UKHotViews
Wednesday 19 June 2013
The transition to a cloud-based subscription model hit Adobe hard in Q2 on a financial level but with accelerating adoption it looks like the strategy is playing through and the market likes what it sees because the share price rose c4% in after-hours trading.
On the positive side subscriptions now number 700,000 vs. 221,000 at the end of Q1 and subscription revenue is now $255m. Product sales are down, to the tune of 26%, but this is expected given Adobe’s strategy of almost completely replacing shrink wrapped software with subscriptions to cloud based software. The impact on revenue and profits is obvious - revenue down 10% to $1.01bn but within management expectations, net profit down from $224m to $76.5m (although this also includes $25m restructuring costs).
Although Adobe needs to make the shift and should be applauded for its wholesale commitment, it is paying a high cost (see the HotViews archive here for the full story). The effects of the change are already dramatic even though it still gets most of its revenue from licences and maintenance. There will be more pain to come as the shape of the new revenue stream starts to come into focus.
Posted by Angela Eager at '10:02'
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Wednesday 19 June 2013
There was encouraging news from Micro Focus in its full year results and outlook. While FY13 (to April 30 2013) saw revenue decline it was in line with expectations, the company believes that by H2 2014 it could deliver a 0%-5% revenue increase. That indicates the effects of readjustment and paring back non-strategic aspects of the business will continue in H1 but, assuming there are no unexpected events, a return to growth is in sight.
FY13 saw revenue drop by 4.8% to $414m on a reported basis, or down 2.4% constant currency. But the profits are still coming in for this mature business with its enduring mainframe and Cobol assets. Pre-tax profits were up 2.8% to $153.4m, or 5.1% constant currency, although some of that was attributable to cost reductions. The operating profit was $161.3m vs. $155.8m, a 3.5% increase. There were some nice operational signs including a small increase in licence revenue and flat maintenance revenue that was better than expected. Having worked on the product line up in FY12 (see here), FY13 was about improving how it went to market and early signs indicate it is making progress.
Micro Focus acquired the CORBA assets from Progress Software during the year (see here) and has signalled this could be first of several acquisitions as it looks for growth and additional returns. With BMC under offer and CA Technologies struggling with growth there could be some asset sales that Micro Focus could take advantage of.
Posted by Angela Eager at '09:09'
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Wednesday 19 June 2013
We said you’d need to move fast to secure one of the last seats at next Wednesday's inaugural Evening with TechMarketView (see here) – and we're now completely sold out!
But you can still put your name down on the waiting list in case a seat comes free. Just let Tina Compton at Intellect know you're interested and she'll put you on the list.
Posted by HotViews Editor at '08:02'
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Wednesday 19 June 2013
We are delighted to welcome Kimble as a TechMarketView banner advertiser. As regular Hotviews readers will know, Kimble has found a growing niche for itself with its SaaS-provisioned professional services automation software. Its Professional Services Management Solution is designed to streamline business processes, drive cost efficiencies and deliver the engine for business growth. To learn more about Kimble follow the banner link above.
If you would like to find out more about the UKHotViews banner advertising service – and how you can put your company's name in front of over 12,000 of the most senior people in UK technology - please contact Helen McTeer on our client services team.
Posted by HotViews Editor at '00:01'
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Tuesday 18 June 2013
Now is the time to speak up if you want to contribute to the debate about how government and industry should work together to “promote the success of the UK information economy sector”. The Department for Business Innovation & Skills (BIS) has published its Information Economy Strategy with the aim of contributing to the growth in the UK economy by helping businesses compete and grow.
The sector on which it focuses is our sector. But is relevant to every sector in the UK. It is about using better using IT to improve the UK’s economic efficiency and productivity, allowing it to achieve strong and sustainable growth. And also about improving outcomes in areas like healthcare, communications, retail and education.
There are four key focus areas in the strategy: investing in skills; updating the UK’s infrastructure; protecting citizens and systems (cyber security); and “leveraging assets in data and human capital”. As the document highlights, some work has already been undertaken in all these areas but there is more to be done. Ensuring continued support for these areas is precisely the right thing to be doing. And it’s great to see the strategy document highlighting where the UK is already leading the way: for example, data, analytics and modelling is put in the spotlight. A Data Capability Strategy will be published in October in partnership with industry and academia.
What’s also worthy of note is the ‘joined up’ approach to the development of this strategy. It is clear that numerous departments have been involved in its development. And some of the messages we have previously seen from the Cabinet Office, particularly related to the support of SMEs in the information economy, are repeated here. Notably, the document states that as part of the efforts for 25% of central government procurement spend to be with SMEs, “at least 50% of spend on new Government IT could flow through SMEs”.
There is much more to digest in the 57-page document. A new Information Economy Council, made up of representatives from Government, business and academia will now set the agenda for actions and monitor progress. If you want to contribute to the strategy as it develops, you can do so through Intellect - http://www.intellectuk.org/information-economy. We all have an interest in making sure we make the UK an attractive place for talent and investment.
Posted by Georgina O'Toole at '09:25'
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Tuesday 18 June 2013
AIM-listed communications services firm, Daisy Group, has released its FY13 results for the year to end March. Revenue from its four divisions (Networks, Data, Systems, Mobile) increased from £348.6m to £351.5m, however operating losses deepened from £13.1m to £16.8m. Adjusted EBITDA remained unchanged at £56.3m.
Despite the losses, the company says it “continued to focus on operational efficiency” during the year, as well as the integration of previously acquired businesses. It is also a positive sign that its traditional fixed line calls business now accounts for a smaller proportion of overall revenue.
The firm has been making a clear play in the strongly-growing mid-sized data centre services market. During FY13, Daisy boosted its data centre capabilities by signing a 15-year agreement for a new facility. In addition, it acquired 2e2’s facilities - see Daisy chains up 2e2 data centres - towards the end of the financial year.
Hosting and cloud services for the mid-market is an incredibly fascinating place right now, and many others are enjoying the spoils. For example, yesterday we reported on Pulsant’s latest set of results (see Pulsant completes strong FY12) – which by the way show it is enjoying both growing revenue and profits.
We’ll have more later on Daisy’s IT services business.
Posted by Kate Hanaghan at '09:07'
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Tuesday 18 June 2013
SDL’s performance woes ratcheted up a few more notches during H1 with both divisions failing to meet management expectations and it has lowered the outlook for the full year as a result. Profit before tax and amortization is expected to drop to £15m-£20m vs. the £35.5m in 2012.
Although Q1 was below expectations, the company had hopes for H1 overall (see here) but instead the Technology division appears to be performing worse then expected. It has been handicapped by long term under investment in the products and while steps to address this were not expected to make a difference in H1, SDL was looking to benefit from sales momentum set in motion in 2012. Now not only is revenue down but there will be a “significant impact on short-term profitability of the Technology segments.”
Language Services has shifted from a position where revenue was slightly ahead in Q1 and is now expected to be below management expectations with profit ”significantly below” expectations. This is attributed to poor macroeconomic conditions causing repeat customers to lower volumes, plus increased pricing pressure.
It is now pinning its hopes on a better H2 based on the effect of product updates and sales and marketing recruitment initiatives and says the pipeline has improved. However, it still has work to do to bring the two halves of the business together to deliver a unified message and portfolio based around customer experience management. That will increase the value proposition but is still work in progress.
Posted by Angela Eager at '08:41'
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Tuesday 18 June 2013
First Derivatives, who supplies software and services to the capital markets sector, had a mixed year but ended on a strong revenue note due to the positive effect of regulatory requirements.
Normalised pre-tax profits were up 6.7% to £7.8m on revenue that increased 22.5% to £56.5m for the year to February 28 2013. However, on a reported basis pre tax profits dropped by 11% to £6.2m (vs. £6.9m) due to investments in sales and consulting that are designed to boost growth. Growth requires investment and takes its toll in profits so the drop in profit is not an area of concern and the company is still generating cash. At 6%, taking the total to £19.5m, UK revenue growth was less impressive but still respectable. Overall growth has been slowing at the company (see First Derivatives marching through transition) and it had to make significant provision for bad debt during the year (see First Derivatives and its ‘significant’ H2). UK performance in line with the UK software sector as a whole, which is hovering close to mid single digits and outperforming the flat lining application services sector.
First Derivatives derives the bulk of its revenue from consulting which shot up 27%, to £41.5m. With revenue of £15m, up 11%, software is the smaller part of the business and at first look appears to be slowing. However, the company is shifting to transactional and recurring revenues and these were up 32% yoy. Its transition continues but it seems to be managing it well.
Posted by Angela Eager at '08:39'
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Tuesday 18 June 2013
Seemingly ubiquitous IT entrepreneur Ian Smith is to take over as executive chairman of mystifyingly named, Manchester-headquartered, contactless mobile solutions firm, 2 ergo, in an appointment which will see three directors resign their posts, including Non-Executive Chairman, Keith Seeley, and co-founding director, Barry Sharples. Smith's corporate finance firm (and TechMarketView Little British Battler partner) MXC Capital led a £3.1m placing at 1p per share in 2 ergo; Seeley and Sharples also subscribed, as did founding CEO (still!) Neale Graham. Shares in the AIM-listed company closed at a little over 3p yesterday evening, having lost over 95% of their value in the past 18 months.
Smith (with MXC co-founder and Redstone CEO Tony Weaver) has a penchant for fixing broken IT businesses (e.g. see Smith brings Maxima to the Redstone party), and 2 ergo looked well broken. The company had already undertaken a major 'strategic shift' in the business (and a £12m impairment) to concentrate on its flagship Podifi product, which left half-time results (to 28th Feb) with pre-tax losses of £2.4m marginally greater than revenues. Their solutions may be 'contactless' but Smith will need full body contact in order to get 2 ergo transmitting on all channels!
Posted by Anthony Miller at '08:05'
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Tuesday 18 June 2013
We are delighted to welcome CentraStage as a TechMarketView banner advertiser. CentraStage is making a name for itself in the UK with its cloud-based remote device management solution. It aims to combine the flexibility and cost-effectiveness required by small businesses with the scale and sophistication demanded by the Enterprise, giving IT managers complete visibility and control over their IT estate from a single integrated cloud platform. To learn more about CentraStage follow the banner link above.
If you would like to find out more about the UKHotViews banner advertising service – and how you can put your company's name in front of over 12,000 of the most senior people in UK technology - please contact Helen McTeer on our client services team.
Posted by HotViews Editor at '00:00'
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Monday 17 June 2013
Watching the House of Commons Public Accounts Committee (PAC) hearing on the programme formerly known as NPfIT (the National Programme for IT in the NHS) last week, you could be forgiven for thinking you were having a ‘Ground Hog Day-style’ experience (see ‘Nicholson put through the wringer over NPfIT’).
In many respects, the NPfIT soap opera has moved on very little since the last PAC report into the Programme was published in August 2011 (see ‘NHS IT: PAC report piles pressure on CSC (and BT)). The key contracts are still ongoing despite the Coalition Government’s plans to ‘scrap’ NPfIT, which were announced with such political fanfare in September 2011 (see ‘NPfT: What does ‘accelerated dismantling’ really mean?’). The Department of Health is still in contract negotiations with CSC, the prime contractor tasked with providing electronic patient record (EPR) systems in the North, Midlands and East of England. CSC still hasn’t delivered its Lorenzo EPR system at scale with the functionality originally promised by the end of 2005. And the NHS is still locked in a legal dispute with former NPfIT supplier Fujitsu over the £896m contract terminated in 2008. It is little wonder that Public Accounts Committee members let their frustration show.
In other respects, however, things have changed in the NHS IT market in the two years since the last PAC report into the controversial programme. In our latest PublicSectorViews research note - NHS IT: Plus ça change...? - we take the opportunity to highlight some of the key facts to come out of the latest PAC hearing; debate whether or not the NHS IT market has moved on and consider the implications for suppliers.
PublicSectorViews subscribers can download this research from today. If you don't yet subscribe to our public sector research stream and you'd like to know more please email Deborah Seth for details.
Posted by Tola Sargeant at '14:06'
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Monday 17 June 2013
Office on iOS is one of the most keenly awaited deliveries and Microsoft is rolling it out this week but the attached strings will be viewed with a sigh. Office Mobile for Office 365 is available for the iPhone not the iPad and although it is available as a free download it can only be accessed as part of an Office 365 subscription, as the name suggests.
This means Office on the iPhone is not an option for Office 2010 and 2013 version users and there are no signs of a standalone version. The company says iPad users can access Office Web apps but as this option provides severely pared down functionality it is not a comparable alternative. However, the iPhone version is fully featured (i.e. it is designed for more than viewing) and has a range of good editing features that make it a good companion to versions running on other platforms.
Microsoft is in an unenviable position because strategic products are effectively at odds with each other. Keeping Office off the iPad will give Windows-based tablets more of a chance to gain market traction yet an iPad version could significantly boost Windows revenue which is struggling (see Microsoft, Q3 and Windows). Microsoft is late to market with a practical iOS solution and what it is offering is not what most users would prefer – an iPad version. The longer the company holds back on the iPad the greater the chance that users will bond with non-Microsoft alternatives so if an iPad version does come to market they will not make the switch. That scenario points to a substantial missed opportunity.
Posted by Angela Eager at '09:53'
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Monday 17 June 2013
If you haven't secured your seat yet for the inaugural Evening with TechMarketView on Wednesday 26th June, then you'd better get your skates on.
We have only five tickets left for the event, which will see the great and the good from the UK IT scene gather to hear the TechMarketView team expound on who will be the 'makers' and who will be the 'breakers' in 2013. And yes we do name names!
'Topped' by Richard Holway and 'tailed' by Anthony Miller, it's a unique chance to hear all of TechMarketView's research directors set out their expectations for how the UK software and IT services market will play out over the next 3 years and what this will mean for the suppliers.
Plus we have a guest interview with the CEO of one of our 'Little British Battler' companies which is sure to be of huge relevance to all SMEs.
And rumour has it Miller may well end the proceedings with his notorious Top 20 Countdown of the leading players in the UK market – no one gets spared his acerbic comments! (Ed's note: Miller says "acerbic, moi?")
Oh – and there's a sumptuous dinner afterwards, of course.
Make or Break – An Evening with TechMarketView will start at 6:00pm on Wednesday 26th June in the magnificent surroundings of BAFTA in London's Piccadilly. Stragglers and reprobates will be forcibly ejected at 11:00pm.
Contact Intellect's stalwart event organiser, Tina Compton, this very minute else all you'll be able to do is read about it on the Thursday!
Posted by HotViews Editor at '09:39'
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Monday 17 June 2013
Managed hosting and co-location company, Pulsant, has given us a preview of its final year numbers to end December 2012, and we have to say it makes for impressive reading. Turnover increased 44% to £30.4m (revenue from ScoLocate is not yet included – see Pulsant acquires ScoLocate), while EBITDA improved 39% to £10m, both partly fuelled by previous acquisitions. Underlying organic growth was 17% and 25% respectively. Furthermore, CEO, Market Howling, is confident of organic growth of 15-20% in the current financial year – with more than half of that growth coming from the existing customer base.
However, Howling is not content to just work on organic growth and there are likely to be more acquisitions – as and when appropriate. Howling indicates this could take place outside of the UK, with Northern European countries (including the Nordics) and Spain all possible targets. That to us sounds highly interesting and we wonder if scale will ultimately lead to an IPO; certainly the UK could do a lot worse than have another Telecity! (See Telecity’s confident start to FY13.)
Pulsant’s growth highlights just how diverse the infrastructure services market is in the UK. We’re just finalising our forecasts for the market to 2016, and overall it is characterised by no and low growth. However, drill down into the mid-sized data centre services market and the story is quite different. Pulsant, alongside iomart (see iomart closes strong FY13), Adapt and Six Degrees and others are thriving.
Despite this healthy market there are still many ways in which players can be ‘tripped up’. For example, poor (or ‘superficial’) integration of acquisitions, failure to deliver consistently good service levels, or failure to grow existing accounts (incurring the cost of new customer acquisition). Based on the time we have spent with the management team at Pulsant, we are impressed with how the ‘ship’ is being run. I’m sure Mark Howling won’t be offended by our description of him as an industry veteran, because certainly his experience is helping to grow a healthy business with strong foundations.
Posted by Kate Hanaghan at '09:37'
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Friday 14 June 2013
I am absolutely delighted that James Bennet (Director Technology at Ernst & Young) has been appointed a Member of the Order of the British Empire (MBE) in the Birthday Honours list. The citation is for ‘services to young people’. James was one of the early supporters/co-founders of the Technology Leadership Group at the Prince’s Trust which has raised over £15m for the Trust since. Indeed, it was James who ‘persuaded’ me to get involved back in 2002. James is now actively involved with the Internet & Media Leadership Group too. On top of that, James has been associated with Byte Night for a long time which has raised over £5m for Action for Children.
This is a truly ‘well deserved’ award to a guy I am proud to count as a very good friend
Posted by Richard Holway at '22:57'
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Friday 14 June 2013
Old soldiers never die … and veteran IT staff agency, project shop, and ex-Holway Boring Award winner, Triad is living proof. Now in its 104th year (or so it seems), Triad continues a graceful decline which has seen revenues nearly halve over the past five (mostly loss-making) years.
And so we arrive at FY13, in which Triad's revenues (to 31st March) fell a further 3%, to £18.9m. Triad reported an operating profit of £138k, but this was only because of a cheeky reassessment of the economic working life of home-grown 'location intelligence' IP, Zubed (see Will Zubed help Triad find its way?). Zubed was put on life support for a further five years and in so doing reduced the year's amortisation charge by £171k. Triad's consulting division, which provides palliative care for Zubed, lost money anyway, though this was primarily due to that nefarious project shop ailment, sticky bench disease.
But when all's said and done, Triad earns enough money to pay its people. In fairness, founding executive chairman John Rigg only draws £25k salary while he assumedly waits for a time that his 4.5m shares are once again worth considerably more than the 6p level at which they currently languish.
Posted by Anthony Miller at '08:18'
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Thursday 13 June 2013
Yahoo’s push for assets has taken two more steps forward with acquisitions in the conference call and the iOS photo apps spaces. First up was the photo app from GhostBird Software, followed by the more significant Rondee IP-based conference call acquisition. Terms were not disclosed but they will not be on the same scale as the $1.1bn paid for Tumblr (see Will Tumblr make Yahoo ‘cool’?). Rondee is a six year old company providing conferencing facilities for free.
It looks like Yahoo plans to progressively close the Rondee service down from June 30 so this appears to be another push for talent and technology rather than directly claiming market share and customer base. At a basic level the acquisition starts to put Yahoo in the same space as the likes of Google Hangouts and Skype, but as far as we are aware Rondee does not support visual comms which is where the action is in the IP conferencing market. Yahoo would have to make many more acquisitions to compete effectively. That may be the plan in the conferencing, and the mobile area, where several of Yahoo’s recent acquisition-spree purchases have been – and that is the nub of the matter. At the moment the strategy behind the many purchases is not apparent. No doubt CEO Marissa Mayer has a goal and is keeping it under wraps while she assembles talent but the mobile and communication/collaboration markets are moving at such a rapid pace that time is not on Yahoo’s side.
Posted by Angela Eager at '22:43'
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Thursday 13 June 2013
We were drawn to an article on v3.co.uk (The Frontline) which highlighted that of the £4m spent by UK public sector through the G-Cloud framework (Cloudstore) in April, £1.3m went to IBM. Steria also won a sizable deal (sizable for the Cloudstore!) worth £68K. Based on this large deal with IBM, the article puts forward the view that there continues to be an “SME mindset challenge” in Government. But, actually, the reason we were drawn to it is that oft-outspoken former G-Cloud Programme Director, Chris Chant, who retired after 26 years in the civil service last year, has responded with the comment, “Move on, nothing but tripe to read here”.
The payment to IBM was related to one deal with the Home Office for its Integrated Case Work (ICW) programme. And actually we concur that it is wrong to come to the conclusion in the article purely based on the proportion of G-Cloud payments going to IBM in one month alone. However, there is a valid point to make. The G-Cloud is a wonderful vehicle for SMEs to win business through a framework that makes procurement cheaper and faster (much of the spend to date has been with SMEs). And we have heard numerous SMEs praise the programme for that very reason. However, as the large SIs (IBM amongst them) face a declining UK central government IT market in the coming years, those that show a willingness to behave differently, in a way that supports the UK Government ICT strategy, do have every opportunity to take market share from competitors that choose to bury their heads in the sand.
Posted by Georgina O'Toole at '10:15'
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Thursday 13 June 2013
Yesterday Sir David Nicholson, KCB, CBE, Chief Executive of NHS England, faced the Public Accounts Committee (PAC). His questioning over the so-called gagging clauses for NHS staff has dominated this morning’s headlines. But, actually, the majority of the session focused on the National Programme for IT (NPfIT). You can watch the full proceedings here.
It made for fascinating viewing with numerous revelations around large payments and intended future payments to CSC (despite the company failing to deliver); and around legal costs related to the department’s dispute with Fujitsu. PAC Chair, Margaret Hodge, was also particularly damning when she accused CSC of being a “rotten company” and the electronic patient records system, Lorenzo, of being a “hopeless system”. Most striking was the accusation that the NHS now has to “bribe” Trusts to take Lorenzo.
We will have more detail on the PAC session early next week when we have fully analysed the revelations and considered their implications. Watch this space!
Posted by Georgina O'Toole at '10:12'
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Thursday 13 June 2013
UK managed security services player, Accumuli, has acquired Signify Solutions for a net cash consideration of £2.6m. To the year ended 31 March 2013, Signify generated £560k of EBITDA on revenues of £2.9m. Signify provides 2FA (Two-Factor Authentication) security solutions, which use a combination of RSA technology (public key cryptography algorithm) and its own Passcode OnDemand software. The purpose of 2FA is to ensure organisations are able to not only identify the user, but can also ensure that only the right users can gain access to data and systems. This is particularly relevant in the context of the growing number of organisations that are implementing Bring Your Own Technology approaches.
Acquisitions have been fundamental to the making of Accumuli. In 2011/2012, it made numerous acquisitions that boosted revenue from £2.4m to £12.4m (see Accumuli confirms expansive year). We’ve just spoken to the firm’s CEO, Gavin Lyons, who explained that his focus is organic growth. Lyons says he is not proactively seeking acquisitions, and will only make a purchase if it adds real strategic value (and shareholder value, of course).
Lyons has gone to great lengths to ensure that all acquired entities are integrated fully into Accumuli systems and that staff feel they are part of “one team”. As we know (see 2e2 hits the buffers), getting a buy and build strategy wrong can have catastrophic consequences!
Accumuli is set to release full-year results in late June so we’ll get more insight into the level of organic growth of the company at that point.
Posted by Kate Hanaghan at '09:53'
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Thursday 13 June 2013
Brazilian (and LatAm) ERP market leader, Totvs, has invested $16m to take a minority stake in San Francisco-headquartered 'big data' business intelligence SaaS firm GoodData, through its VC arm, Totvs Ventures. Totvs led the $22m Series D funding round, which also included joint-investors Andreessen Horowitz, General Catalyst, Tenaya Capital and Next World Capital. Totvs' stake gives it exclusive distribution of GoodData solutions in Latin America; meanwhile GoodData gains access to the LatAm market through Totvs' distribution channels. GoodData was founded in 2007 and has so far raised over $75m in venture funding.
This looks like a smart move for Totvs from a 'directional' point of view, but is unlikely to solve the tactical challenge of Totvs' declining new licence revenues (see here). Neither will it contribute much to Totvs' international aspirations; its revenues outside of LatAm represented under 2% of the R$1.4bn total last year (see here). The real beneficiary though should be GoodData, which will now have the backing of the region's best known indigenous software firm with which to establish its credentials.
Posted by Anthony Miller at '09:03'
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Thursday 13 June 2013
Rapidly moving WANdisco is going all out for market reach with the acquisition of the TortoiseSVN.Net Community Website. Having bolstered its software assets and significantly accelerated its Hadoop development and capabilities with the AltoStor acquisition last year (see here), this investment is about mindshare and sales lead generation directly from the developer community as much as gaining a new piece of technology. Terms of the acquisition were not disclosed but the company refers to a “nominal fee.”
TortoiseSVN.Net is the web site for the open source TortoiseSVN client for Windows, which in turn is a client for the Subversion source/version control product. The salient point is that the TortoiseSVN client is widely used by software engineers and by buying the site and client WANdisco is exposing itself to a bigger audience. The intention is to convert users from the free version of Subversion products to WANdisco’s paid for offerings and services. Although there are many Subversion clients available, the web site claims 500,000 unique visitors per month and supports over five million downloads each year so WANdisco will get much more exposure, which marks this out as a smart acquisition. Stefan Küng, the lead developer for TortoiseSVN, will join WANdisco to ensure ongoing development.
With its focus on high availability software that supports big data and distributed software development, WANdisco is making rapid progress, particularly in the US (see here). By tapping directly into the software engineer base it is further making its mark as an early mover.
Posted by Angela Eager at '09:01'
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Thursday 13 June 2013
The fact that management of Paris-based Sopra Group didn't venture to provide margin guidance for 2013 when it announced last year's results rather set the expectation that the news might not be good. And so it came to pass, with the company now expecting operating margins to come in some 30-70bps below those in 2012 (7.5%). However, management is sticking to its 2%-5% organic growth target and expects net margins to 'at least equal' the 4.6% achieved last year. Part of the reason for the expected slip in profitability is the acquisition of Madrid-headquartered, ‘Global Services HR solutions’ firm, HR Access (see here), for which "budgetary breakeven could be reached as early as 2014".
Management also took the rather unusual step of forecasting revenues and margins two years hence, setting a €1.5-2.0bn revenue and a 10% operating margin target for 2015. This is a pretty bold statement for a €1.2bn company to make, clearly signalling more acquisitions are on the agenda, which then rather calls into question the aspirational margin boost.
Sopra is around a tenth of the size of Paris-based archival Capgemini and not much more than that compared to Atos. Meanwhile Sopra's subscale UK IT services business appears to be drifting away (see Sopra UK slips again) as its compatriots – including Steria, not that much bigger than Sopra groupwide – gain share.
Management's quest for accelerated growth and profitability seems to be resulting in an unfocused IP acquisition strategy (banking software, HR software, what next?) which risks seeing the company hoisted on its own medium-term-target petard. One wonders whether an independent existence for Sopra really is the best way forward, more so in the UK.
Posted by Anthony Miller at '08:35'
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Wednesday 12 June 2013
MXC Capital, the multifaceted corporate finance firm (and TechMarketView Little British Battler programme partner – see here) founded by IT entrepreneurs Ian Smith and Tony Weaver, is to take a stake "up to 25%" in Tunbridge Wells-based cloud storage firm Maytech Communications. MXC is also to provide debt funding. Maytech, launched in 2006, owns and operates a global file exchange network with hubs in London, New York, Hong Kong, Sydney and Dubai. I understand revenues are under £10m and the company is profitable.
Looks like Dropbox and its 'storage as a service' ilk to me, but I guess there must be room for yet another in the market if only as a potential acquisition target. You may also be vaguely interested to learn that Maytech's Ireland-born, and now UK-based, CEO John Lynch is the owner of the Dublin arm of Rugbytots, which rather does what it says on the tin.
Posted by Anthony Miller at '09:10'
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Wednesday 12 June 2013
Following a positive end to FY12 (see here) product lifecycle software and services provider Sopheon is heading into its AGM with the news that full year 2013 revenue visibility from contracted business and recurring revenue is running above £8m vs. £7.5m from the year ago period. The increase is primarily due to increased services activity, which is being delivered by new hires but also extensive use of subcontractors. The downside is that costs are rising and although management is trying to minimise the effect by setting higher licence sales goals these have yet to come through. With the end of the month in sight, the company needs to close considerable business by the end of June to stave off a yoy revenue decline. Licence sales and new customer revenue have been an issue for Sopheon over the last couple of years and the pre-AGM announcement shows there is still work to be done to get the balance of the business right.
Posted by Angela Eager at '09:04'
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Wednesday 12 June 2013
‘A billion here, a billion there. Soon you’re talking serious money…” . Looking back on the ‘social’ and ‘cloud’ deals we have reported of late, they all seem to be ‘about a $1billion’ even though none are profit-making and few even have any revenues of note. And '$1.1b' is the rumoured value of Google’s acquisition of Israeli Waze announced last night.
Last year’s abortive launch of Apple Maps put mobile-based maps and navigation into the forefront. I haven’t used Waze myself – yet – but now intend to try it out. Waze is basically a crowd-sourcing app that provides traffic and other travel info. How many times have I hit a jam on the M6 and wanted to know what is causing it. It seems to take an age for the info to come through on the radio traffic reports or on the AA or other traffic info sites. Waze allows other users to update with their own live experiences. Although there is no word on how you do that whilst driving your car at the same time! Waze is a lot more than accidents though. If you leave your Waze App on, it will track your speed and location etc and thereby build up a pretty good picture of traffic conditions. It also allows speed camera alerts, detours to recommended local facilities etc.
As is the norm, I don’t think that Waze has any revenues of note. They see advertising for local amenities as one revenue source. So I guess the Google acquisition will help greatly there.
Putting the valuation to one side (What’s billion to Google particularly when it can be paid out of foreign cash holdings?), looks like a really good acquisition for Google and just demonstrates the importance of mobile-oriented services.
Posted by Richard Holway at '08:14'
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