REG - Cirata PLC - Q2 Trading Update and Outlook

CirataAnnouncement

16/07/2024 16:45

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RNS Number : 6392W  Cirata PLC  16 July 2024

16 July 2024

 

Cirata plc

("Cirata" or the "Company")

Q2 Trading Update and Outlook

 

Cirata plc (LSE: CRTA) today announces a trading update for the quarter ended
30 June 2024. Cirata has separately launched today a Placing of Ordinary
Shares.

 

Summary

 

·    Bookings for Q2 2024 of $1.7m, representing 143% growth sequentially
over Q1 FY24 and YoY growth also of 143%.

·    16 contracts signed with 44% of the value of the contracts coming
from 'new & growth' contracts.

·   Continued to strengthen pipeline volume and quality, driven by
increasing customer, partner and sales activity.

·    Marketing activity increased quarter on quarter, generating healthy
inbound leads.

·    Cash position of $9.1m as at 30 June 2024.

·    Further cost efficiency programme commenced, targeting reduction in
annualised costs from c.$23m to c. $20m 1 .

 

Outlook

 

With the current pipeline, prospects in progress (including those delayed from
Q2) and six months of the year remaining, the Board is retaining its FY24
booking guidance 2  as, with strong execution, it remains achievable although
demanding with expected bookings Q4 weighted.  We believe we will continue to
see improving levels of sales activity, both direct and through partners as we
trade through H2 and our Go-To-Market (GTM) continues to mature.

 

The Board believes that the current levels of lead generation and early-stage
pipeline support the medium-term ambition of the Company.

 

 

 

1 Annualized overhead run rate commencing FY25

2 FY24 Bookings guidance $13-15m

 

 

 

 

Trading Update

 

Bookings in Q2 2024 were $1.7m (Q2 2023: $0.7m), with the business mix driven
by DevOps software, accounting for 63% of bookings and Data Integration (DI)
software accounting for 37% of bookings.

 

In total, 16 new contracts were signed in the quarter of which 7 were 'new
& growth' contracts, including the second phase to the previously
announced deal with GM, which validates the Company's 'land & expand'
strategy.

 

Significant renewals secured in the quarter included Oppo's 3-year, $592,000
maintenance and support renewal for Cirata's MultiSite Gerrit product 3 .

 

Deal slippage remained a feature of Q2 performance. Some of the significant
potential deals in Q2 slipped, and following consultation with our customers,
we have an expectation that these will now conclude in H2 matching the
customer critical timelines. The team delivered some improvement on closing
smaller deals, which is encouraging, but challenges remain around the complex
nature of larger enterprise sales for data integration, with complexity from
customer and partner procurement processes. Establishing greater sales cycle
predictability, therefore, remains a key priority for management to enable
Cirata to move beyond its current non-linear growth trajectory. Today, the
sales team is more established which provides greater confidence in sales
cycle management and deal closure predictability.

 

 

Business Review

 

Following a review of the strategy completed in April 2024, several strategic
decisions were validated with primary data input from customers, partners and
market data, namely:

 

1. Grow and invest in the two product lines - Data Integration (potential
triple digit annual growth) & Dev Ops (potential double digit annual
growth). Functionally, there is a separation between DI and Dev Ops sales
& Product/Engineering teams to execute for growth;

2.  Establish two Data Integration sales geographies (Americas &
International) and a dedicated global Dev Ops focus; and

3.  Continue the tactical 8-12 quarters growth plans whilst developing
long-term strategic growth plans in growth markets based on our core
competencies of DI/Dev Ops towards Hybrid Cloud & AI.

 

At the appropriate time, the Company will host a Capital Markets Day to expand
on this strategic intent.

 

3 Renewal amount for the whole of the 3-year term

 

During the past six months, the Marketing function has 'test driven' various
elements of the marketing mix and there is growing evidence that digital
marketing and account-based marketing efforts are starting to deliver
meaningful inbound leads. The Marketing team is now doubling-down on certain
activities that are yielding improved lead generation metrics such as a 200%
increase in Q2 over Q1 LinkedIn add performance and an 80% increase in organic
search traffic.

 

The new GTM organisation is bedding down and leads from partners and customer
activity levels are increasing and contributing to pipeline growth.

 

Whilst the first two quarters have been slower than expected or desired, the
January 1 reconfiguration of the GTM approach accompanied by greater clarity
around Cirata's product offerings have served to improve momentum, which is
encouraging. The pipeline is higher quality, better qualified and more robust
compared to this point last year or indeed 6 months ago.

 

Stephen Kelly, Chief Executive Officer, commented:

 

"Overall, we are making good progress although I feel this is not represented
in the headline numbers and I felt we could have reached further in Q2 if it
wasn't for some material deal slippage which we expect to complete in Q4.
Nevertheless, the team did deliver improved sales conversions and certain
deals initially slated for Q2 close are now slated for H2 close, are aligned
to customer timelines and consistent with our reconfirmed FY24 bookings
guidance.

 

As part of our ongoing efficiency and effectiveness drive, we have started a
fresh cost alignment program to further reduce annualised costs from $23m to
circa $20m by the end of December 2024. This compares to the overall
annualised cost base of $45m at the end of March FY23. Our goal is to deliver
sustainable high growth with a fraction of the previous cost base as we
improve GTM productivity and market alignment across the Company.

 

As I have said before, the recovery of Cirata is likely to be non-linear but
those who know me understand that I am very ambitious when it comes to the
growth aspirations I have for companies I lead. With 6 to12 month sales cycles
and the need to re-build the pipeline from its embryonic form when the new
management team arrived, sustainable bookings growth is taking longer than I
had hoped. We can, however, foresee some major contracts in Q4 FY24 in the
pipeline which bodes well for a strong end of FY24 performance consistent with
our retained guidance. I want to thank our colleagues who show great
commitment to Cirata as well as our customers and investors for their
support."

 

 

This announcement contains information that qualifies or may qualify as inside
information for the purposes of Article 7 of the Market Abuse Regulation (EU)
596/2014 as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the
company's obligations under Article 17 of MAR.

 

The person responsible for arranging the release of this announcement on
behalf of Cirata plc is Larry Webster, Company Secretary.

 

 

For further information, please contact:

 

 Cirata                                  Via FTI Consulting
 Stephen Kelly, Chief Executive Officer
 Ijoma Maluza, Chief Financial Officer
 Daniel Hayes, Investor Relations

 FTI Consulting                          +44 (0)20 3727 1137
 Matt Dixon / Kwaku Aning / Usama Ali

 Stifel (Nomad and Joint Broker)         +44 (0)20 7710 7600
 Fred Walsh / Ben Good / Sarah Wong

 Liberum (Joint Broker)                  +44 (0)20 3100 2000
 Max Jones / Rupert Dearden / John More

 

 

About Cirata

 

Cirata, accelerates data-driven revenue growth by automating data transfer and
integration to modern cloud analytics and AI platforms without downtime or
disruption. With Cirata, data leaders can leverage the power of AI and
analytics across their entire enterprise data estate to freely choose
analytics technologies, avoid vendor, platform, or cloud lock-in while making
AI and analytics faster, cheaper, and more flexible. Cirata's portfolio of
products and technology solutions make strategic adoption of modern data
analytics efficient and automated.

 

For more information about Cirata, visit www.cirata.com
(http://www.cirata.com)

 

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