This time last year we commented on the unsettling picture Microsoft’s Q3 performance painted (see here), and it was similar in Q3 this year (to March 31 2017) as the company met market expectations for earnings but at $22.1bn (up 8% reported/7%cc) was slightly short on revenue. Net income was up 28% reported/16% cc to $4.8bn. Shares fell c3% in after hours trading before recovering.
A year is a long time, especially in the cloud market which Microsoft is adjusting to, so there have been developments. Specifically, Microsoft’s cloud offerings provided the engine for growth. The $6.8bn Intelligent Cloud division saw 11% growth (12%cc) on the back of demand for server products (apparently assisted by IoT requirements) but with 93% (94% cc) yoy growth Azure was the star, although Microsoft does not reveal hard revenue figures. This is the second consecutive quarter with this level of Azure growth, so traction is strong and increasing – but it no doubt has a long way to go to catch up with AWS, despite AWS's slowing growth.
As the home of Office and Dynamics, the Productivity and Business Processes unit is also cloud-inclined. With revenue up 22% (23% cc) to $8bn, it also contributed to the overall growth in cloud revenue through good Office 365 performance (up 45%) which is quite a rate of increase for an accepted product. The 81% growth for Dynamics 365 reflects its younger age but is testament to the appeal of modular capabilities and the ability to augment on premise Dynamics with cloud components. This division also houses LinkedIn, which contributed revenue of $975m but carried a loss of 386m. The value from this data rich acquisition has yet to be mined.
It was hardware that let Microsoft down – More Personal Computing was down 7% to $8.8bn, including Surface sales down 26%/25% cc; the decline was steeper than the 5% fall of Q2. On a positive note, Windows OEM revenue was up 5%, as it was last quarter, while Windows Commercial and Cloud rose 6%.
The more balanced portfolio and increasing cloud adoption are signs Microsoft is doing many of the right things during this period of cloud transition and with its emerging machine intelligence and data assets there are more developments to come.
Posted by Angela Eager at '10:01'
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Q1 results out overnight from Amazon show the trends around top and bottom line performance of Amazon Web Services (AWS) are continuing. Since the first quarter of 2016, growth has slowed quarter by quarter from 64% to 43%, producing revenue of $3.66bn for the three months to the end of March. Despite an ongoing slow down in revenue growth in the first quarter of the year, the operating margin in the public cloud business is still hovering around 24%.
Perhaps we shouldn’t be too surprised that AWS has not maintained the phenomenal growth levels (80+%) it showed when we first got some insight into its financial performance back in 2015. The business is now larger and competition has strengthened. Indeed, Microsoft Azure has gained traction with revenue growth of 94% in the quarter just reported see Cloud a bight spot in mixed Microsoft Q3.
Whichever way you look at it, growth of 40+% is not to be sniffed at and of course it blows the traditional infrastructure services market growth rate out of the water. However, it is a figure that some traditional players are able to compete with in their own fast-growing cloud businesses.
What continues to impress us is the rate of new products and investment – and not just in AWS but across Amazon as a whole. For example, AWS recently announced it will be opening an infrastructure region in Sweden this year, with more “availability zones” opening in France in due course. The company’s strategy shows that moving quickly and constantly is key to creating dominant positions in markets. However, we are just at the start of what cloud will enable businesses and government to do; things have a long way to run meaning we should certainly not assume AWS will retain such a lead as time goes on.
Posted by Kate Hanaghan at '09:44'
Enterprises have about one year left to become compliant with the EU’s new General Data Protection Regulation (GDPR) which comes into force on 25 May 2018, and there are a lot of tech companies that would like to help you get there.
One such is Newbury-based Exonar, whose e-discovery platform aims to classify all of a company’s unstructured data and determine who has access to it. Incorporated in 2007 and renamed in 2010, Exonar has raised £1.25m in a seed funding round led by Winton Group (to the tune of £750k), along with Amadeus Capital Partners and existing angels. This brings Exonar’s total funding to £3.3m.
The clock is ticking!
Posted by Anthony Miller at '09:26'
AIM-listed telematics and data insight provider Trakm8 posted a trading update indicating financial performance for the year ending 31st March 2017 to be in line with revised expectations issued in February.
We calculate the company’s FY17 revenue was £27.2m, up 6% from £25.7m a year earlier, but the Dorset-based supplier left any reference to operating profit off the bulletin. We don’t expect the news to be good in that respect. H117 pre-tax profits were down 77% to £282k and management warned full year operating profit would be significantly below the £3.1m posted in FY16.
Trakm8 spent £130k on overhead reduction initiatives during the reporting period and invested heavily in staff, IP and product development. The fruits of that labour arrived too late to have a defining impact on the FY17 results though Trakm8 is confident it will provide a solid platform for future growth.
Recurring revenue from service and data fees grew 18% to £9.8m during FY17 (33% like for like) as the “evolving” business model shifted fees awasy from product and into SaaS and rental revenue. An acceleration of new orders (up 37% yoy) should also benefit FY18 performance.
The cost reduction measures now in place are expected to shave around £1.5m a year off the company’s opex. That should deliver a much needed boost to Trakm8’s profitability and help it repay the additional £2.9m of net debt added in the last 12 months (now £3.9m in total).
We think Trakm8 looks well placed to exploit growing consumer and commercial interest in autonomous vehicles and telematics insurance over the next few years. The British Insurance Brokers Association (BIBA) reported a 25% yoy increase in the number of telematics backed insurance policies issued in 2016, for example, and a new generation of connected cars coupled with IoT-enabled “smart city” infrastructure also plays to Trakm8’s product and service portfolio.
Posted by Martin Courtney at '09:09'
Cardiff-based developer of regulatory compliance software, W2 Global Data Solutions, has raised further funding in a Series A round which introduced Mercia Fund Management (MFM) and Thorium Technology Investors as new backers. Existing investors Finance Wales and other shareholders also participated. The amount was not disclosed, but media reports suggest that this was MFM’s largest ever growth fund investment.
W2’s portfolio includes SaaS products for the Know Your Customer (KYC), Anti Money Laundering (AML) and fraud prevention due diligence markets. The company recorded a pre-tax loss of nearly £0.6m in the year to 31st March 2016, more than double that of the prior year. W2 was incorporated in 2011 and, according to an article in Simpleweb, lost its technical co-founder in 2012 ‘leaving the company with no tech team’. They seem to have recovered, claiming to have almost doubled revenues every year since 2014.
Posted by Anthony Miller at '08:57'
Don’t forget that applications for the inaugural TechMarketView Great British Scaleup Event close on Friday 5th May. The event will be held in London on Wednesday 28th and Thursday 29th June.
If you run a fast growing, privately held, UK-owned tech SME and feel that you are ready, willing and able to make a step-change in growth, the TechMarketView Great British Scaleup programme aims to help you connect with external finance to accelerate your scale-up journey.
Successful applicants will be invited to participate in a half-day, closed-door session to discuss their business plans and prospects in confidence with TechMarketView and our founding Advisory Sponsor, ScaleUp Group, whose team of successful tech entrepreneurs and experienced executives have been responsible for company exits valued at over £4b.
All applicants will also be eligible for an initial infrastructure assessment at no charge by managed cloud and infrastructure services firm Cogeco Peer 1, the Enterprise Cloud & Infrastructure Services Technology Partner for the Great British Scaleup programme.
Companies participating in the Great British Scaleup programme will also enjoy invaluable exposure in TechMarketView UKHotViews, widely acknowledged as the most influential daily commentary on the UK tech scene, as well as coverage in selected TechMarketView research.
Applications for the inaugural Great British Scaleup event can be submitted via the web-based Pre-Qualification Form. Successful applicants will be notified by 26 May.
There is no charge to apply or participate in this event, so don’t miss this chance to be one of the first TechMarketView Great British Scaleups!
Further information can be found in the Great British Scaleup page on our website or by contacting us at email@example.com.
Posted by HotViews Editor at '07:15'
Alphabet (or still Google to the rest of us) had a stonking Q1 with revenues up 22% at $24.8b yoy. Mobile search was again the star contributor. Profits were up 29% from $4.2b to $5.43b. This was all better than expected and Alphabet shares were up nearly 5% in after-hours trading. That’s on top of a 20%+ rise in their shares in the last year.
Alphabet added around 10,000 employees yoy to 74K with the biggest increase in those engaged in cloud. Indeed the biggest increase in Capex was in cloud. UK revenues were up 5% at $2b. The pesky £ was blamed – the UK would have been up 16% on fixed FX
‘Other bets’ achieved revenues of $244m compared to $165m a year back. But losses actually increased to $855m. Big investments here are now away from Fiber towards data centres in a move to challenge AWS.
On the conference call, Alphabet made a big emphasis on its AI developments and machine learning. Eg the launch of a parking assistant on Google Maps. Youtube is rocking with over a billion hours of Youtube videos now watched everyday. It really doesn’t look as if all the bad press about advertisers deserting Youtube because their ads were appearing against inappropriate content, has had too much of a negative impact…yet. The boycott really occurred after quarter end so we will have to wait until the Q2 results.
Google, of course, still has its challenges. It has no social network offering of note and has really left Facebook to clean up here. Few of its hardware initiatives have worked leaving Apple and Samsung the ones to beat. Losses at Other bets continue to soar with no knockout hit yet. It is playing catch up to Amazon on cloud and data centers. Even on AI Google has only just lauched its Assistant whereas Amazon's Alexa, Apple's Siri and Microsofts's Cortina are well established.
But any ‘Big Numbers’ company that can continue to grow at 22% deserves praise.
Posted by Richard Holway at '22:48'
UK tech stocks got off to a steady start to the year with the notable exception of the telecoms sector. The clear leader was the FTSE Hardware index, up 14.8% in Q1, driven by Spirent which gained 21% in the quarter. This also helped the FTSE Technology Index gain 3.1% qoq.
However, the FTSE SCS index, a proxy for UK listed software and IT services (SITS) companies only managed a gain of 1.8%, trailing the broader market as represented by the FTSE 100 which gained 2.5% qoq. The FTSE Fixed Line index was again the worst performer, down 12.1%, undoubtedly influenced by further uncertainty over BT’s prospects, after the agreement to spin out Openreach and further speculation on the future of BT Global Services. The FTSE Mobile index performed better with Vodafone and Inmarsat posting Q1 gains of 4.1% and 13% respectively to lift the index by 4.7%.
Subscribers to the TechMarketView Foundation Service can download the latest edition of IndustryViews Quoted Sector to see our latest analysis of how the stock performance of UK software and IT services companies listed on the London Stock Exchange compares with their international peers.
Posted by HotViews Editor at '16:14'
Really interesting to read the report from the Publishers Association which stated that printed book sales rose by 7% in 2016 but sales of ebooks fell by 3%. Children’s books were cited as one of the major reasons with parents preferring their kids to read ‘proper’ books rather than on their tablets.
I was thinking of this in connection with the possible ban by the US on taking any tablets, laptops and ebook readers on any flights to the US - echoing the current ban on flights from several Middle Eastern countries. eBooks really come into their own on long flights. But the thought of taking any kids on almost any flight without the distraction of tablets and eReaders fills even me with dread. Maybe that will provide yet another boost to paper books? I can see queues at the airport bookshops as parents stock up with books to entertain the kids on that long flight to Orlando to visit Disneyworld.
Posted by Richard Holway at '09:29'
The challenge of integrating customer interactions, particularly across mobile devices, continues to attract enterprise budgets, something the year end trading update from IMImobile illustrates. However, the level of performance shows that the company, who describes itself as a cloud communications and solutions provider, is not just bobbing up in a rising market but is actively creating opportunities.
Performance for the year to March 31 2017 is expected to be slightly ahead of market expectations on an organic basis for all regions and business units, resulting in revenue and gross profit increases of 23% and 18% respectively. This compares to organic growth of 11% in the previous FY (see here). The company has also achieved good cash conversion, ending the year with £14.7m gross cash.
It has been an action packed year with customer wins, renewals and upsells demonstrating both a sticky offering and land and expand opportunities. The company also clinched a global framework agreement with mobile operator Telenor Group. There was progress too, on the important and developing partner strategy including its first partner win with BT Group. In addition, it expanded its footprint with Archer in South Africa and addressed the banking sector with the recent (March 2017) UK Infracast acquisition. Although there is work to be done to integrate the acquisitions they are broadening IMImobile’s foundations and Infracast in particular will be important in strengthening its position in the financial services sector, which now represents a significant proportion of business. It was a positive year for IMImobile and one that puts it in a strong position at the start of the new FY, during which we hope to hear of further developments on the partnership front in particular.
Posted by Angela Eager at '09:26'
The revenue decline deepened for Sopra Steria UK in Q117 results. The organic revenue decline in FY17 was 0.4% (see Sopra Steria Group targets met; UK stable); in Q1 the comparable decline was 3.6% with revenues at €205.2m. The geography was also punished by currency movements again, such that, overall, the entity posted a decline of 13.5%. A decline in UK revenue over 2017 is expected, as the SSCL joint venture (see UKHotViews archive) “transitions”, i.e. moves on from the transformational stage. For the full year, taking out the impact of SSCL, Sopra Steria expects UK revenues to be “stable”. This will be an interesting year for Sopra Steria as it attempts a cultural shift aligned with more agile, digital, opportunities (also see UK defence SITS supplier profile: Sopra Steria).
At Group level, the growth rate at constant scope and exchange rates was 4.8%. Total revenue growth was 4.4% to €953.7m. The most notable performance came from Germany, which experienced a clear upturn in growth (“renewed sales momentum and major deals won”), and contributed to organic revenue growth of 15.9% for ‘Other Europe’. we heard a similar story from Computacenter this week – see Germany boosting Computacenter in Q1, while others like IBM have struggled (see IBM flags UK declines in Q1).
Posted by Georgina O'Toole at '09:16'
Fidessa, the global provider of high-performance trading, investment management and information solutions, provided a relatively upbeat assessment of the state of demand across the world’s financial markets as it delivered an interim management statement for the first four months of 2017.
Heightened uncertainty, driven by Brexit, the new US administration and the round of elections across Europe is lengthening the sales cycle, but the company still considers that it can generate constant currency revenue growth of c.4%, the level it achieved in 2016.
Underpinning this confidence are the inescapable fundamentals of financial markets trading; companies are desperate to reduce costs, comply with higher levels of regulatory oversight and meet the demand for increasingly sophisticated trading instruments and trading techniques. Fidessa’s portfolio of service-based solutions and its broadening asset class coverage should thus prove increasingly attractive to market participants. TechMarketView subscribers can catch up on our latest views on Fidessa in our recent UKHotViewsExtra.
The international spread of the business, with Sterling-based contracts driving only 30% of revenue, will provide an additional boost to reported figures if Brexit, a major source of uncertainty and risk, causes further Sterling weakness. Our latest report on the wider implications of Brexit is available here.
Posted by Peter Roe at '08:16'
Belying the sentiment in the headline, there are reasons to be cheerful about the prospects for UK-headquartered international recruitment firm Harvey Nash. In particular, cash generation has improved significantly, so investors will benefit from an increase in the div. And in order to ‘demonstrate solidarity’ with its pay-constrained employees, CEO Albert Ellis has taken the unilateral decision to waive all executive bonuses. Some CEOs do indeed walk the walk.
That aside, the numbers, as always, do the talking. Headline revenues for the year to 31st Jan. 2017 rose by 16% to £784m, with gross profit up 8 % to £98m, trimming gross margins by 80bps to 12.5%, but a better result than mooted in last month’s trading update. However, operating profit was a different story, down 12% to £9.2m, trimming 30 bps off the margin to 1.2%.
Harvey Nash’s UK & Ireland business held its own, with gross profit flat at £37m, in line with (quarterly) performance at peer PageGroup but trailing that of Robert Walters. The UK recruitment market remains very much like the ‘curate’s egg’.
Ellis has also made the decision to downgrade Harvey Nash’s London Main Market listing to AIM, in order to ‘provide an environment more suited to the Group’s current size and strategic intent to enhance shareholder value by organic growth and acquisitive activity (note!)’. Fair enough.
Ellis has been doing the right thing getting rid of the ‘unnecessaries’ though as far as I can see, Harvey Nash still runs an IT outsourcing operation in Vietnam, which frankly doesn’t belong and never really did.
Posted by Anthony Miller at '08:12'
Eventually tech was bound to come up with a resonse to the old, but impossible to answer question ‘Does my bum look big in this?’ (My advice, after many decades of experience, is to NEVER answer this question if you want to preserve your marriage) Today Amazon has launched Echo Look which takes a full length, full body, hands free, 360 degree video/photo selfie of you. Apparently, you use it to judge how you look in various outfits in various colours - but, more importantly, from every angle. Amazon has also launched some AI software called StyleCheck which gives you feedback on your outfit from fashion experts. I have to admit that I am probably NOT the target audience for this device as I think there are some angles which I would prefer not to see. But, I can see how some might.
You can link Echo Look to Alexa so you can say ‘Alexa take a video’ and then share the result on social media for others to give you instant feedback. The device is designed to sit in your bedroom and be ‘always on’. Sounds like a snoopers paradise to me!
Echo Look costs c$199 and is only available in the US for now.
Posted by Richard Holway at '22:07'
Just when you think you should be administering the Last Rites, the patient starts breathing again.
Twitter surprised the market by announcing it had gained 9m new users (to 328m) in the last quarter- rather more than the 2m the market was expecting. The new video streaming service reported a 31% increase to 45m users. However revenues fell 8% to $548m yoy and a loss of $62m was recorded - albeit less than the $167m loss last quarter. This was probably due to the 9% cut in the employee count.
Twitter shares are up 11% as I write.
My rather pessimistic views on Twitter are, however, unchanged. I’ve never been a real fan although we use Twitter a lot at TechMarketView - but not as a research tool/more as a communications channel to our clients and followers. We pay Twitter nothing and neither do our readers (I suspect). However I organise my Twitter feeds they are always overrun with dross. But clearly other (President Trump for example) swear by Twitter. Although whether that is an incentive for me to get to grips with Twitter is a moot point.
Posted by Richard Holway at '16:53'
TechMarketView is delighted once again to be both a Sponsor of/and Judge in The Enterprise Awards 2017 (in association with WCIT). This year’s event is even bigger and grander and takes place at the Dorchester on 14 June 2017.
Over 300 leaders in UK tech have already booked a place in the audience at the Awards ceremony - for full details and to book a table yourself CLICK HERE.
But what we really want you to do is consider entering for an Enterprise Award. Unlike TechMarketView’s Little British Battlers or Great British Scaleups, the Enterprise Awards are for individuals not companies. So, if you are already an LBB or budding GBS, why not enter yourself, or your CEO/founder, for an Enterprise Award? Indeed, many already have - and won - in the past.
Our dear friend, John O’Connell, established these ‘Oscars for UK Tech Entrepreneurs’ some seven years ago. TechMarketView – together with such notables as Sage, Smith & Williamson, Natwest, Silverpeak, R and D Tax, Questers and ScaleUp Group – are sponsors. And this year’s chosen charity is Sherry Coutu’s Founders4Schools. TechmarketView will be there on 14 June 17. We’d love to see you there too.The Award categories are as follows:
· Young Entrepreneur
· Evergreen Entrepreneur - for founders who started their business aged 50 or over
· Emerging Entrepreneur – up to £1 million annual revenue
· Developing Entrepreneur – annual revenue between £1 and £5 million
· Scaling Up Award – fastest growing companies
· Enterprise Entrepreneur – annual revenue over £10 million
· Social Enterprise Entrepreneur - for entrepreneurs with a business model that gives something back
· Public Sector Award - excellence and achievement in the public sector
· Female Entrepreneur - for outstanding female entrepreneurs
· Mentor of the Year
· and the Judges Special Award.
Entries must be received by next Friday, 5 May. Entry forms can be downloaded from Enterprise Awards 2017 Entry Form or contact Sarah Robinson at tx2 Events - firstname.lastname@example.org or 020 31372541. Good luck!
Posted by HotViews Editor at '16:34'
You start to feel a little sorry for Capgemini’s UK business when you read through the Q1 results announcement and listen to this morning’s webcast. Since the acquisition of iGate (see Capgemini, iGate and “Parties A, B and C”), the region now contributes just 14% of Group revenues, less than each of North America, France and ‘Rest of Europe’. It is also, when it comes to the numbers, the region that continues to drag down the Group numbers. As a result, it gets little attention in the announcement and, much of what is going on under the covers, gets rather hidden.
In Q1, reported UK revenues were down 17.1% to €435m. The numbers were negatively impacted by currency movements; at constant currency, the decline was 7.6%. This was, as Capgemini highlights, a reflection of the anticipated decline in infrastructure services revenues due to the insourcing of some elements of the HMRC Aspire contract. We are told that the UK private sector business had a mid-single digit percentage growth, with financial services performing particularly strongly; what isn’t clear is how the public sector is performing outside the core Aspire contract. Previously that picture has been pretty positive.
The executive team also talks little about the digital undertakings with the HMRC Aspire contract, which, we understand, are leading the way in digital for the UK business, and hence providing a useful reference site. Although perhaps they are steering clear of talking about it until things become a little clearer on the Making Tax Digital programme. This week, Chancellor, Phillip Hammond, has proposed scrapping many of the clauses in the Finance (No2) Bill, in the hope that the legislation can be passed before Parliament is dissolved next week (just one more impact of Brexit and the snap General Election). Many of those clauses relate to controversial elements of Making Tax Digital. In the private sector in the quarter, Capgemini highlights a cloud native application development contract with a car rental company.
At Group level, revenue growth was 2.6% at constant Group scope and exchange rates, to €3,171m. Financial services and manufacturing, which account for nearly half of Group revenues, reported growth of close to 10%. ‘Digital and cloud’ grew 24% y-on-y accounting for 32% of the total. The strongest service line growth came from consulting services (at 10.6%), which represents just 4% of revenues, reflecting digital transformation consulting demand, and highlighting the stage in many client’s journeys.
Posted by Georgina O'Toole at '10:03'
AIM-listed recruitment software specialist Dillistone Group confirmed 2016 to have been a solid year. Revenue was up 6% to £10m despite weaker sales in the UK and the devaluation of the pound following the Brexit vote estimated to have stymied growth by around 3%.
Adjusted operating profit grew 3% to £1.5m but the London-headquartered firm saw post-tax profits fall 44% to £526k from £1.2m in FY16 after acquisition-related costs and a one-off amortisation adjustment totalling around £1m were factored in (earnings per share also fell 2% yoy to 7.10p).
Despite reduced demand in its home market (72% of Dillistone’s customers are UK-based) and negative currency fluctuations the company is doing a good job of growing its core revenue base. A strong H2 helped Dillistone’s Systems division sign around 100 new clients with a total contract value over £1m during the year, increasing its yoy turnover 5% to £4.9m. The Voyager Software division too saw an 18% increase in new business wins following the launch of its ISV Online platform and a suite of mobile apps, with revenue up 6% to £5m.
Uncertainty over the impact of Brexit on the UK economy doesn't appear to be denting Dillistone's confidence. The company remains bullish for 2017 and expects to continue the growth in its long-term recurring revenue (up 7% to £7m in FY16).
We expect that its performance could also get something of a boost from the EU’s forthcoming General Data Protection Regulation (GDPR - compliance with which becomes mandatory for companies operating in the EU in May 2018). The new legislation lays down strict rules on how companies store, process and manage EU citizen’s personal data and many recruitment firms (including those in the UK) may have to upgrade current systems to comply.
Posted by Martin Courtney at '09:36'
Vipera, the AIM-listed provider of mobile financial services and digital customer engagement software, is continuing to see good growth, albeit from a low base, but losses continue to widen, setting back recent progress (see Vipera showing progress at half year).
Revenues for the year ended 31 December, were up 16% to €7.9m, however pre-tax losses widened to -€1.5m from -€646k last time, primarily due to restructuring at its digital consultancy division Codd & Date. Excluding restructuring, losses were still 9% wider yoy.
Vipera offers a proprietary bank grade platform Motif, which is used in over 1 million apps for banks and retailers enabling mobile banking, mobile payments and mobile marketing. But this is a highly competitive market dominated by bigger names, with much bigger wallets. Nonetheless, Vipera is well-placed as a niche provider, targeting emerging sectors such as the Middle East, where it works with Mashreq bank, and via partnerships such as payments provider EquensWorldline and Serco’s Experience Labs.
Looking ahead to the current year, there should be continued healthy growth as Vipera benefits from an enlarged partner network and ‘substantial additional new business’. There’s also the prospect of the forthcoming Payment Services Directive 2 (PDS2), which should create opportunities to offer product and services to both banks and the anticipated new service providers (see Open Banking and PSD2).
Posted by John O'Brien at '09:32'
I’m delighted to see that London-based (but mainly Israeli managed) HRtech startup Hibob has dropped the pseudo-cool "HR management software to sort your people stuff" tagline from its branding (see HR startup Hibob enrols $7.5m seed funding) and now plays to the more corporate ‘Shaping the future of HR’. Shame they kept the naff name though, but what can you do.
Anyway, just under a year later, Hibob has raised a further $17.5m in a Series A funding round led by US VC Battery Ventures, along with Arbor Ventures, and Fidelity’s Eight Roads Ventures, and existing backer Bessemer Venture Partners.
Part of Hibob’s ‘USP’ is its focus on pension management, particularly in the light of the UK government’s mandated workplace pension scheme now being rolled out. Just a month ago Hibob announced an arrangement with UK insurer Aviva to link into its workplace pension system.
Of course, Hibob is hardly the only HRtech game in town. Perhaps more visible in the UK market is Fairsail, which was acquired last month by UK-based SME business software giant, Sage (see All Hail Adam Hale as Sage acquires Fairsail). Perhaps if Sage is in the mood for a little more shopping …
Posted by Anthony Miller at '09:29'
Analytics-as-a-service minnow Rosslyn Data Technologies (Rosslyn), is making its first acquisition since floating on AIM last year. Having seen revenues fall 8.5% in FY16 as partnerships take longer to monetise (see here), it’s definitely time to pursue the inorganic route.
Rosslyn is acquiring Portsmouth-based Integritie, an unstructured data content management player specialising in IBM Filenet technology for up to £3.35m. This includes an initial consideration of £2.6m, plus an earn out of up to £750k based on revenue targets. Rosslyn is also planning to raise up to £4.5m to fund the deal and provide working capital.
Integritie should enable Rosslyn to expand its current addressable market beyond its core in structured data analysis for spend analytics.
In addition to its core knowledge capture solutions, Integritie provides a content analytics and sentiment management engine to capture and analyse inbound communications, as well as a social media, email, SMS, image and digital information capture and control solution. Customers include the likes of O2, Cumberland Building Society, RAC, Aviva and Iron Mountain.
Most digital data is unstructured, and so Integritie should present higher growth potential for Rosslyn. Rosslyn aims to drive out cost savings of £800k within the first year, and expects there to be further savings from platform and development costs. Let’s hope the enlarged group can then begin firing on more cylinders.
Posted by John O'Brien at '09:25'
PROACTIS, the Wetherby-based provider of spend control and e-procurement solutions, has posted its interim H1 results (six months ending 31 January 2017).
It continues to bring new customers into the business, securing 27 new name deals (H1 FY16: 23), with more than 80% of those being multi-year SaaS or managed service contracts. Its decision to focus on improving opportunities with existing customers also appears to be paying off, picking up 59 deals (H1 FY16: 45) and increasing annualised contracted revenue to £22.9m (H1 FY16: £17.6m).
Revenue was at £11.8m, up 36% on this point last year (H1 FY16: £8.7m). Underlying revenue growth (excluding the benefit of acquisitions) was 13.4% (H1 FY16: 3.6%). PROACTIS has benefited from the contributions of Due North (see Access Intelligence shifts sourcing assets to PROACTIS) and Millstream (see PROACTIS adding Millstream to its list of acquisitions) in this period, neither of which were included in its H1 FY16 numbers.
The company has invested heavily in account management and tapping into opportunities in its existing customers' supply chain during the period, which has had an impact on profitabillty. Operating profit margin fell to 8.1% from 11.3% in H1 FY16. Operating profit of £954k was flat compared to this point last year (H1 FY16: £974k), but EBITDA improved slightly to £3.0m (H1 FY16: 2.4m).
PROACTIS is growing well, both organically and by acquisition, but it needs to keep an eye on its profit margin. It has made five acquisitions since 2014 and is committed to making further deals. The business continues to deliver against each of the key stands of its growth strategy and we expect to see this trend continue in H2.
Posted by Dale Peters at '09:10'
London-based Healthtech startup Babylon Health appears to be firmly establishing itself as the leader of the pack among self-service medical apps.
Earlier this year, Babylon was selected for a six month trial by the UK National Health Service for its often derided ‘111’ non-emergency helpline (see Calling Dr Bot - NHS 111 trials AI chatbot). And now, Babylon has raised a further £50m/$60m in a Series B funding round which, according to the FT, included Egyptian billionaire business family, the Sawiris, as new investors. TechCrunch further identified NNS holdings, Vostok New Ventures, and existing backers Kinnevik as participating in the round. Babylon had previously raised $25m in January last year (see Rivers of Babylon run deeper with $25m funding round).
Access to the ‘smarts’ in Babylon’s app is free and available globally, while access to ‘live’ GPs (UK and Ireland) start at £5 per month.
Babylon seems to be surging ahead of Manchester-based competitor Push Doctor, which as far as I can see has received no additional funding since the $8.2m raised also in January 2016 (see Push Doctor gets $8.2m health kicker). With another £50m in the piggybank, perhaps it’s now time for Babylon to go shopping.
Posted by Anthony Miller at '08:57'
Specsavers has signed an £18m deal with Fujitsu as part of a major internal programme to reduce the number of technology platforms and suppliers it uses. We understand that up to nine suppliers were bidding on the contract but it was Fujitsu’s combination of retail experience and global footprint that enabled it to win out in the end.
The two companies have worked together for some time, but CIO Phil Pavitt has been undertaking a major activity to streamline Specsavers’ use of infrastructure and related services in order to provide the appropriate platform for the firm’s digital agenda. For example, a new global platform run by Fujitsu will replace various other IT support contracts/activities delivered by numerous suppliers. Indeed, the number of technology suppliers Specsavers is using is reducing from 40 to just three or four in the retail end of the business.
Fujitsu will also be helping Specsavers move to new technologies in-store (it has over 1200 shops across Europe) to enhance both the customer and employee experience. The company is just at the start of its journey and expects to deliver many more digital-led improvements in the coming few years. Indeed, Pavitt tells us that its streamlined team of core suppliers has been selected based on what they can deliver now but also for the other services and technologies they can enable Specsavers to tap into going forward. We immediately thought of Fujitsu’s Internet of Things capabilities, which could help Specsavers improve supply chain performance, for example.
Specsavers was founded 33 years ago making it a relatively young organisation. As such, Pavitt believes all of its systems could be moved to an entirely cloud hosted environment within a three-year period (Microsoft Azure currently accounts for around two-thirds of its cloud usage). However, he won’t be around to oversee that as Pavitt is in fact leaving Specsavers in a couple of months now the new strategy and supplier ecosystem is in place.
Posted by Kate Hanaghan at '08:29'
There’s not long to go before applications close for the inaugural TechMarketView Great British Scaleup Event, to be held in London on 28-29 June 2017 … and there’s even more reason to apply!
Earlier this week we announced that managed cloud and infrastructure services firm Cogeco Peer 1 has become the exclusive Enterprise Cloud & Infrastructure Services Technology Partner for the programme. Cogeco Peer 1 will offer all applicants to the inaugural Great British Scaleup Event an initial infrastructure assessment at no charge, giving them access to solution engineers and network architects able to advise on the mix of technology that is a best fit for them today and will also allow them to scale rapidly in the future.
They join our founding Advisory Sponsor, ScaleUp Group, whose team of successful tech entrepreneurs and seasoned executives have been responsible for company exits valued at over £4b.
Successful applicants will be invited to participate in a half-day, closed-door session to discuss their business plans and prospects in confidence with TechMarketView and ScaleUp Group. Selected qualifying companies will then have the option for further mentoring by ScaleUp Group to help prepare for potential external investment.
Companies participating in the TechMarketView Great British Scaleup programme will also enjoy invaluable exposure in TechMarketView UKHotViews, widely acknowledged as the most influential daily commentary on the UK tech scene, as well as coverage in selected TechMarketView research.
Applications for the inaugural Great British Scaleup event close on Friday 5th May and can be submitted via the web-based Pre-Qualification Form. Successful applicants will be notified by 26 May.
Further information can be found in the Great British Scaleup page on our website or by contacting us at email@example.com
Posted by HotViews Editor at '07:37'
Our recent research, The Little British Battler 100 report - The LBB100, surveyed 100 innovative UK tech SMEs who have taken part in the TechMarketView Little British Battler (LBB) Programme. The report answers some of the burning questions about the LBBs, as they seek the next stage in their growth.
Our research shows that strategic partnership arrangements with larger SITS players are hugely important to LBBs for gaining access to enhanced scale, capability and customer reach. UK SITS market leader Capita stands out as the biggest partner to the LBBs but many other strategic service provider partners are listed within the research as can be seen in our summary chart. Our report also explores the leading strategic LBB partners in the software space as well as in cloud & hosting.
Partnering with LBBs is also becoming increasingly important to the large SITS providers to drive innovation in deals, differentiate and seek out potential acquisition opportunities.
Keen to read more? Existing research clients can access the full analysis here. If you are not an existing client but would like order a copy of the report please contact Deb Seth in our Client Services Team or download the LBB100 Report abstract for full details.
Posted by HotViews Editor at '07:00'
Well, Bangalore-based offshore services major Wipro made it across the finishing line pretty much according to plan (see Wipro heads for 5% growth year - and gets a Brazilian!) but management implied that they won’t be able keep up even that modest pace this year.
Wipro’s headline revenues grew by 4.9% in FY17 (to 31st March) to $7.7b, faster growth than the prior year’s 3.7%, but below that of archrivals TCS (6.2%) and Infosys (7.4%). As I had surmised, FY operating margins fell below 20% for the first time on record, two points below, actually, at 18.0%.
The new FY looks even tougher. Management are forecasting essentially no revenue growth at all in Q1 18 (to 30th June) – in fact perhaps a small decline. Given that Wipro kicked off last year reasonably smartly, with Q1 17 growth at 7.6% yoy, this really does not bode at all well.
Posted by Anthony Miller at '18:10'
AIM-listed managed service provider RedstoneConnect saw its FY17 post-tax operating profit grow to £2.1m following a loss of £2.2m in FY16. But the company looks like it has struggled to grow organically and relied on a shift to higher margin contracts and overhead reductions following the acquisitions of Connect IB and Commensus to deliver that success.
RedstoneConnect's revenue was up 3.5% to £41.5m, driven primarily by £1.6m of new contracts for its OneSpace smart buildings software platform with UBS and UBM and revenue from its £1.3m buyout of software provider Connect IB.
A tranche of 3-5yr managed services contract renewals from existing customers helped deliver another £15.3m, down 6% from £16.3m in FY16 with post tax operating profit flat at £1.4m. RedstoneConnect paid £2.4m for rival MSP Commensus late last year (a company that posted revenue of £3.2m in FY15) which suggests to us that other contracts have not not been extended.
RedstoneConnect’s systems integration revenue grew 3% yoy to £24.6m. The company had some success in upselling additional services and developing recurring revenue streams on top of in-building cellular network connectivity deployments which drove post-tax profit down 77% to £341k.
Those overall changes in the revenue mix did help RedStoneConnect swell its gross profit by around 33% to £9.2m however, with gross margin up 22% yoy – a significant boost to its profitability.
With three distinct areas of its business – software, managed services and systems integration – now performing at a different pace, we think RedstoneConnect may have to work harder on upselling and integration, particularly when it comes to tying smart building implementations to managed service provision in the nascent IoT market.
Posted by Martin Courtney at '10:21'
Atos has had a solid Q1. At both the Group and UK level, the growth performance was an improvement on FY16 (see Atos UK: a year of two halves). Worldwide, total revenues increased by 12% at constant exchange rates to €3.1b, and at 2.0% organically. In the UK, organic revenue growth was 2.6% to €437m.
The positive UK performance was put down to the ramp up in contracts in financial services (Aegon will have been significant here - see Atos breaks new ground in life & pensions), as well as new customers in Big Data and HPC activities in the public sector and in cyber security. In Big Data & Cybersecurity, management points to a win for Atos CODEX (Cognitive Solutions) at a UK university and a security win with the Metropolitan Police (where it expanded its relationship last year). We have already written about several HPC wins for the UK business, e.g. at AWE and at the Science & Tech Facilities Council. As we highlighted in Atos UK: An evolving business, Atos’ Digital Transformation Factory (see Atos 2019: stakes in the ground) accounted for 10% of UK revenues in FY16, after growth of 34%. It is important that Atos maintains momentum in this area as more traditional SITS areas stagnate or decline. Worldwide, the book-to-bill ratio fell below 100% in Q1 (to 98%) but looking back at historic figures, a lower book-to-bill in Q1 has been a pattern for the last few years so doesn’t immediately signal a cause for concern.
Also, worth noting that Atos has decided to integrate Unify Software & Platforms into the business, with the objective to grow by year end. As a result, the company has raised its 2017 objectives and its 2019 ambition. The 2017 revenue growth target now stands at +9.5% at constant exchange rates (vs. c6% previously) while the organic revenue growth target remains unchanged at +2%. The 2017 operating margin target has been increased to c10% (vs. 9.5%-10% previously). The 2019 operating margin target has been increased to 11.0% (vs. 10-5%-11.0% previously.
Mind you, Atos’ predictions do seem to rest on a very positive outlook with regards the global trading environment. With regards to the impact of BREXIT in the UK, for example, management gives “confirmation of no impact on commercial activity neither in Q1 2017 nor anticipated”. It is hard to believe there will be no impact from BREXIT for Atos in the UK, particularly taking account of the proportion of revenues it derives from the public sector. We will have more in Brexit and its implications for the UK SITS market over the coming weeks.
Posted by Georgina O'Toole at '10:12'
Building on its strong 2016 performance (SAP confident on cloud – current and future), SAP started 2017 in fine fettle with overall Q117 results up a rewarding 12% to €5.3bn. There was top line strength across the business and particularly where cloud growth was concerned.
Cloud subscription and support revenue showed marked progress with a 34% uplift to €905m, representing 17% of total revenue compared to 12% in Q416. New cloud bookings came in at €215m, up 49%, which shows growing momentum. However, even traditional software licence revenue saw a rise in demand as indicated by the 13% increase in revenue to €691m.
S/4HANA appears to have been a significant contributor to overall growth and now boosts 5800 customers, including c400 added during Q1. What is most impressive about this figure is that around 50% of the Q1 new adopters were also new customers to SAP, which indicates the company has appeal outside its existing customer base and traditional addressable area. With the multi-faceted SAP Cloud Platform at the heart of its portfolio (home to HANA, PaaS and the Leonardo IoT and Clea Machine Learning portfolio of applications) it has scope to expand its reach. These capabilities also mean SAP is not just promoting a ‘lift and shift’ approach to the cloud and its new platform, but is offering the promise of substantially more.
The cloud shift is impacting the bottom line as would be expected, resulting in a 17% drop in operating profits to €673m and a 10% decline in PBT to €668m. The bottom was also hit by share based compensation expenses. However, the company raised its outlook for both top and bottom lines for the full year – a move that sent shares higher in Frankfurt despite weaker than expected Q1 earnings. Overall, Q117 was a strong period for SAP, setting the foundation for good and cloudy 2017.
Posted by Angela Eager at '09:59'
Unisys, the global IT provider, has had a good start to FY17, significantly narrowing its losses compared to this point last year.
In Q1 FY17 (31 March 2017) it generated revenue of $665m, a slight decline on Q1 last year (Q1 FY16: $667m) on a constant currency basis. It has improved its operating margin to (0.4%) from (4.1%), making an operating loss for the quarter of $2.7m (Q1 FY16: loss of $27.6m).
The decline in revenue comes from its Services business (which represented 88% of revenue for the quarter), where sales were down 2% on Q1 FY16 to $585m. However, gross margin was up 400 basis points compared to Q1 FY16 at 18%, reflecting its ongoing cost cutting measures (see Unisys carries on cost cutting). Revenue in its smaller Technology business were up 7% to $79.2m, but gross margin fell to 47% from 49% in the prior-year period.
In the quarter Unisys, entered into key contracts with: the US Internal Revenue Service (IRS), New Zealand Transport Agency, Catholic Health Initiatives, and the largest financial services group in Latin America. The company has also taken steps to improve liquidity, raising $440 million of capital through a high-yield notes offering in April.
Peter Altabef, Unisys President and CEO, stated he was “pleased with our strong start in the first quarter”. He said, “Our first-quarter results indicate continued progress executing against our strategic and financial goals” and reiterated that Unisys intends to “continue its disciplined financial focus over the remainder of the year”.
After delivering against revenue and profit expectations in FY16 (see Unisys hits FY16 guidance), today’s results represent a positive step for the business—the next challenge is to maintain that progress.
Posted by Dale Peters at '09:54'
CityFibre confirmed an adjusted EBITDA profit of £2.5m for the financial year ending 31st December 2016, but the company’s post-tax net loss expanded to £12.6m from £6.5m a year earlier.
As indicated in a trading update earlier this year, revenue grew 140% to £15.4m. Almost every other metric looked solid for CityFibre in FY16, with gross profit up 145% to £13.5m, gross margin expanded to 88%, and initial contract value up 225% yoy to £75.5m.
New connections, fibre kilometres and service provider relationships all grew but CityFibre’s rapid expansion took a toll. Administrative costs - wages, depreciation, integration and acquisition costs - increased from £11.7m to £18.7m and charges associated with the £180m funding that financed the £90m KCom and £5m Redcentric buys also affected the bottom line.
A bigger long-term challenge may come from Ofcom pressure on BT to remove restrictions on rival broadband suppliers using its wholesale Openreach pole and duct access (DPA) to deliver their own infrastructure and services.
CityFibre is adamant that any opening up of the DPA is a positive step towards expanding the UK wholesale fibre broadband market (the subject of considerable financial and political stimulus), despite its potential to take business away from CityFibre itself (subscribers to SecureConnectViews can access our report ‘CityFibre – building Britain’s broadband future’ here).
BT Openreach will launch its UK wholesale Dark Fibre Access (DFA) product covering much of the UK in October, and third-party broadband service providers that hitherto had little choice but to turn to CityFibre for dark fibre network infrastructure may then choose to partner with BT Openreach instead.
Nevertheless, we calculate existing contracts with KCom, Redcentric, Southend-on-Sea Borough Council, MLL Telecom, Serco, Capita, and Coventry Clinical Commissioning Group alone will guarantee CityFibre a minimum annual revenue of £6.5m over the next five years, Ready demand amongst fibre broadband suppliers, expanded network reach and a favourable government headwind should grow its customer base and turnover further.
Posted by Martin Courtney at '09:18'
2017 has ‘started well’ for top ten UK business process services (BPS) player Equiniti, and it remains is on track to hit its targets for the year.
The brief AGM update highlighted a number of renewed or extended relationships with clients Santander, Imperial Brands, National Express, TalkTalk and most recently the NHS. Equiniti manages the national NHS pension scheme with 2.6m members and payments worth £7.6bn p.a. There’s also been an encouraging number of new client wins across all of Equiniti’s divisions including Sainsbury’s, House of Fraser and a new partnership with fellow top 10 BPS player Aon Hewitt.
Aon Hewitt is effectively transferring three pensions outsourcing contracts across to Equiniti, serviced from its office in Forss, Scotland. Equiniti will then take on the employees and responsibility for pension scheme administration and project services. For their part, Aon said they remain committed to the UK pensions industry, but are focusing on working with ‘integrated clients’, rather than clients on a standalone basis.
We recently met with CEO Guy Wakeley to learn more about the strategy since the IPO. Wakeley’s focus is very much on building a business that has strong long-term customer relationships (check), supplemented by capability enhancing acquisitions (check), and which is innovating around IP and platform technology. Wakeley’s doctorate is in artificial intelligence, so he has a very good handle on one of the hottest sectors of the market. Wakeley is also a big fan of our Little British Battler (LBB) programme – indeed one of their recent acquisitions was of LBB Toplevel (see The LBB100 report). We are now launching the next phase - the Great British ScaleUp programme, with lots of external interest.
Posted by John O'Brien at '09:16'
Little British Battler, Carrenza, has opened two new cloud availability zones in the US. The facilities, in Washington D.C. and Chicago, will deliver Infrastructure as-a-Service (IaaS) based on exactly the same architecture as its three existing zones that sit in the UK and Amsterdam. This means customers can consume the same Carrenza service model wherever they are geographically.
The company has also announced that Fourth, a cloud-based cost control solutions provider to the hospitality industry, is now using the US-based facilities. Fourth has c1,200 customers worldwide, including Pizza Express, Hilton and Caffè Nero. It has partnered with Carrenza in the UK for over a decade, but needed a cloud solution in the US that was compatible with US state law while having the same architecture as the existing UK zones.
Carrenza is now a subsidiary of Six Degrees following its acquisition back in April of last year (see Six Degrees buys Carrenza). It is highly likely that without joining the larger Six Degrees family Carrenza would not have been able to make strides into the US market.
Posted by Kate Hanaghan at '09:10'
“Mobile-first” technology company mporium Group plc (AIM:MPM) is looking to ride two technological waves as it builds its growth strategy. Central to its proposition is the analysis of customer behaviour and contextual information, “unlocking the intelligence” to enable retailers to present timely, attractive and personalised offers over a customer’s smartphone – an ever-increasing influence over our everyday lives.
Throughout 2016, mporium has been developing its proprietary IMPACT and INSIGHTS products, launching IMPACT in mid-2016 for distribution through media agencies to on-line retailers. IMPACT provides an overlay to the digital advertising platforms of Facebook and Google which dominate this market area. The purpose of IMPACT is access these platforms and other real-time information sources to capture “micro-moments” when offers would prove particularly appealing – a far cry from earlier on-line marketing attempts (see Just what the country needs). The INSIGHT product sets out to provide smaller retailers with access to high-end analytics functionality. The market for mporium’s propositions is growing strongly as retailers strive for ever more effective digital advertising where global spend is estimated at c.$200bn (Source: eMarketeer).
However, it is still early days for this company that morphed out of ill-starred MoPowered. 2016 saw a rise in revenue to £1.8m and a small decline in pre-tax losses (to £4.8m). At year end, mporium had cash and near-cash balances of c.£2m and has since raised £3m via a placing. Momentum appears to be growing. A commercial agreement with WPP-owned digital agency, Essence, adds to a 2016 Q4 deal with Jellyfish (another digital agency) and more talks are ongoing. In 2017 management will be working hard to sign more agency deals and then looking further out for revenue (and profit) as usage grows.
Posted by Peter Roe at '08:49'
I am pleased to see that London-based homecare startup Cera has moderated its marketing message since I wrote about their prior funding round last November (see Investors care for Cera with £1.3m funding). Incorporated in 2015, and still registered as Golden Era Club Ltd, Cera specialises in providing home care in sensitive cases such as dementia and palliative care.
In truth I still struggle with their ‘pulling at the heartstrings’ website but that might just be me. Or maybe it’s the word UBER written in massive script across the entire width of their Partner page. Whatever, Cera has raised a further £1.4m in a seed funding round led by exisiting backer Credo Ventures, along with new investor Kima Ventures.
In an interview in Business Insider, Cera co-founder Dr. Ben Maruthappu said that besides wanting to match carers with those needing care, he’d also like the platform to provide other services beyond the Uber deal, such as food deliveries or ‘GP on demand’.
I ‘get’ the proposition. I just hope that the slick marketing and burgeoning commercialisation opportunities don’t detract from the quality of care provided in such stressful family situations.
Posted by Anthony Miller at '08:44'
There have been minor signs of operational improvement at innovation software and consultancy provider Imaginatik, particularly in H2, but the company is finding things hard going according to today’s full year trading update as profits continue to remain out of reach (see here). At £3.9m, revenue was flat for the year to March 31 2017, although adjusted loss before tax of £0.55m was at least in line with expectations.
Momentum built during H2, with 11 of its 15 new customers secured during this period but the most promising sign in terms of future prospects was a partnership agreement with an unnamed global IT and Services supplier. Described as a supplier to Global 1000 companies, it will take a jointly developed offering to market. Imaginatik is expecting to benefit from subscription and consulting fees as well as ‘success based fees’. Securing partnerships is one of Imaginatik’s strategic goals so this is a milestone. Let’s hope the lag between agreeing the partnership and securing revenue isn’t too long.
Posted by Angela Eager at '08:13'
It was just 18 months ago that London-based homecrafts portal LoveCrafts raised a massive (by UK standards) $20m (see Investors love up LoveCrafts with another $20m) to help keep middle England (and middle America!) in woolly jumpers.
Founded in 2012, the startup has just raised a further £26m/$33m in a Series C funding round led by new investor Scottish Equity Partners, along with previous backers Balderton and Highland Europe. This brings the total that LoveCrafts has raised so far to over $60m on a valuation hinted in an interview with TechCrunch at “north of £100m”.
LoveCrafts is turning out to be a great British success story (though some R&D is done in Kiev) which is becoming a great international success story too. There is clearly value in sticking to the knitting!
Posted by Anthony Miller at '07:52'
Reid Hoffman has been appointed an Honorary CBE - a rare honour.
Hoffman, of course, is famed as the founder of LinkedIn and now, as partner at Greylock Partners, has invested in Workday, Palo Alto Networks and others. But it is probably his focus on entrepreneurship in the UK via his Silicon Valley Comes to the UK (SVC2UK) initiative and the support he has provided for US students to study in the UK via his Marshall Scholarship programme, that makes the honour so well deserved.
I also note that Hoffman was appointed as a director of Microsoft last month.
Posted by Richard Holway at '06:53'
As many readers will know, for several decades I always used a snatch of music to introduce my ‘State of the IT Nation’ speeches. Some truly great tracks like Bowie’s Changes and the Rolling Stones’ ‘IT’s all over now’ all the way through to some tracks which were not quite so great.
Back in 2005 I wanted to use ‘It ain’t what you do, it’s the way that you do it’ to illustrate how great managers could make a success out of businesses in rubbish sectors and vice versa. The problem was that Bananarama had never figured in my extensive music collection. So I bought Bananarama’s Greatest Hits for £1.99 on Amazon. Every time I checked in to Amazon for months afterwards I was greeted with the message “For someone who likes Bananarama, maybe you would like Brotherhood of Man”. I nearly died of shame!
All this came back to me when I learned that Bananarama were reforming for a UK tour in Nov/Dec 17. Indeed looks like tickets have sold out in a few hours. I also learned from the BBC that Bananarama still hold the record for more Top Ten hits (10 in total) than any other girl group in the world. Siobhan, Keren and Sara are now all fast approaching 60 - and, judging by their official photo today (above), are looking pretty good too.
The Telegraph has welcomed this news with the headline ‘Bananarama’s comeback offers just the silliness we need to lighten the nation…’. There is something in that!
Posted by Richard Holway at '22:34'
In this latest PublicSectorViews publication, we add to our series of research notes profiling the UK defence businesses of the leading software & IT services (SITS) providers to the sector.
As we have highlighted previously, all providers are faced with a changing market environment – changes to the MoD culture, to its organisation, to its ICT procurement approach and to its security requirements - and are, therefore, aligning their approaches.
In this, the third in the series, we look at Sopra Steria, which sits eighth in the last published UK defence SITS rankings (see UK public sector SITS supplier landscape report 2016-17). The company has established a solid footprint in the sector over the years and is now evolving as it looks to ensure future success. Our analysis outlines the company's current defence footprint, the business' strengths, the challenges it faces and the actions it is taking to protect its existing business and win new businesss.
If you are a PublicSectorViews subscriber, you can download the report - UK defence SITS supplier profile: Sopra Steria - now. If you would like to find out how to access the research, please contact Deb Seth.
Posted by Georgina O'Toole at '10:00'
We are absolutely delighted to announce that Toronto-headquartered managed cloud and infrastructure services firm Cogeco Peer 1 has become the exclusive Enterprise Cloud & Infrastructure Services Technology Partner for the TechMarketView Great British Scaleup Programme.
Cogeco Peer 1 has a proven track record partnering with businesses to help them scale, ensuring their technology and infrastructure can adapt as they grow, and will be offering support to Great British Scaleup Programme candidates to assist them on their scale-up journey.
The scope of this support encompasses services around cloud, hosting, colocation, security and network/connectivity solutions. Cogeco Peer 1 will offer all applicants to the inaugural Great British Scaleup Event an initial infrastructure assessment at no charge, giving them access to solution engineers and network architects able to advise on the mix of technology that is a best fit for them today and will also allow them to scale rapidly in the future.
Cogeco Peer 1’s EMEA operations are headed by Vice President and General Manager, Susan Bowen. In her prior role as Chief of Staff UK & Ireland at Hewlett Packard Enterprise, Bowen was responsible for leading the company’s UK & Ireland growth plan and small and medium business programme. As such, she is highly versed in the challenges facing British scale-ups and now brings this experience to bear for Cogeco Peer 1 customers and TechMarketView Great British Scaleup programme candidates.
In light of this announcement, we are also pleased to advise that we have extended the closing date for applications for the inaugural Great British Scaleup Event until Friday 5th May. The event will be held on 28-29 June 2017,
Applications can be submitted via the web-based Pre-Qualification Form; there is no charge to apply or participate. Further information can be found in the Great British Scaleup page on our website or by contacting us at firstname.lastname@example.org.
The TechMarketView Great British Scaleup programme is run in association with Advisory Sponsor ScaleUp Group, an elite team of successful tech entrepreneurs and seasoned executives with an enviable track record of building and realising value for UK tech companies.
Posted by HotViews Editor at '09:59'
They don’t seem to deliver to Ealing (yet) so I guess I’ll have to stick to Sainsbury’s for my fresh fruit and veg. I’m talking about London-based grocery delivery startup, Farmdrop. The produce is sourced direct from farms, and Farmdrop claims that farmers get to keep a higher proportion of the retail price than if they sold through supermarkets.
Farmdrop has recently raised a further £7m+ in a Series A funding round led by Atomico, the London VC fund founded by Skype co-founder Niklas Zennström. Atomico invested £3m in Farmdrop in February 2016. Farmdrop was originally incorporated as Local Food Movement Ltd in 2012. The service was launched in 2014 on the back of a £750k crowdfunding round and moved from a ‘click-and-collect’ model to home delivery.
In an interview in TechCrunch, Farmdrop founder (and ex-stockbroker) Tom Pugh alluded to the business having reached annualised revenues of £3m. The new funding is to be used to open more distribution hubs and offer more functionality for participating farmers.
There is a growing number of online grocers, some recipe-based (e.g HelloFresh, Gousto) and others seemingly more akin to Farmdrop (e.g. Riverford). Choice is good for consumers and hopefully for producers as well. But it needs to be good for the ‘platform’ too.
Posted by Anthony Miller at '09:54'
Microgen, selling software to enable change in complex organisations and to the specialist niche of Trust and Fund Administration (T&FA), has undergone a transformation in recent times. This change is clearly seen in the share price and is chronicled in UKHotViews (see here and work back). TechMarketView subscribers can access a more detailed analysis of the business in our February UKHotViewsExtra.
Today’s AGM statement will make clear that both the Group’s business have started the current financial year well.
The Aptitude Software business has won two contracts in the US Healthcare market and this looks like a significant step forward into a new market opportunity. Expect more deals in the US as new regulation deadlines loom. In Financial Systems, growth has been boosted by cross-selling into customers added as Microgen acquired other companies in the T&FA area. The latest deal was completed in February, see here.
The Board seems justified in its confidence with respect to further progress during the current year.
Posted by Peter Roe at '09:30'
The briefest of statements from First Derivatives, the supplier of database technology and Fast Big Data solutions, stated that the results due on May 16th are now expected to deliver figures “moderately” ahead of current consensus forecasts of £144m of revenue and £27.5m of EBITDA. This would represent a revenue growth of around 23%, after a first half advance of 34%, and that EBITDA for the second half would be only slightly ahead of the first six months’ total.
We have been hugely impressed by the progress of this company as it has exploited its position in delivering leading-edge solutions into the financial services industry to build a large customer base and an increasing share of wallet. It has then broadened its reach into other potentially high value markets. The longer term opportunity for the company’s technology is exemplified by the latest deal with part of the Airbus Group to collaborate in the large-scale processing of geospatial data and in the February link-up with the Business Growth Fund. (You can also work back from this HotView to see the company’s history).
However, we remain concerned that the company does not have sufficient resources to win in all the markets where its technology can deliver benefit. We will be looking at the detail of the results in May to see whether the company is getting the balance right between exploiting key markets and evangelising its technology.
Posted by Peter Roe at '09:27'
An earlier-than-expected Q1 trading update from Computacenter pushed the company’s shares 7% higher in early trading today as the company announced a buoyant performance from its German business, with the France and UK operations making steady progress. Favourable currency movements also added to the improved performance.
Q1 constant currency growth for the Group was 9%, with a 23% uplift from Germany. Growth here was largely driven by (lower margin) Supply Chain revenue, up 31%, but the Services side was able to contribute an 8% advance. In France, Services revenue was up a healthy 22%. The UK also participated in the Services revival, with revenue here advancing 4% (after a full year decline of 1% in 2016).
Management were encouraged by Q1 performance and suggested that as a consequence the Stockmarket’s revenue and profit expectations for the year are under-cooked. However, they were also at pains to point out that the first half last year had been unusually weak and that this will flatter performance comparisons. They are looking for a return to the historical balance between first and second half profits, so observers should not get carried away.
As we said in our March commentary on 2016 results, this is an incredibly tough market, where a couple of contract wins can make a significant difference – and can drive large swings in performance. Nevertheless, management will be able to take substantial comfort from the recent performance in Germany and in the Services market.
Posted by Peter Roe at '09:21'
WANdicso, who spent much of 2016 getting back on track, started its new financial year with further signs of improvement, the most significant of which was the signing of its biggest ever contract. During Q1, a major financial services multinational signed a contract worth $4.1m for WANdisco’s Fusion Big Data and Cloud product. Key to its selection was Fusion’s ability to move active, critical data between primary and disaster recovery sites and the Cloud without any downtime. Fusion has been making progress, so this is further affirmation of its appeal – and of the broader market need for software infrastructure tools to help businesses operate responsively and in real time.
The other positive sign to come out of Q1 was that the company reduced its cash burn to zero in the quarter, maintaining the $7.6m cash it had at the end of the financial year. This is the result of reductions in cash overheads and a cost control programme, plus contract wins. It is progress; the challenge now is maintaining it.
Posted by Angela Eager at '09:21'
After finishing last year with a flourish, Mumbai-based mid-tier offshores services firm Hexaware appears to have set the pace for 2017 with revenue growth ahead of Indian pure-play (IPP) companies that have so far reported.
Headline revenues for Q1 (to 31st March) jumped 19% yoy to $144.7m, more reflecting the moribund year-ago quarter, rather than ‘and then a miracle occurred’. Nonetheless, organic sequential growth of 4.2% comfortably outstripped that of top-tier players TCS and Infosys, and mid-tier Mindtree. Hexaware’s growth came with only slight operating margin dilution, about 60bps compared to the prior quarter, to 15.3%.
Hexaware derives over 80% of revenues from the Americas, usually its fastest growing region, although APAC grew materially faster in Q1 2017 but is still barely 7% of the total.
Management is predicting double-digit growth for the year. If achieved, this would probably leave other IPPs wondering whether a miracle had indeed occurred!
Posted by Anthony Miller at '08:50'
When I moved to Farnham 30 years ago, the picturesque streets were crammed with shops selling ‘stuff’. The first ‘revolution’ to hit Farnham were the out-of-town supermarkets which basically killed the butchers, bakers, greengrocers and fishmongers.
The next revolution was internet shopping which killed many specialist shops. I think the saddest was a few months ago when the camera shop that I had used for many decades closed its doors. I knew the proprietor who moaned about people spending hours in his shop whilst he demonstrated the various cameras on offer only to walk out and buy them on the internet. I could have done the same but always reckoned that a 10% price difference more than justified the service offered.
Now Farnham is a very different place. Far more empty/charity shops. Loads of service shops - hairdressers, nail saloons etc. But the biggest change is the upsurge in coffee shops, bars, restaurants etc. Farnham is no longer where you go to shop. It is now a hospitality centre.
I was moved to write this after reading three separate reports this weekend.
First National Statistics reported that UK shoppers spent £1b per week online in Mar 17 - up 19.5% yoy and representing 15.5% of all retail spending compared to 13.6% in Mar 16. Retail spending overall was up just 1.7% yoy but down 1.8% compared to Feb 17. Sales on the High Street fell yet again prompting big chains like Debenhams to announce still more store closures. Not surprising as online sales of Textile, Clothing and Footwear saw the fastest growth - up 28.1% yoy with online food sales growing 19.2%.
The second survey came from the UK Cards Association which found that UK households spent $5900 using payment cards online in 2015 which was the highest of any country in the world - beating Norway ($5400), the US ($4500) and Australia ($4000). The survey found that Entertainment had the highest % of online sales. 67% of all concert tickets and 61% of cinema tickets were booked online. More than a quarter of all the money spent online was on financial services - eg renewing insurance policies.
The third survey came from the BBC which found that 63% of women had returned clothes ordered online. It is certainly higher in our house. These free returns are hugely expensive for the retailers.
Back in the 1990s when pundits (like me) were getting to grips with forecasting for the internet age, such forecasts were met with derision. Yet even the wildest forecast then has been overtaken by reality. The consequences are not only the death of the High Street as we have known it for many centuries but a shift in retail power from the many to the few. The power that Amazon now wields is truly scary. Whether all this is really ‘good for mankind’ is open to debate.
Posted by Richard Holway at '07:43'
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