data points, however, suggest there will be an imminent reversal of Tech Mahindra’s fortunes. Commenting on the FY25, CEO, Mohit Joshi said the company looks forward to an "improvement in clients spending". For now, this feels more like an expression of hope rather than a statement of expectation.
Posted by: Duncan Aitchison at 10:00
Tags: results offshore IT+services
Results out overnight from Alphabet saw the firm beat financial analysts’ expectations in terms of both revenue and EPS.
Google’s parent achieved earnings per share of $1.89 and Q1 revenue of $80.54bn (+16% in constant currency). In EMEA, Alphabet revenue grew slower at 12%. Following Meta’s lead in February, Alphabet announced its first ever dividend - 20 cents per share and to be paid in June. The Board has also approved the repurchase of $70bn in shares.
In the Google Cloud segment, revenue increased c.28% (as reported) to $9.5bn (up from 25.5% in Q4). Here, we continue to see significant enrichment of collaboration with its partner ecosystem. Google’s rock-solid heritage as a data specialist sets it apart from the other hyperscalers, while its position and ongoing investment in AI continues to help fuel extensive activities amongst both partners and end customers.
TechMarketView customers can read more analysis on the performance and moves of the big tech vendors and their partners (big and small) by using our EXTENSIVE HotViews archive.
For market trends and analysis in complex, fast-moving markets, see recent research including: AI: Market trends, use cases, and suppliers and Quantum acceleration is on the horizon.
For more on how the likes of Google are working with the world’s largest systems integrators, see our unique Market Readiness Index for our tech buyer clients, out next week.
Contact Deb Seth to get access to the UK’s best market and supplier research.
Posted by: Kate Hanaghan at 10:00
Fujitsu has released its FY23 results (year to end March 2024), which showed notable improvements inside its core Service Solutions business. Top line revenue for the whole of Fujitsu was up 2.2% to 3,756 billion yen. Profit for the year was 254.4 billion yen, an increase of 39.2 billion yen from the prior year.
In Service Solutions, the performance was good – and the key driver of the company’s improved profitability. The top line increased 9.9% to 2,137.5 billion yen. Adjusted operating profit was up (to 237.2 million yen) with the margin improving to 11.1% – an increase of three percentage points over FY22. Driving that was the increase in revenue but also improvements in productivity – including better use of Global Delivery Centers and standardisation in development work. Profitability was squeezed a bit by investments in growth areas (notably Uvance offerings and employee training), but this is essential – and planned. Fujitsu is also “strengthening” investment in R&D in five key areas, including AI and quantum computing (see TechMarketView’s latest research: AI: Market trends, use cases, and suppliers and Quantum acceleration is on the horizon). Japan’s Service Solutions revenue grew faster at +12% with Fujitsu’s home country registering “solid growth” in digital and modernisation deals.
Over in Europe, there was a “pull-back” in orders from last year’s “large-scale” deals with the carve-out of the German private cloud business also impacting the numbers. The UK, which is Fujitsu’s largest subsidiary outside of Japan, does not get a specific mention as per usual. Contract renewals and new wins suggest progress in the commercial sectors, but we think Fujitsu needs to put more focus on getting deeper into some key sectors. Of course, it is unprecedented times for this business in light of the Post Office Horizon IT Inquiry (read our analysis: Impact of Post Office Inquiry on Fujitsu and wider IT industry) and the tsunami of related media coverage. The UK is not surprisingly investing considerable time into communicating with customers, partners, and employees. A major programme is underway to ensure the business responds in the best possible way to the Inquiry (which is still ongoing) and repositions itself appropriately for the longer term.
Posted by: Kate Hanaghan at 09:55
ServiceNow has announced its results for Q1 2024 (ended 31 March 2024), again exceeding guidance – see last quarter: ServiceNow exceeds Q4 guidance, raises outlook – by posting total revenue of $2.6bn year-over-year (up 24% in constant currency), the vast majority of this figure being subscription revenue ($2.5bn, up 24.5% ccy).
It’s been (another) bumper quarter for ServiceNow, with the company recording eight transactions over $5m net new annual contract value (ACV) – double the number from Q1 2023. It now sports 1,933 total customers with >$1m ACV (representing a 15% yoy growth).
Unsurprisingly, in this age of AI-fuelled everything, ServiceNow credits its GenAI-powered Now Assist “experience” with providing the largest net new ACV contribution to date of any new product family launch in a comparable period. New variants, such as Now Assist for ITIM AIOps and Impact AI Accelerators came to market during the quarter. On the subject of GenAI, ServiceNow’s expanded partnership with NVIDIA resulted in the introduction of new telco-specific GenAI solutions (in February); and in the same month acquired telco-focused NetACE network management and automation technology from Israel-headquartered Atrinet (see ServiceNow targets telcos with latest acquisition). Expect more AI-driven business transformation activity from ServiceNow in the telco space once that deal closes (expected in Q2).
As a result of the Q1 figures, ServiceNow has raised the midpoint of its subscription revenues guidance range for Q2 2024 (to $2.525bn-$2.53bn, representing growth of 21.5%-22%). Full year guidance for subscription revenues now has a slightly raised floor, standing at $10.56bn-$10.575bn (up 21.5%-22%).
Posted by: Craig Wentworth at 09:43
Tags: results telco
Business process specialist WNS grew revenue in Q4 by 6.9% YoY to $336.8m on the back of continuing strong sales activity. This helped WNS end FY 2023 with overall Group revenue growth of 8.1% to $1,323.4m (FY23 $ 1,224.3m). Profits improved slightly on the year previous with operating profit coming in at $140.1m (FY23 $137.3m). Despite the respectable FY results WNS’s share price was down some 10% today as the company reported fourth quarter earnings that came in below expectations.
Q4 revenue continued to grow on the back of new client wins, some expanded contracts, and some favourable currency movement. This was then partially offset by the offshore delivery transition of a large internet client and some volume reductions elsewhere in their portfolio. Q4 profit decreased YoY impacted by the impairment of major Healthcare client contract termination and annual wage increases. This was then partially offset by the revenue growth, some improved productivity and currency movements.
Leadership wise WNS announced that Arijit Sen, the company’s Corporate Financial Controller, has been appointed CFO from July, succeeding Sanjay Puria who is stepping down for family reasons but will continue in an advisory role until April next year. Looking forward WNS is now expecting FY 2025 revenue to be between $1,293m and $1,357m, up from $1,284.3m in FY 2024.
Posted by: Marc Hardwick at 09:31
Sopra Steria is one of several companies publishing first quarter results today with Group revenue coming in at €1,587m, up 13.8% on the same period a year ago. Most of this is inorganic, factoring in the impact of the CSGroup and Tobania acquisitions from March last year and October’s Ordina deal – these acquisitions were worth some €184.1m to the top line in Q1. Organically, Group revenue was flat (+0.3%), held back by its comparison against the strong growth (+9.1%) of the same quarter a year ago.
The UK business continues to perform strongly, posting revenue of €240m, representing growth of 7.4% (all organic). The UK now accounts for some 15% of Sopra Steria revenue globally and was buoyed by “a very robust public sector and a private sector that started to feel the positive effects of new contracts signed in the second half of 2023, which will gradually ramp up over the course of 2024.”
Group CEO Cyril Malargé pointed to market conditions that remain strong for large-scale digital transformation projects but are “substantially less dynamic for discretionary investments”. Strategically, the priorities for Sopra Steria this year remain integration of its acquisitions, with a planned divestment of its banking software business likely to come in Q2 or Q3. As with the rest of the market Sopra Steria has been raising its Gen AI game with investments in its rAIse programme to embrace the technology. The firm’s consulting business, Sopra Steria Next has recently signed new partnerships with Microsoft to assist businesses in implementing of Microsoft 365 Copilot and has joined the NVIDIA AI Consulting Partner Network. Looking forward, the business is targeting organic revenue growth of between 2% and 4% for this year.
Posted by: Marc Hardwick at 08:34
Tags: results itservices
In this latest ‘View from the Chief Analyst’, Georgina O’Toole, considers whether the CMA is justified in its view of the GAMMAN companies and the potential for their behaviours to negatively impact competition in the Foundation Models market. She also looks at what evidence there is of damaging behaviour to date. And finally, she considers whether, if the CMA decides to pursue enforcement action against the GAMMAN contingent, it really has the teeth to enact change.
In answering these questions, Georgina also obtains fascinating insight – in ‘A Conversation With…’ - from TechMarketView’s Principal Analyst, Simon Baxter, during which she explores a range of topics including; fears of hyperscaler dominance, market consolidation of AI foundation models, and the competition amongst suppliers across the AI ecosystem.
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Posted by: HotViews Editor at 18:15
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