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Thursday 25 July 2024

IBM raises cash flow outlook after strong Q2

IBMIBM has announced its results for Q2 2024 (ended 30 June 2024). Revenue was $15.8bn (up 4% year-over-year in constant currency), exceeding estimates. The company's Software division was the star player (up 8.4% ccy to $6.7bn), Consulting was up 1.8% ccy to $5.2bn (though down 0.9% as reported, reflecting a tightening of belts in the short term), Infrastructure was up 2.7% ccy to $3.6bn (near flat – +0.7% – as reported), and Financing was down 6.6% ccy (but – at $200m revenue – only represents 1.3% of the total).

Unsurprisingly, IBM is lauding AI's contribution to the company's performance. It launched the watsonx AI platform a year ago and now reports having a book of business for GenAI in excess of $2bn.

Although growth at IBM's Software division has improved on the 5.9% posted in Q1 (see  IBM shares dip on Q1 results and HashiCorp acquisition), Big Blue still expects overall (constant currency) revenue growth of "mid-single digits" for the year (IBM closed out FY23 at +3% – see IBM closes a solid FY23), citing currency as applying a "one to two-point headwind" to revenue growth figures (at current foreign exchange rates). However, the company is raising its full-year view of free cash flow (now expected to be over $12bn for FY24).

See how IBM has been performing in the UK in our latest UK SITS Supplier Rankings.  

Posted by: Craig Wentworth at 09:52

Tags: results  

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Thursday 25 July 2024

B2B baggage remains burdensome for BT

LogoThe impact of legacy managed services contact declines, which began to bite in the final quarter of FY24 (see here), dragged BT's Business Division down further during the first quarter of the new fiscal year. The latest trading update from the company states that revenue from the B2B connectivity-centric unit for the three months ended 30th June shrank both qoq and yoy by 3.4% and 5% respectively to £1.933bn. The company did, however, report seeing improved trends within the division as the modernisation of its offering portfolio and streamlining of its operations both progress.

Q125 turnover for BT Group as a whole was down by 2% yoy at just over £5bn. Openreach was the only unit to deliver top line growth for the period with sales increasing by 2% to £1.56bn. There was, however, better news to be found on the profitability front. Adjusted EBITDA in the first quarter ticked up by 1% yoy to £2.06bn. This was largely driven by tight cost control, which included lower staff costs.

The transformation of BT Group remains very much a work in progress. As CEO, Allison Kirkby notes “There is much more to do to simplify BT Group and deliver for our customers.”. The company believes that it remains on track to achieve its near and longer-term financial objectives. These comprise an adjusted revenue increase of 0-1.0% generating EBITDA of around £8.2bn in FY25 and consistent and predictable turnover growth coupled with EBITDA improvements ahead of revenue from FY26 to FY30. Continuing difficult macro-economic conditions and cost of living pressures coupled with a highly competitive market for connectivity services, however, make the road ahead a challenging one for the telco heavyweight.

Posted by: Duncan Aitchison at 09:48

Tags: results   telco  

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Thursday 25 July 2024

A buoyant start to FY25 for Coforge

LogoHaving signed off its FY24 with an ahead of market growth performance (see here), mid-tier offshore provider, Coforge has continued to outpace its larger rivals during the first quarter of the new fiscal year. Company turnover for the three months ended 30th June increased by 7.8% yoy at constant currency to $294.1m. The bottom line improved at an even faster clip with Q125 adjusted EBITDA rising by almost a fifth yoy to lift the associated margin by 210 bps to 17.0%.

There was positive progress made across all the vertical sector and geographic dimensions of the firm’s business portfolio in the recently completed quarter. From an industry segment perspective, it was the double-digit yoy increase in sales to Coforge’s Banking and Financial Services clients which made the largest contribution to the Q1 revenue uptick. In terms of geographies, the firm’s Americas and EMEA regions both advanced more rapidly that the business as whole. Together accounting for almost 90% of world-wide turnover, these two territories delivered yoy top line improvements of 8.2% and 8.1% respectively.

Although no forward guidance was provided, Coforge did report that it entered the second quarter with a very strong executable order book. Company CEO, Sudhir Singh is justifiably upbeat on the outlook commenting that the firm is well set for continued growth ahead.

See how Coforge has been performing in the UK in our latest UK SITS Supplier Rankings.  

Posted by: Duncan Aitchison at 09:39

Tags: results   offshore   IT+services  

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Thursday 25 July 2024

Aptitude H1 results mixed amidst strategic pivot

logoAptitude Software Group H1 2024 results reveal a mixed financial picture amidst its strategic pivot towards AI Autonomous Finance. Despite single digit declines in revenue, early results are promising for adoption of its Fynapse data platform.

Total revenue for H1 FY24 dipped -6% to £35.3m, with Annual Recurring Revenue growing 2% to £50.8m, driven by strong business performance in Fynapse and Revenue Management products. The company has made significant strides in its strategic realignment, moving from directly selling regulatory and compliance software to becoming a partner-led platform organisation delivering AI Autonomous Finance solutions. Despite the decrease in total revenue, Aptitude maintained its adjusted operating profit at £4.2m. The company's focus on operational efficiency and cost management has led to improved margins.

Fynapse, its intelligent finance data management and accounting platform for finance teams launched in 2022, but the big change came last year when new CEO Alex Curran took the reins, shifting the focus of the business (See - Aptitude doubles down on Autonomous Finance). In H1 Aptitude secured two additional Fynapse clients, including one win in partnership with HSO and Microsoft and one with a major existing Aptitude Accounting Hub client. The company's partnership strategy is also gaining momentum, with 38% of new Software ARR signed through partners in H1 2024. Aptitude aims to increase this to 80% by the end of 2027. A notable development was the launch of a global insurance industry solution with HSO, underpinned by Fynapse and Microsoft Dynamics 365.

Aptitude is still very much a business in transition, including leadership refreshment and a flattened structure. The company remains confident in meeting market expectations for 2024, with a £4m contract win with a major global insurer announced in July (See - Aptitude Software celebrates £4m contract win) and a growing pipeline of opportunities for Fynapse.

Posted by: Simon Baxter at 09:34

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Thursday 25 July 2024

ServiceNow outperforms again in Q2 thanks to GenAI tailwind

ServiceNow logoServiceNow has outperformed again in Q2, exceeding guidance across all topline growth and profitability metrics and raising guidance for the outlook thanks to GenAI, which it describes as a ‘generational secular tailwind’.

Total revenues in Q2, to end of June ’24, were up 22% to $2,627m; subscription revenues increased by 23% to $2,542m; and the net new average contract value for Now Assist, ServiceNow’s GenAI offering, doubled quarter over quarter, significantly beating expectations, with 11 new deals greater than £1m in the quarter.

There is no doubt that ServiceNow is a supplier in the right place, at the right time. Chairman and CEO Bill McDermott believes the relevance of its AI platform for business transformation remains stronger than ever as CEOs look for new vectors of growth, simplification and digitisation. And he’s not lacking ambition with the goal to ‘reinvent every workflow, in every company, in every industry with GenAI at the core’.

Partnerships are central to this strategy and Q2 saw ServiceNow expand its strategic AI relationships with a host of big names including Microsoft, IBM, NVIDIA, Genesys, Fujitsu, Equinix and Infosys. Today it also announced a deal with Boomi in customer experience.

There is no let up in innovation either, with ServiceNow launching its RaptorDB Lighthouse programme today to help customers quickly ingest and analyse data at massive scale as they pursue new AI use cases. It also announced the acquisition of German information retrieval tech company Raytion, to enhance its GenAI search and knowledge management capabilities.

Against this backdrop, and given ServiceNow’s robust pipeline and outperformance in the first half, it is no surprise to see CFO Gina Mastantuono raise 2024 subscription revenue guidance and have the confidence to predict revenues of $15bn+ in 2026.

Posted by: Tola Sargeant at 09:25

Tags: results   acquisition   partnerships   genAI  

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Thursday 25 July 2024

Sopra Steria confirms mixed H1 amid challenging market conditions

Sopra SteriaLast Friday, we covered Sopra Steria’s preliminary results for the first half of 2024 with the business adjusting its FY growth outlook whilst maintaining its margin target. Full H1 2024 results were published yesterday evening and confirmed the headline numbers released last week, with Group revenue of €2,949.4m, equating to total growth of 3.8% and organic growth of just 0.3%. Operating profit was up 13.6% to €285.3m with a corresponding margin of 9.7%, up 0.9 points from H1 2023.

Sopra Steria Group CEO Cyril Malargé provided more colour on operating conditions citing a wait-and-see stance of clients. The business has been strategically targeting higher value activity (upscaling in consulting, moving its tech offerings up the value chain and upgrading its operating model) that appears to be feeding through into wider margin improvement. Positioning / differentiation is now about providing a “credible European alternative to global players” and Malargé confirmed that most of the steps in the sale of banking software activities to Axway have been completed with the deal to be finalised in early September.

The UK business accounts for 17% of total Group revenue with €487.3m achieved in H1, equating to organic growth of 3.1%, after declining slightly in Q2, with the election acting as a drag on the Public Sector heavy business, particularly impacting its SSCL Business Process Services operation. The most buoyant parts of the UK business were cited as financial services, government and transport. UK operating margins on business activity were 11.6%, up 0.2 points from the first half of 2023.

Looking forward, full-year Group targets are now for “relatively stable” revenue on an organic basis, with operating margin of at least 9.7% and free cash flow of around €350m.

Posted by: Marc Hardwick at 08:22

Tags: results  

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Wednesday 24 July 2024

Atos Chairman becomes Chair and CEO

YAtos logoou’d be excused for missing it. As it seemed to be merely an addendum to a financial restructuring market update. But Atos has another CEO. In January this year, we published Atos: 6th CEO in 6 years so you can do the maths for yourself.

The new CEO is Jean Pierre Mustier; the former UniCredit boss has been appointed as both CEO and Chairman of Atos, replacing Paul Saleh who has resigned. Mustier has been Chairman since October 2023.

Mustier joins as Atos announces the next positive step in its financial restructuring journey. In relation to the pre-arranged financial restructuring plan, Atos has entered into “accelerated safeguard proceedings”, which have been approved by a French court (see Atos: Significant milestone in financial restructuring journey | TechMarketView). The expectation is that the plan will be approved on 15th October, with implementation between November 2024 and January 2025.

Affecting Atos’ financial debt and share capital, the plan includes €1.7bn in new funding and a debt reduction of at least €3.1bn and will mean that no debt is maturing before the end of 2029. 67% of bondholders have agreed to contribute to the new financing, including up to €837.5m in new bonds and €75m in cash.

The usual reminder is included: that the restructuring will result in a massive dilution for Atos’ existing shareholders, “who would, if they do not participate in the proposed capital increases, hold less than 0.1% of the share capital.”

The news had little impact on Atos’ share price during today’s trading. Every step towards more certainty is positive for stakeholders, including clients and employees. But one of the biggest uncertainties remains. How will the Atos Group move forward in terms of its organisational structure and go-to-market approach? Will it continue to go to market as two businesses: Atos and Eviden? We understand that a ‘One Atos’ approach remains on the cards. How that is implemented remains up in the air and must be a question that employees will want answered as soon as possible. They have been on one hell of a journey already.

Posted by: Georgina O'Toole at 18:23

Tags: leadership   corporateactivity   equity   debt   financing   restructuring  

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Wednesday 24 July 2024

A tough FY24 for cybersecurity services supplier Shearwater

logoManaged security services supplier Shearwater Group has had a challenging FY24 (year ended March 31, 2024), with revenue declining double digits as customers continued to ‘defer budget allocations’ for larger contracts to future periods.

FY24 total revenue was down -15% to £22.6m. Services accounts for 89% of revenue, with revenues of £20m down -15% yoy, with contract wins and renewals notably in the banking, telecommunications and government sectors contributing to performance. Advisory revenues included particularly strong demand for penetration testing consulting services during the year. Noteworthy wins included a managed cyber security service, utilising AI-driven endpoint protection for a leading finance investment house. A £1.3m government agency contract won in October 2023 was also an important milestone for the business, its first major government contract.

The software business saw similar struggles, posting revenues of £2.4m, down -17% yoy. Both the US and the Middle East remain target markets for growth going forwards. The groups SecurEnvoy solution will seek to further leverage AI to reduce training needs, enhance security response and proactive threat prevention. The integration of GeoLang (a sensitive data discovery solution it acquired in October) has generated efficiencies that allowed for increased investment in product development.

FY25 has started well according to management, with increasing momentum building in Q1, with notable contracts including a £1.4m contract renewal and a $4.8m new deal with a British media and telecommunications company, as well as one of the delayed projects from a leading international bank. There are signs that customer budget allocations are starting to be released at a modest pace. While current market conditions have necessitated a focus on strengthening organic growth, M&A remains a strategic pillar for the business, as is focusing on expanding into government departments.

Posted by: Simon Baxter at 09:48

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Wednesday 24 July 2024

LTG disappoints

LTG logoShares in AIM-listed Learning Technologies Group (LTG) took a hit this morning – they are down 17% as I write to c67p - after the learning and talent solution provider revealed a disappointing first half performance and the temporary suspension of its subsidiary GP Strategies’ eligibility to work on new classified contracts by the US Government.

A weaker US dollar and subdued market mean LTG is expecting a 7.5% decline in first half revenue (to end of June ’24) to c£248m, despite SaaS and long-term services contracts, which make up three-quarters of revenues, remaining resilient. Margins continue to improve though and adjusted EBIT for the first half is forecast to be c£43m, up from £41.4m on a like-for-like basis in H1 ‘23.

The picture for the second half is expected to be similar – revenues under pressure but margins improving – with the full year now predicted to deliver revenues of £480-£500m (adjusting for the sale of VectorVMS on 1 July) and EBIT of £88m-£93m.

On the plus side, it’s also worth noting that the disposal of VectorVMS has strengthened LTG’s balance sheet enabling a debt repayment of $25m. Net debt is now just £6m, compared to c£79m in FY23.

However, news from GP Strategies in the US is less reassuring for shareholders. As a US company that performs work for the US Government, it requires certain approvals designed to protect classified information and these have been suspended. Although GP Strategies, which LTG acquired in 2021, can continue to work on existing classified contracts – and the Board claims the value of related contracts is not material in the context of total group revenue and profit - it can’t take on new classified work until certain requirements are met.

It’s a situation that LTG is taking very seriously and GP Strategies, which has to operate at arm’s length under US foreign parent company rules, is ‘working tirelessly’ to resolve all relevant issues to the satisfaction of the US Government. We expect a further update in due course.

Posted by: Tola Sargeant at 09:35

Tags: results   trading   education  

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Wednesday 24 July 2024

Temenos looks to the future with optimism

TemenosLeading banking software vendor, Temenos, has announced interim results for its current fiscal, highlighting encouraging growth despite a challenging first quarter. For the six months to 30 June 2024, Annual Recurring Revenue (ARR) rose by 12% to $1.47bn whilst total revenue was up by 2.7% at $478.3m.

During the early part of the fiscal Temenos was negatively impacted by unfounded allegations made against it by an activist, short-seller, Hindenburg Research. Despite the software vendor subsequently being totally exonerated, following a thorough independent investigation, the unwanted attention caused contract delays that negatively impacted Q1 revenue. Despite a healthy 13.3% increase in SaaS revenue for H1, total licensing revenue for the first six months of the year was down by 4.2%.

Having been the victim of a prolonged campaign of mischief making by small number of activist investors since 2022, in April this year Temenos announced Jean-Pierre Brulard as its new CEO (effective on May 1, 2024). Alongside Brulard’s appointment, former CEO Andreas Andreades (who had been personally targeted by some of those calling for change) retired after 25 years with Temenos. In addition to the role of CEO he had held since January 2023, Andreades also spent 11 years as Executive Chairman (see: Andreades signs off).

Commenting on the results and his first three months in office, Temenos' new CEO, highlighted the company’s unrivalled reputation for innovation. Brulard also announced further changes to the executive management, with Will Moroney promoted to Chief Revenue Officer with Rodrigo Silva promoted to President Americas. Since his advent, the new Temenos CEO has also made a number of senior hires in the US, with Isabelle Guis joining as Chief Marketing Officer, and Monty Bhatia joining as Executive Vice President of Global Alliances and Partner Ecosystem.

Despite its revamped leadership now able to look to the future with optimism and the company having put the distraction of dissenting voices behind it, Temenos revised its guidance to take account of the impact of the short-selling in Q1. ARR growth for FY24 is now expected to come in at ~13% (previously ~15%), whilst forecasts for EBIT, EPS and free cash flow remain unchanged (at 7-9%, 6-8% and 16%).

Posted by: Jon C Davies at 09:24

Tags: banking  

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Wednesday 24 July 2024

Alphabet posts strong growth in Q2 amid cloud acquisition setback

Alphabet GoogleGoogle parent company Alphabet has announced its results for Q2 2024 (ended 30 June 2024). Revenue was up 15% year-over-year in constant currency to $84.7bn, with operating income climbing to $27.4bn (a margin of 32%) – both metrics beating expectations for the quarter.

As always, Alphabet's figures are dominated by Google's ad revenues from Search, YouTube and Google Network (comprising over three-quarters of the total), but Google Cloud revenue was up a healthy 28.8% (as reported) to $10.3bn – similar to Q1's figures (see Alphabet shares leap 14% on Q1s) – posting an operating income for that segment of the business of $1.2bn.

Growth in EMEA lagged behind the headline figure a little (up 12% yoy ccy to $25bn).

In other Google/Alphabet news, the company's bid to acquire cloud security startup Wiz for around $23bn (announced last week – see Alphabet in talks to acquire cloud security startup Wiz for $23bn) is reportedly now off, denting attempt to bolster Google Cloud's offer with further cybersecurity capabilities... particularly around AI models, data and services. According to a Wiz memo seen by Reuters, the startup now favours an IPO (again).

The Wiz deal collapse represents the second time in the last few months that Alphabet has walked away from major M&A activity, deciding not to pursue the acquisition of online marketing software company HubSpot after beginning talks in April. 

Posted by: Craig Wentworth at 09:15

Tags: results   M&A  

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Wednesday 24 July 2024

What is Tesla?

LogoI’ve been writing about Tesla for 12 years now. Back in 2012 I ‘d been a director of Allianz Technology Trust (#ATT) since 2007 when its Fund Manager, Walter Price, announced that he had bought into Tesla. Tesla had just launched the Model S in the US and had no presence in the UK. Tesla shares soared in the following year which secured a mega performance for #ATT. In the following years I followed them closely including a visit to their factory in California.

12 years and a hundred or so articles later, my views on Tesla – and Elon Musk – have changed considerably.

Firstly, I am now not such a fan of EVs as I thought I might be. Indeed, my views seem to be echoed in those of the general public. 

Secondly, I said from the start that Tesla would lose their ‘first mover’ advantage as established and new automakers moved to catch up and, in many cases, overtake Tesla.

However, throughout those 12 years, I have reported on Tesla as an ‘energy/battery company’. Indeed suggesting that, in time, it might become a more important part of the company than the auto bits. I got the obvious business case for a Powerwall in your home charged by solar panels (or cheaper off peak electricity). But I was also impressed by the huge battery farms that Tesla could build to power whole communities.

Last night’s Q2 results from Tesla reported a 45% slump in profits on revenues up just 2% and another 4.8% drop in vehicles delivered. In EVs, Tesla has an aging line-up and faces huge competition particularly from Chinese BYD.

But there is one really bright spot in Tesla’s results. Its revenues from ‘Energy generation and storage’ DOUBLED to $3b in Q2 yoy and now represent c12% of Tesla’s total revenues.Photo

Which leads one to ask ‘What is Tesla?’

As an EV manufacturer, it is now ‘one of many’ if not just plan ‘run of the mill’. Indeed Elon Musk now seems to see Tesla’s future to be in self-driving ‘Robotaxis’. They are also putting huge investment into AI projects. The much rumour ‘cheap Tesla EV’ seems to have been delayed yet again.

But maybe Tesla’s best route forward is in developing its battery technology and deploying it outside of EVs? Indeed on current trajectory, its ‘Energy generation and storage’ activities could indeed become the main driver at Tesla in a few years. Dare I say it, just as I mused all those years ago!

Posted by: Richard Holway at 08:22

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Wednesday 24 July 2024

Insight acquires Brighton-based NWT

insSolutions Integrator, Insight, has acquired Brighton, UK-based New World Tech (NWT) in an important step to expand its Services capability in the UK/Europe. Terms of the deal were not disclosed.

NWT is a 50-person consultancy working across all industries (with a notable presence in Public Sector). It helps customers deliver complex, strategic technology projects and programmes. Staff are typically highly experienced advisors/practitioners such as CTOs, programme/project managers, and solutions architects. The firm also has a growing concentration of expertise around ServiceNow and cloud technologies and has developed its own set of processes and methodologies to help accelerate aspects of its clients’ transformation journeys (e.g., a playbook for cloud migration and a proven framework for running large programmes of work).

UKHotViews Premium logoIt’s a really interesting move by Arizona-headquartered Insight, which is seeking to build out its Services capability. I caught up with Adrian Gregory, President for EMEA at Insight, whose background in Services will be essential to both the success of the integration and Insight’s broader strategic aims in Services. More here in UKHotViews Extra…

Posted by: Kate Hanaghan at 07:10

Tags: acquisition   consulting  

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Tuesday 23 July 2024

*HotViewsExtra* Digital centre of government starts to take shape

DSIT logoThe new government's plans to create a modern digital government are starting to take shape. 

Earlier this month, it was revealed that digital government expertise from Government Digital Service (GDS), the Central Digital and Data Office (CDDO) and the Incubator for AI (i.AI) will move to Department for Science, Innovation and Technology (DSIT). These organisations are expected to transfer in their entirety from the Cabinet Office (and Prime Minister's Office in the case of i.AI) to DSIT, although the timescales for this move have not been confirmed. 

With key ministerial roles now in place, we now know who will be responsible for leading digital, data and technology change within government. 

UKHV Premium logoTechMarketView subscribers, including UKHotViews Premium subscribers, can read more about DSIT’s changing remit and the roles and responsibilities of its ministers. in our expanded UKHotViewsExtra article here.

If you aren't a subscriber—or aren't sure if your organisation has a corporate subscription—please contact Deb Seth to find out more.

Posted by: Dale Peters at 10:22

Tags: strategy   policy   government   digital   data  

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Tuesday 23 July 2024

NTT DATA and iPipeline target growth in UK Insurance

NTT DATANTT DATA’s UK business has announced a new partnership with policy administration platform provider iPipeline, as it looks to further expand its presence in the insurance, pensions, and savings markets.

iPipeline operates as a business unit of Nasdaq-listed Roper Technologies and was established back in 1995, providing a platform that serves life insurance, pensions, savings and investments markets coupled with a ‘data library’ designed to help automate a range of related business processes and workflows (from “quote to commission”). iPipeline provides its core policy administration platform to some of the biggest insurance, pensions, and savings businesses in the UK, including Aviva, Zurich, Royal London Ireland, and OneFamily. iPipeline is headquartered in the US with office locations in the UK and Canada. 

As covered in our recently published UK Financial Services SITS - Suppliers, Trends and Forecasts 2024 report the Insurance sector remains one of the most dynamic components UK FS SITS, worth around a third of the market by value. Changes in consumer engagement, purchase behaviours, demographics, and retirement provision are all driving the need to accelerate innovation and digitise processes further, faster. NTT DATA will be looking to this partnership to help accelerate its growth in the sector.

Posted by: Marc Hardwick at 09:58

Tags: partnership  

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Tuesday 23 July 2024

OpenAI releases GPT-4o Mini as it eyes Broadcom tie up

logoAmidst all the chaos around the global IT outage was the announcement that OpenAI is releasing a lighter, cheaper model called GPT-4o Mini. The cut down model costs significantly less and is said to be more capable than GPT-3.5. Why does this matter you may ask? Well, the trend towards the development of these smaller lightweight models should help democratise the use of AI LLM’s, which for many organisations are still out of reach due to their high cost.

The new GPT-4o Mini model has a context window of 128k tokens, which is a measurement of how much it can remember in a given conversation. By way of comparison GPT-3.5 Turbo has a context window of 16k tokens. Perhaps more importantly for many organisations is the cost. GPT-4o Mini costs 15 cents per million input tokens and 60 cents per million output tokens, which OpenAI said is about equal to 2,500 pages in a book. GPT-4o, which was released in May, costs $5 per million input tokens and $2.50 per million output tokens.

An LLM can have billions or even trillions of parameters (such as GPT-4). However, the largest LLM’s are both expensive and consume a lot of energy. We have seen a trend towards the development and use of small language models (SLMs), which for some tasks are more than capable for what organisations require, but at a much better price point. Anthropic for example released three different models, ‘Haiku’, ‘Sonnet’, and ‘Opus’, as part of its Claude 3 release, all varying on cost, speed and capability. Other SLMs include the likes of Microsoft's Phi-3 Mini, which is built to run on phones and PC, Mistral's 7B and Google's Gemini 1.5 Flash, which is designed for high-volume, high-frequency tasks like generating captions and extracting data from forms. (See - Google I/O 2024: The Gemini Era & Project Astra).

In other news, OpenAI has also been in talks with semiconductor designers including Broadcom about developing a new chip, as the company looks to ease its reliance on Nvidia and bolster its supply chain. CEO Sam Altman has engaged with chipmakers, partners, including Microsoft, government bodies and financial backers in an effort to boost capacity.

Posted by: Simon Baxter at 09:56

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Tuesday 23 July 2024

Eagle Eye maintains an upward trajectory

LogoLondon-HQ’d digital promotions and loyalty specialist, Eagle Eye looks to have delivered another strong fiscal year performance. The latest trading update from the company states that revenue for the twelve months ended 30th June is anticipated to be up 11% yoy to £47.7m with adjusted EBITDA margin reaching an above market expectations 24% (FY23: 20%). Annual recurring revenue (ARR) for the period is estimated to have risen by 19% yoy to £39.7m.

The figures suggest, however, that the SaaS provider’s momentum stalled somewhat during second half of the FY. H1 revenue, ARR growth and margin were £24.1m, 19.8% and 24.3% respectively (see here).

Beyond the numbers, there was positive progress made on the business development front in FY24. There were notable account expansion successes at Tesco, Morrisons and Asda in the UK, Hudson's Bay in North America and Woolworths in Australia. There were also several new international sales in the final quarter. These included Central Retail Vietnam - Eagle Eye's first customer in Vietnam - together with Picard and Chronodrive in France. The company’s winning ways have continued post year end in the shape of contracts with RONA in Canada and Waterstones in the UK.

The company finished that last fiscal with net cash of £10.4m (30 June 2023: £9.3m). Eagle Eye also reports having already built a considerable pipeline of sales opportunities for the coming months. The Board is confident that the business has established a strong platform for further growth during FY25 and beyond. Eagle Eye certainly looks well positioned to continue to prosper as retailers turn increasingly to data driven, personalised promotions and rewards to drive sales and retain customer loyalty (see our latest Market Trends & Forecast report for more details).

Posted by: Duncan Aitchison at 09:55

Tags: saas   software   retail   ecommerce   customer+experience   trading update  

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Tuesday 23 July 2024

North America sustains LTIMindtree’s growth

LogoLTIMindtree has kicked-off its new financial year on a reasonably positive note. Company revenue for Q125 (the three months ended 30th June) rose by 3.5% yoy at constant currency to c. $1.1bn, albeit adjusted EBITDA margin shrank by 120 bps to 17.6%. All of the firm’s first quarter top line improvement came courtesy of the North America market. The pace of top line expansion was not, however, sufficient to maintain the growth leadership position LTIMindtree held last year among the offshore majors (see here). Both HCL and TCS posted stronger sales increases during the starts to their FY25’s.

The firm’s slowdown in Europe which began during H224 continued through the recently completed quarter. Turnover in this region decreased by 1.7% yoy to $158m largely on the back of weaker demand from the Banking, Financial Services & Insurance sector. Company revenue in North America, conversely, rose by 6.4% supported by double-digit sales upticks in the Technology, Media & Communications and Manufacturing & Resources verticals.

As is LTIMindtree’s habit, no forward guidance was provided for either the current quarter or the full fiscal year. The company’s latest results announcement did, however, note that order inflow during Q1 had remained stable. Continuing low single-digit top line growth would seem the likely shape of things to come for this the aspiring India Tier 1 vendor.

Posted by: Duncan Aitchison at 09:45

Tags: results   offshore   IT+services  

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Tuesday 23 July 2024

Double digit growth for SAP Q2 as AI-focused restructuring continues

SAP

SAP has announced its Q2 2024 results (ended 30 June 2024). Total revenue was up 10% to €8.3bn in constant currency, with cloud revenue growth remaining strong – up 25% (as it was in Q1) to €4.2bn. SAP Cloud ERP Suite also kept up its stellar performance from the start of the FY, with growth climbing a percentage point to +33% (revenue being €3.4bn for the quarter). Cloud backlog edged to a new high of €14.8bn (up 28% from the previous record of €14.2bn set in Q1 2024) and Cloud gross profit rose 29% to €3bn – rounding off a strong set of quarterly numbers for the company's cloud business, now bringing in close to half (49%) of SAP's total revenue.

SAP continues to focus on "business AI" as a key strategic growth area, as we reported in earlier quarters (see SAP grows 9% in FY23, led by cloud – but AI-driven job cuts beckon). The company-wide restructuring programme begun at the start of the year (see SAP cloud up 25% in Q1 24 but restructuring hammers profits) rumbles on; now looking set to impact "9,000 to 10,000 positions" (up from the c. 8,000 jobs the company reckoned would be affected when it rolled out the news). Costs of €600m were attributed to the programme on Q2's balance sheet (down from the €2.2bn hit in Q1); total costs are expected to reach €3bn by the time it concludes early next year.

The company's outlook for the full year revenues remains unchanged (with Cloud revenues of €17.0–€17.3bn and Cloud & Software revenues combined of €29.0–€29.5bn – up 25%–27% and 8%–10% respectively, in constant currency). SAP's "ambition" for 2025, however, sees the company expecting operating profit of €10.2bn (previously c. €10bn) for FY25 (up from an expectation of €7.6–€7.9bn for FY24), as the anticipated incremental benefits from its transformation programme begin to flow through.

Posted by: Craig Wentworth at 09:41

Tags: results   restructuring  

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Tuesday 23 July 2024

*NEW RESEARCH* UK Financial Services SITS - Suppliers, Trends and Forecasts 2024

Growth within the UK Financial Services SITS market slowed significantly during 2023, driven largely by the challenging global economic climate and its impact on end-user organisations. However, despite the inhibiting factors dampening spend, the technology-led transformation of the UK Financial Services sector continued, albeit at a reduced rate.

Recognition of the limitations of outdated technologies and analogue business processes, coupled with the volume of in-flight projects, prevented the sector from turning its back on the transformation imperative. As economic conditions continue to improve and financial restraints are gradually eased, expenditure within the UK Financial Services SITS market will pick up once again, with sustained growth forecast through to 2027.

MTFReflecting softer demand for new technology initiatives during 2023, only six of the vendors in the Top 10 grew UK Financial Services SITS revenue by more than 1%, with two of these delivering a double-digit increase. Combined revenue for the Top 10 rose by 6.8%, representing a significant reduction on the growth experienced in 2022, when the comparable figure was +18.9%.

FinancialServicesViews subscribers can learn more by downloading UK Financial Services SIT - Suppliers, Trends and Forecasts 2024. If you do not currently have access to this report but would like to learn more, please contact Deb Seth.

Posted by: Jon C Davies at 08:58

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