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Meta shares are down c.13% in afterhours trading after the company reported higher than expected AI spending, despite a strong Q1 performance.
The business reported revenue grew 27% to $36.46bn in Q1 FY24, however the firm said it now expects to spend between $35bn and $40bn, (£28bn-32bn) in 2024, up from an earlier prediction of $30-$37bn, as the business continues to accelerate infrastructure investments to support its AI roadmap. Meta said it is not providing guidance for years beyond 2024, but expect capital expenditures to continue to increase next year as it invests aggressively to support AI research and product development.
Meta CEO, Mark Zuckerberg, seemed prepared for an adverse reaction by investors, commenting; “I think it’s worth calling that out, that we’ve historically seen a lot of volatility in our stock during this phase of our product playbook where we’re investing in scaling a new product but aren’t yet monetizing it”.
Last week the company launched the latest version of its open-source AI large language model Llama 3 - See Meta releases latest AI model Llama 3. Meta is building AI into a number of its services, with its AI assistant ‘Meta AI’ to be available across Facebook, Instagram, WhatsApp, Messenger and for the first time through a standalone website. Users will also be able to create images from text in real-time using Meta AI’s new Imagine feature. Though the Llama 3 AI models are being used to power its own internal AI applications, Meta is still giving them away for free, so it’s not going to be directly clawing back investment any time soon, though by making them open source they do benefit from essentially some free R&D as organisations use the models, training them further.
Zuckerberg was quite clear that Meta expects multiple years of investment into AI before any pay off, but is confident in the long-term opportunity. He highlighted several ways to build future business, including; scaling business messaging, introducing ads or paid content into AI interactions, and enabling people to pay to use bigger AI models and access more compute. AI is also at the core of its advertising proposition, which generates nearly all of Meta’s revenue, helping to show people more relevant ads.
We must of course not forget about the Metaverse, Meta’s other big loss-making bet. Reality Labs (which is the arm of Meta focused on virtual and augment reality), generated revenue of $440m in Q1, but an operating loss of $3.8 billion! Meta says it expects operating losses to increase meaningfully yoy due to ongoing product development and investments
Posted by: Simon Baxter at 10:10
Tags: AI advertising metaverse
US based security awareness training and simulated phishing platform KnowBe4, has announced it has acquired UK HQ’ed email security supplier Egress. Further terms of the transaction were not disclosed.
KnowBe4 provides a platform that allows organisations to drive awareness of security threats and change user behaviour through security awareness training and simulated phishing attacks. The platform also includes a real time security coach that detects and responds to risky end user behaviour to provide immediate feedback. UK Customers include Whitbread, Action for Children and River Island, with a reported 65,000 customers worldwide.
Egress’ Intelligent Email Security suite provides a set of AI-enabled security tools with adaptive learning capabilities to help prevent, protect and defend organisations against sophisticated email cybersecurity threats. Egress customers include NHS East of England Ambulance service, City of Edinburgh council and Bensons for beds. By acquiring Egress, KnowBe4 plans to deliver a single platform that aggregates threat intelligence dynamically, offering AI-based email security and training that is automatically tailored relative to risk.
Both companies have been making AI-led investments with KnowBe4 releasing Artificial Intelligence Defense Agents (AIDA), which enable organisations to automate the dynamic selection of security awareness training and testing to give users a more individualised learning experience. Meanwhile, Egress launched its AI-powered Automated Abuse Mailbox in early April, which utilises AI to instantly inspect and remediate attacks. With on average 85% of emails reported to abuse mailboxes false positives, AI can significantly help in cutting down analyst investigation times.
Posted by: Simon Baxter at 10:05
Tags: M&A cybersecurity
Pinewood Technologies Group plc (formerly Pendragon plc) has published its maiden results following its transition into a pure-play SaaS business.
In September 2023, Pendragon—one of the UK’s largest automotive retailers—announced a plan to sell its motor and leasing divisions to Oregon-headquartered Lithia in a £250m deal. In October, Lithia announced it had signed a revised agreement on improved terms increasing the total cash consideration by 42% to £397m. The deal was approved by shareholders later that month and the sale completed at the end of January 2024. As part of the deal the companies formed a strategic partnership that will see Pinewood’s software platform adopted across Lithia’s network in the US and UK, and the creation of a joint venture to co-develop automotive technology solutions for the North American market.
Revenue from continuing operations for the 13-month period ended 31 January 2024, was up 28.3% to £24.5m (2022 (12-month period): £19.1m). Revenue including intercompany revenue was up 26.0% to £32.0m (2022: £25.4m). Operating profit was £10.0m (2022: £7.0m) with profit before tax coming in at £9.9m (2022: £7.0m). Core business operating profit was up 25.5% to £13.8m (2022: £11.0m).
The company achieved 4% growth in user numbers during the period, resulting in c.33,100 now using its software. It saw growth in UK & Ireland and internationally as it benefited from new implementations in Denmark and Luxembourg. Pinewood also sustained good customer retention with a net user churn rate of c.2%.
Following the disposal of its motor and leasing divisions, Pinewood is a much smaller business than its predecessor (Pendragon group revenue in 2022 was £3.6bn), but one that is now laser focused on higher margin cloud-based dealer management software. It is well positioned for growth through a combination of a robust financial situation and opportunities for international growth, particularly through its partnership with Lithia in North America. TechMarketView will be following its progress.
Posted by: Dale Peters at 09:53
Tags: results saas transport software automotive partnership
IBM announced its Q1 results last night, which saw the stock tank by up to 9% in after-hours trading.
The news wasn’t all bad, with earnings per share (EPS) hitting $1.68, ahead of the expected $1.60. Revenue, however, came in below analyst expectations at $14.46bn. A tightening around discretionary customer spend in part contributed to this.
Across its segments, IBM saw revenue growth of 5.9% in Software (constant currency), 1.7% in Consulting, with Infrastructure growth all but flat. The sum of that was 3% growth in Q1 at the top line. IBM said its book of business around watsonx and GenAI “showed strong momentum” and has now breached the one-billion-dollar mark. IBM also grew 3% in FY23, with growth across all segments.
IBM also announced its intention to acquire HashiCorp for $6.4bn. The firm’s capabilities span infrastructure and security lifecycle management, which helps organisations increase automation in hybrid and multi-cloud environments. News of the deal appeared to slip out into parts of the media before the official announcement.
For FY24 as a whole, IBM expects mid-single digit growth.
Posted by: Kate Hanaghan at 09:50
Tags: results acquisition
Atos’ Q1 results, for the period ending 31st March 2024, illustrate the effects of Atos’ precarious financial position on the confidence of clients and prospects.
The trouble is that it’s a vicious cycle. A difficult three months has done nothing to shore up the coffers. Indeed, rather the opposite. As of March 31, 2024, cash & cash equivalents and short-term financial assets stood at €1.0b, down €1.4b compared with 31st December 2023. Net debt, meanwhile, stood at €3.9b at the end of the quarter, compared to €2.2b three months prior.
With July 2024 remaining the target date for reaching a financial agreement with the Group’s creditors, there will be prolonged uncertainty, and, undoubtedly, a difficult Q2. Atos is now in the process of revising its 2024-27 business plan “to lead to an increase in new money needs and to a potential additional debt reduction”.
At the top level, Atos’ revenues for the quarter were down 2.6% organically to €2,479m, with an operating margin of 1.9% or €48m (compared to 3.3% in Q1 23). In Northern Europe & APAC (which includes the UK), the decline was 3.2% to €754m.
Globally, revenue at Eviden, the part of Atos focused on Digital, Big Data & Cybersecurity, declined by 3.9% organically to €1,164m, highlighting the fact that Eviden’s business is defined by shorter-term bookings and smaller contracts and is, therefore, hit hard when clients are nervous to sign deals. One of the challenges highlighted Is “contract scope reductions in the UK”. Meanwhile, revenue at Tech Foundations, the part of Atos focused on Digital Workplace, Infrastructure Services, and Professional Services, and with more longer-term multi-year deals, declined organically by a lesser 1.5% to €1,314m. However, in Northern Europe & APAC, Tech Foundation revenues increased, with some of that growth driven by increased BPO activity.
The forward view is heavily impacted by the unwillingness of clients to commit to new arrangements with the Group until its future is put on a firm footing. The Book-to-Bill ratio for the group was 64% in Q1, down from 73% a year before. The Tech Foundations business is particularly suffering, as clients will be far more reluctant to enter into major long-term, transformational, contracts; the Tech Foundations Book to Bill for the quarter stood at just 47% (with Eviden’s at 83%, driven by new High Performance Computing contracts).
Both the Tech Foundations and Eviden businesses are executing on their transformation plans internally. But this must be very tough to achieve with the purse strings pulled tight. Interestingly, the attrition rate for Q124 was “the lowest Q1 over three years, at 13.0%”. But as the situation drags on, it must be an incredibly difficult environment in which to work, particularly as it remains unclear how the Tech Foundations and Eviden businesses will continue to operate together under the same umbrella. It seems highly likely that we’ll see a delayed impact on attrition in the next few months. Agreeing a financial resolution cannot come soon enough, for investors, for clients, or for employees.
Posted by: Georgina O'Toole at 09:40
Tags: results corporateactivity debt refinancing IT+services
UK-based electric vehicle (EV) charging analytics platform supplier Camion has raised EUR2.7m in pre-seed funding, led by EQT Ventures with participation from First Look Capital and RitMir Ventures.
Camion describes its tech as “location intelligence”, using machine learning to optimise the deployment of EV charging points across real estate portfolios – providing services both to real estate owners and charging point operators. According to the company, its proprietary algorithms evaluate the key factors driving EV charging demand and power availability, and then construct a property-based revenue model that estimates the potential lease revenue for property owners (taking into account associated development costs).
The company’s aim is to accelerate the proliferation of EV charging points, focusing on areas where predicted demand makes the infrastructural investment worthwhile. Whilst this isn’t a policy that will ensure outlying hard-to-reach locations are covered, it will at least serve to increase EV charging point availability for the mainstream.
EV charging is at the nexus of real estate, transport, and energy supply – and (along with innovations in vehicles themselves) is central to the roll-out of a post-fossil fuels travel infrastructure. All of these use cases areas are featured 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 09:24
Tags: EV charging real estate
Despite sequential top line growth turning negative in the final quarter, LTIMindtree’s FY24 revenue increased by 4.2% yoy at constant currency to c.$4.3bn. The company’s pace of expansion for the twelve months ended 31st March exceeded that of the Tier 1 offshore vendors which have announced results for the period. TCS, Infosys and Wipro posted annual rises in turnover of 3.4%, 1.4% and -4.4% respectively. LTIMindtree’s full year net profit improved by 1.4% yoy to $553.4m.
In terms of industry verticals, it was demand from the company’s Manufacturing & Resources clients that proved the most robust in FY24. Sales in this market segment were up by 14.6% yoy to generate nearly a fifth of global turnover. The performance of LTIMindtree in the Banking, Financial Services and Insurance arena, which accounts for almost 40% of firm-wide turnover, was more muted. A 6.6% yoy decrease in this sectors Q424 revenue limited its full year growth to just 2.2%.
From a geographic perspective, company sales in Europe dipped by 3.6% yoy in the final quarter to $167m. This constrained the territory’s FY24 revenue improvement to 3.5%. LTIMindtree North America fared better with turnover in this region up by almost 6% to around $3.15bn.
The company was silent regarding the outlook for the new financial year. The c.16% yoy increase in FY24 order inflow achieved by LTIMindtree is a positive lead indicator. The Q4 slowdown in revenue growth, however, suggests that the firm will have its work cut out to deliver a significant uptick in its pace of expansion for the current fiscal. The realisation of the aspiring Tier 1 offshore vendor’s objective of becoming a $5bn turnover business, targeted eighteen months ago for FY24 (see here), now appears to be a few years away barring acquisitive assistance.
Posted by: Duncan Aitchison at 09:20
Tags: results offshore IT+services
Cambridge-headquartered Checkit, is a software provider that helps organisations manage operations in a hybrid working environment. Full year results out this morning outline a business on a path to profitabilitywith its SaaS pivot and focus on cost cutting starting to delivering results (SaaS move checking out for Checkit).
Operationally, the business is focused on a productivity play around the “Augmented Worker” automating activity to free up staff time that can be deployed on more valuable activity. This includes for example, IoT sensors added to stock (ranging from food to blood), workflows to help drive collaboration and data/intelligence to support compliance.
FY24 results headlines include ARR growth of 16% to £13.3m (FY23 £11.5m) and recurring revenue growth of 17% to £11.2m (FY23 £9.6m) as the business continues its SaaS journey. Total Group revenue was also up 17% to £12m (FY23 £10.3m). The business continues with its progress towards profitability, with a 46% improvement in adjusted EBITDA to -£3.4m (FY23 loss of £6.4m), driven by the revenue growth, an increase in gross margins to 67% (FY23 63%) and an 11% reduction in operating costs.
Checkit's USP is that it helps organisations manage its staff and its physical assets (buildings/equipment/inventory) through a combination of workflow, asset, and buildings management – given the challenges of the current economic environment positioning this as a productivity play makes absolute sense. The challenge will be convincing clients to invest now to save further down the line. Looking forward Checkit now expects to reach breakeven in FY27 (calendar year 2026).
Posted by: Marc Hardwick at 08:16
Tags: results software operations productivity
Cardiff-based insurtech, Peppercorn AI, has successfully raised £3.25m in new funding. The cash injection was provided by a variety of investors including, EHE Capital and Angels Invest Wales. The company previously secured £1.8m in seed funding from EHE Capital in April 2022.
Peppercorn AI, which started life in 2020, is the brainchild of CEO and serial founder, Nigel Lombard. Lombard’s previous ventures include digital car insurance MGA, Hedgehog, and telematics-based car insurers Provancy and Drivology.
Peppercorn AI has developed a SaaS platform called Pipr and utilises conversational AI to streamline insurance processes and reduce operating costs. The insurtech claims to provide “a new experience, that puts the customer in control”. The startup intends to put the latest funds towards the development of conversational AI technology to support its growing pipeline.
Posted by: Jon C Davies at 07:04
Tags: funding AI insurTech
ERP specialist SAP has announced results for Q1 2024 (ended 31 March 2024). Total revenue was up 9% year-over-year in constant currency to €8bn, buoyed by double-digit growth in its cloud offerings (cloud revenue up 25% (cc) to €3.9bn, €3.8bn of which from Cloud ERP Suite – growing 32% in constant currency). The company reported record current cloud backlog growth of 28% (cc) to €14.18bn.
SAP reported particularly strong Q1 cloud revenue performance in APAC/Japan and EMEA (calling out Germany and Italy for special mention), and “robust” in the Americas. Key customer wins (across the company’s portfolio) included Maersk, Rabobank, Sky, and Valliant Group.
Profits continued to be impacted by SAP’s restructuring (a €2.2bn hit in Q1, which includes costs associated with its 2024 transformation programme), resulting in an operating loss of -€787m for the quarter. The company has committed to focus on “key strategic growth areas” in 2024 – and for that, read “business AI” (SAP and NVIDIA announced a partnership expansion in March, focusing on bringing GenAI to customers, for instance). The year-long programme of re-skilling and role re-evaluation (towards an AI focus) began in January, affecting around 8,000 positions (as we reported at SAP’s FY23 year-end, see SAP grows 9% in FY23, led by cloud – but AI-driven job cuts beckon). However, SAP expects to exit 2024 with a similar level of headcount overall to the end of 2023… just (in some cases) differently-skilled people, in different areas.
SAP continues to expect FY24 revenues to be in the range €17.0bn-€17.3bn (representing growth of 24% to 27% cc). Although Q1’s €2.2bn restructuring costs are anticipated to cover the bulk of the programme’s expenses, precise costs in some geographies (particularly Germany) are currently unknown, and the company will update in due course.
Posted by: Craig Wentworth at 10:01
Tags: results
California-based start-up Perplexity is a company you are likely to hear a great deal more about in the coming months.
Despite being very much smaller and less capitalised than ChatGPT-maker OpenAI, not to mention Google, Perplexity is making waves in the AI-native search market. The 55-person business, which currently turns over c$20m, has captured both investor and user enthusiasm for generative AI products that can transform the way we do basic things like search the internet.
The disruptor has just raised a further $62.7m - doubling its total valuation to over $1 billion and taking the total raised to $165m - and launched an Enterprise version of its product as it plans global expansion.
This Series B1 funding round, which follows hot on the heels of its $73.6m Series B raise in January this year, was led by Daniel Gross, former head of AI at Y Combinator, with support from a string new high profile individual investors including billionaire Stanley Druckenmiller, plus Laude Capital. Existing big-name investors – notably Jeff Bezos and NVIDIA as well as IVP and NEA – also doubled down on their support.
Founded in 2022, Perplexity is meeting a need for trusted, reliable answers in the new era of AI-powered search. Its AI-native ‘answer engine’ browses the internet in real time and provides complete, verifiable answers with citations, along with multimedia answers that include charts, videos, and images to provide more context.
The chatbot draws on several leading large language models including OpenAI’s GPT-4, Anthropic’s Claude and Meta’s Llama-3, and it’s proving popular with adoption growing rapidly over the last few months to 169 million queries a month.
Further growth is on the cards and global expansion is a top priority for Perplexity with this new funding. Although we’ve yet to see much of it in the UK, Perplexity has just inked new partnerships with two of the world’s largest telecoms firms — Japan’s SoftBank Corp. and Germany’s Deutsche Telekom — to market its capabilities to their 335m consumer and business customers.
Perplexity has also addressed demand from businesses for a B2B offering with increased data privacy, enhanced security and user management capabilities with yesterday’s launch of Enterprise Pro. Priced a $40/user/month, it’s already been adopted by the likes of Databricks, NVIDIA, and Zoom.
Posted by: Tola Sargeant at 09:56
Tags: funding AI genAI
The Home Office has published its response to the recommendations of the Policing Productivity Review (see Policing Productivity Review calls for greater investment in innovative technology), highlighting the crucial role of technology in improving police efficiency.
The Government commissioned the independent Policing Productivity Review in August 2022. The final report, which was published in November 2023 highlighted the need for greater application of automation, facial recognition, and analytics across police forces in England and Wales.
In its response, the Government says it is going further than the Review recommended. This includes the Spring Budget announcement of £234m investment, over four years, to deliver pilot schemes with the potential to save police officer and staff time (see Spring Budget 2024: Challenging productivity goals). Approximately £65m is allocated for 2024/25 to support piloting and the roll out of facial recognition, drones as first responders, redaction tools, rapid video response, automated triage of 101 calls, knife detection, and robotic process automation (RPA). Earlier this month it was revealed that £17.6m will be used to enhance police facial recognition capabilities, including up to £4m to support the procurement of purpose-built live facial recognition mobile units (see Facial recognition technology to help tackle retail crime).
The response provides additional information on the Centre for Police Productivity, which was also announced in the Spring Budget. This initiative, which will be based within the College of Policing, will be established from autumn 2024 with the intention of overseeing plans to free-up c.38 million hours of police time over the next five years. This includes establishing a National Policing Data Hub to facilitate data-driven decision-making and the adoption of new technologies, including AI.
The Government will also establish a fund to support the most promising AI projects for improving productivity in policing, with all use of AI in the sector being subject to the Covenant for Using AI in Policing that was established last year.
The response acknowledges that it needs to be easier for forces to adopt new science and technology-based solutions at pace, but as policing is operationally independent, the Government will do this by supporting NPCC initiatives such as the Office of the Police Chief Scientific Adviser (OPCSA) and Science and Innovation Coordination Committee (see NPCC Chair calls on policing to push the boundaries of innovation). The need for better collaboration with industry forms part of this work, including establishing the Police Industry Charter, of which TechMarketView is a signatory.
The response concludes by saying the Government has invested in the foundation for change and is looking to policing, to the NPCC, APCC, and Chief Officers across England and Wales, to make the most of this investment and the opportunities presented by the Review’s recommendation.
Further discussion about the role of technology in improving police productivity can be found in TechMarketView’s Police Suppliers, Trends, and Forecasts and UK Public Sector Predictions 2024 reports.
Posted by: Dale Peters at 09:44
Tags: strategy funding police policy automation government AI RPA drones productivity law+enforcement public+safety efficiency
Full year 2024 results out this morning from Cambridge-headquartered, AIM-listed geospatial software provider and data integrator 1Spatial, have the business heading in a SaaS-based direction, increasing Group revenue by 8% to £32.3m. Gross profit increased by 15% to £17.9m (2022 £15.5m), with a corresponding margin of 55.5% (2022 51.7%). Adjusted EBITDA was £5.5m (2022 £5m) held back by necessary investment into its sales operation, required to take advantage of the launch of two higher margin SaaS solutions. Other headlines saw the UK business up 11%, US up 10%, Australia up 20%, whilst Europe remained flat. Recurring revenues increased by 23%, partially offset by a 5% decline in services and a 23% fall in perpetual licences. Recurring revenue now accounts for 56% of all revenues (FY 2023 49%) which puts the business in good shape for FY25.
As we have been covering over the last year or so (see here and read back), the real opportunity for growth with 1Spatial sits with the potential of its NextGen-9-1-1 (US focused) and 1Streetworks (UK focused) solutions, both of which target large addressable niche markets. For example, 1Spatial now has four live 1Streetworks trials and hopes to commence another ten trials in H1 across a spread of UK based utilities, private sector contractors and traffic management players. Each deal has the potential to be worth between £100k and £3m ARR and its scalable. Less advanced but also attractive is the NG-9-1-1 opportunity in the US where 1Spatial is adapting its go to market approach and already has five SaaS contracts secured.
The NG 9-1-1 and 1Streetworks are both more standardised propositions which have many potential clients – success here (along with good partnering) over the next couple of years will really define the firm’s future growth trajectory. The challenge remains executing on that plan over the medium to long term.
Posted by: Marc Hardwick at 09:42
Tags: results software data geospatial
Leading banking software provider, Temenos, has published its results for the first three months of its new fiscal highlighting improved profitability and modest revenue growth. The financials for the year to 31 March 2024 showed that Annual Recurring Revenue (the vendor’s preferred measure) was up 12% year-on-year to $723.1m whilst EBIT rose by 7% to $46.4m. Total revenue on an IFRS basis was up 1% in constant currency to $229.9m.
Temenos’ focus on ARR sales drove strong growth in recurring revenue streams in the first quarter and SaaS revenue rose by 19% year-on-year to $56.3m. Meanwhile, subscription revenue was down by 41% in the quarter at $20.1m. Term licenses brought in $7.6m (down 25%). The latest financials follow an impressive set of full-year results from the Swiss vendor’s proposition (see: Temenos delivers strong growth and a robust rebuttal). Alongside the first quarter results, Temenos also announced that its long search for a new CEO had concluded. The company revealed the appointment of Jean-Pierre Brulard as CEO effective on May 1, 2024.
Brulard has spent the last fourteen years at VMWare, where he was EVP of Worldwide Sales and a member of the Executive Committee. During his time there Brulard was responsible for strategic planning, business operations, go-to-market strategy, and management of VMware’s revenue globally. Prior to that, Brulard was SVP and EMEA General Manager, of Business Objects from 2000-2008. He has also previously held roles at Sun Microsystems and IBM.
Once Brulard formally takes office, Temenos’ current CEO, Andreas Andreades, will retire from the company after 25 years. In addition to the role of CEO that he has held since January 2023, Andreades time with Temenos has included 11 years as Executive Chairman. Under his stewardship, Temenos delivered a strong performance in FY23 whilst over the years, clear passion and determination of Andreades have played a key role in helping Temenos to become a leading global brand in banking software.
Commenting on the latest financials and the appointment of Brulard, Temenos’ outgoing CEO expressed his gratitude to all his colleagues for the collaboration and hard work that helped deliver growth in Q1, despite the challenging sales environment. Highlighting the excellence of Temenos team, the product and the company’s client references, Andreades predicted “an exciting future under the new leadership”.
Posted by: Jon C Davies at 09:20
Tags: software banking Temenos financial+services
The H1 results for Tracsis, the Leeds-HQ’d provider of software and services to the rail and transport industries, landed in line with the estimates provided in company’s February trading update (see here). Turnover for the six months ended 31st January was down 6.7% yoy to £36.5m and adjusted EBITDA decreased by 24% to £5.7m. The steep fall in the latter was affected by exceptional costs attributed to an operating model transformation programme running throughout FY24 (£1.3m incurred in H1, with around a further £1m set to fall in H2).
The top line dip stemmed from a £3m drop in revenue from the company’s Rail Technology North America division. This is attributable to two main factors. In H123 Tracsis delivered a £1.2m perpetual software licence deployment which was not repeated in the latest period. In addition, during the first half of the prior year the company generated £1.8m increased revenue from contract milestones based on delivery timelines in the orderbook. Elsewhere across the business, sales by the Rail Technology UK unit were broadly flat yoy at £14.3m in H1, while revenue from the company’s Data, Analytics, Consultancy & Events segment grew by c.3% to £20.1m.
Despite the slow start to the year, Tracsis remains upbeat on the outlook for H224. The company both believes that the programme of actions to transform the Group's operating model is progressing to plan and reports now seeing growth in its pipeline of major software opportunities. The latter is estimated by Tracsis to have more than doubled in both the UK and North American rail markets during the first half and continues to improve.
The company describes the start to Q3 trading as encouraging and activity levels are said to be high across the business. Post period end, Tracis has secured a number of new contract wins with delivery milestones in H2. The Board's expectations for the full year remain unchanged. It will, however, take a big second half performance – a sequential revenue increase of more than 25% - to get the company into top line growth territory for FY24.
Posted by: Duncan Aitchison at 09:18
Tags: results transport software rail
AIM-listed ActiveOps, the ‘decision intelligence provider’ continues to execute on its growth strategy, updating the market this morning on an expected 5% uplift in Group Revenue, an 11% increase in SaaS revenue, whilst exit Annual Recurring Revenue (ARR) was up by 14% (all in Constant Currency over prior year). This should see Group Revenue climb to c. £26.8m for FY 2024 (year ended 31st March 2024) against £25.5m in FY 2023, whilst adjusted EBITDA is expected to improve to at least £2.2m (FY 2023 £0.7m).
Operationally, the Group points to success on the sales front with the winning of three “significant ControliQ enterprise contracts” as it migrates customers onto ControliQ Series 3. ActiveOps is working towards the release of Series 4, promising expanded AI and ML capabilities. The Group also strengthened its senior leadership team back in March with three new appointments that we covered here (ActiveOps positions for growth with three new appointments). FY 2024 results are out in full on 25th June which we will cover in detail.
Posted by: Marc Hardwick at 08:31
Tags: software operations trading update
Crown Hosting Data Centres (CHDC) has won a significant contract with the Bank of England to provide Information Storage Co-location Services. The contract started on 1st March this year and will run until the end of February 2031 (seven years) and is valued at just over £22m.
CHDC is a joint venture (JV) between the Cabinet Office and Ark Data Centres, dedicated to providing Data Centre Services to the UK Public Sector. The original Crown Hosting framework agreement, for the provision of data centre colocation facilities for the ICT of public sector customers, was signed with Crown Hosting Data Centres (CHDC) in 2015.
CHDC had initial success as public sector customers took advantage of the new arrangement; from 2016 to 2020, the company achieved a strong compound annual growth rate of 80%. However, over the years growth slowed. In its FY21 and FY22 (Y/E 30th June) the CAGR was just 9%. The good news for CHDC is that double-digit growth returned in FY23, as CHDC saw revenues climb 28.6% to £57.6m. Profits also grew: by 10% to £2.9m, representing a 5% margin.
Ex-CEO, Steve Hall, was still at the helm during CHDC’s FY23 (see From Crown Hosting CEO to Littlefish CRO: Steve Hall | TechMarketView). Early in 2023, we caught up with him about the new hosting agreement signed in October 2022: Crown Hosting II (see Crown Hosting II: Game changer? | TechMarketView). The new framework agreement represented more than just a simple extension. Many of the changes looked set to give departments and agencies more cause to consider Crown Hosting as a viable alternative when putting in place legacy migration strategies.
It appears that is what has happened. CHDC explains its “significant” FY23 growth as being a result of “more eligible entities (using) Crown Hosting for their datacentre requirements”. Those entities have included organisations in the wider public sector, such as London Ambulance Service NHS Trust and NHS Arden Greater East Midlands Commissioning Support Unit.
In January this year, CHDC welcomed a new CEO. Jason Liggins initially joined Ark Data Centres in January 2014 as its CTO. Simultaneously he also served as CIO of CHDC. In 2020, Jason left to become a consultant at the Cabinet Office and Crown Commercial Service, within the Crown Hosting Framework Authority to “assist with the steering of central government’s aims towards a public cloud future, using Crown hosting as a bridging step from traditional IT services”. He, therefore, was heavily involved in the changes to the UK Government’s Cloud First Policy, as well as the award of Crown Hosting II.
Posted by: Georgina O'Toole at 09:51
Tags: contract colocation hosting legacy framework migration financial+services
Cognizant and Microsoft have announced an expanded partnership focused on the software giant’s generative AI and Copilots. The companies will collaborate to deliver industry-specific solutions using the Copilot Studio platform. Target vertical sectors for the joint initiative include retail and consumer goods, financial services, life sciences, manufacturing and communications and media.
As part of the enhanced partnership, Cognizant purchased 25,000 Microsoft 365 Copilot seats for Cognizant associates, along with 500 Sales Copilot seats and 500 Services Copilot seats. In addition, Cognizant will work to deploy Microsoft 365 Copilot to a million users within their global 2000 clients and across 11 industries. Through Cognizant's Synapse skilling program, 35,000 Cognizant developers have been trained on Github Copilot, with an additional 40,000 developers slated to receive training.
The expansion of the alliance with Microsoft is the latest component of Cognizant’s three-year $1bn generative AI investment programme. Earlier this month, the company declared that it will use the NVIDIA BioNeMo Gen AI platform for drug discovery in the Life Sciences industry. In March, Cognizant opened its Advanced Artificial Intelligence Lab focused on the science of AI and at the beginning of the year the company launched its gen AI software engineering platform, Cognizant Flowsource™️.
The big bet on Gen AI is, however, not set to reignite company growth in the nearer term. The latest guidance from Cognizant anticipates that FY24 revenue will land somewhere 2% down and 2% up yoy at constant currency (see here).
Posted by: Duncan Aitchison at 09:29
Tags: offshore partnership genAI
The UK government has launched an £8m Smart Shipping Acceleration Fund to drive maritime innovation and harness the benefits of AI to boost productivity.
The Smart Shipping Acceleration Fund will kickstart feasibility studies to develop smart shipping technologies such as AI, robotics, and autonomous vessels. The winning projects will also require match funding – leveraging further investment from the private sector. Ports will be able to use AI to detect safety hazards, optimise port activities and reduce their environmental impact.
This latest funding forms part of the UK Shipping Office for Reducing Emissions (UK SHORE) programme. Launched in March 2022 and with £206m in funding, the programme is helping the sector reach net zero.
Maritime Minister, Lord Davies, made the funding announcement while visiting Ocean Infinity, a Southampton-based marine robotics company creating robotic and uncrewed vessel technology. The company is using the funding it won from the UK SHORE programme to develop decarbonisation projects, including future propulsion systems.
AI companies targeting the maritime industry include AIM listed Windward who grew 31% in FY23, See - Windward closes FY23 with revenue up 31% - and provides a range of solutions from an AI driven decision support platform, to solutions to predict fuel consumption and advise on sanctions compliance. Another is Dublin based Protex AI, which uses existing CCTV infrastructure and computer vision technologies to capture unsafe events autonomously in a variety of settings such as manufacturing facilities and ports. See - Protex AI raises $18m to enhance workplace safety.
Posted by: Simon Baxter at 09:24
Tags: AI maritime
Construction software specialist, Eleco made further strides along its strategic shift to a SaaS-based business model during FY23. Total recurring revenue ncreased by 22% yoy to £20.7m to account for nearly three quarters company turnover for the twelve months ended 31st December.
The accompanying cannibalisation of Eleco’s perpetual license revenue however, limited overall top line growth at constant currency to just 6% over the prior fiscal year. The company generated sales of £28m in 2023, of which £1m came from the acquisition last June of Project Portfolio Management (PPM) software provider, Best Outcome. The bottom line for the FY improved at faster pace with EBITDA up 12% yoy to £5.8m.
Eleco’s UK business was the star of last year’s show. Revenue in this country jumped by 22% yoy (12.6% organically) to just over £13m. Overseas revenues decreased by 6% to £15m with sales in Germany and Sweden impacted by divested and end-of-life products. There was better news from across the pond where the implementation a direct sales channel secured more than 40 new customers in the USA. FY23 turnover in this region rose by 7.5% yoy to £1.2m.
Despite the continuing headwinds in the construction sector, Eleco remains confident about its prospects for the current year. Annualised Recurring Revenue increased by almost a quarter in 2023 providing a solid platform for growth. The recent purchase of Romania-HQ’d software developer Vertical Digital (see here) together with the full year benefit of the Best Outcome buy will also bolster the FY24 top line. Investors appear to share the company’s optimism. At the time of writing Eleco’s share price stood over 25% higher than twelve months ago.
Posted by: Duncan Aitchison at 09:21
Tags: results saas software construction
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