REG - GetBusy PLC - 2022 Half-year Results
13/07/2022 07:00
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RNS Number : 2435S GetBusy PLC 13 July 2022
13 July 2022
GetBusy plc
2022 Half-year Results
Acceleration of predictable, scalable and valuable ARR
Further upgrade to 2022 revenue expectations
GetBusy plc ("GetBusy", the "Company" or the "Group") (AIM: GETB), a leading
provider of productivity software for professional and financial services,
announces its unaudited results for the six months ended 30 June 2022 (the
"Period", "H1" or "H1 2022").
H1 2022 H1 2021 Change
£'000 £'000 Reported currency Constant currency(+)
Group ARR 18,068 14,049 29% 21%
Group recurring revenue 8,519 6,940 23% 19%
Group total revenue 9,070 7,489 21% 18%
Group adjusted EBITDA* 24 (148) n/a
Group adjusted loss before tax* (724) (472) (53)%
Group loss before tax (880) (949) 7%
Net cash 2,131 1,991 7%
Financial highlights
· Further acceleration of constant currency ARR growth to 21% (H1
2021: 13%), with healthy new business, improving churn and successful
monetisation
· Recurring revenue growth of 19% at constant currency to £8.5m
(H1 2021: £7.0m)
· Recurring revenue comprises 94% of total revenues (H1 2021: 93%)
· Gross margin remains strong at 90.4% (H1 2021: 91.8%) with
greater volume of cloud revenue
· Adjusted EBITDA at breakeven (H1 2021: £(0.1)m) - reflecting
ongoing growth investment in line with strategic roadmap
· Net cash of £2.1m (H1 2021: £2.0m) remains strong, underpinned
by undrawn committed £2.0m facility
Operational highlights
· Strong net revenue retention of 100.6% per month (H1 2021:
99.3%), reflecting successful fair-price monetisation efforts and value
customers ascribe to our solutions
· Group ARPU up 15% at constant currency to £245 (H1 2021: £207)
· 8% increase in paying users to 73,667 (H1 2021: 68,030)
· Strengthened position in insolvency market following signing of
another UK Top 10 accountancy firm for Virtual Cabinet's cloud offering,
powered by Workiro
· Continued to build out footprint in NetSuite channel for Workiro
with total of five partner agreements now signed
· Development of operational infrastructure around Certified Vault
progressing to plan, supporting planned scale up of customer acquisition
efforts in 2023
· Integration of October 2021's technology acquisitions on target,
with commercial launch expected by end of this year, broadening the Group's
capabilities to drive ARPU growth through its portfolio of productivity
software products
· Group now annually handles more than 250 million documents and
executes over 3 million digital signatures among over 2 million collaborators
Further upgrade to revenue expectations for 2022(#)
· Despite the wider backdrop of economic uncertainty, our core
markets remain robust, driven by structural changes in the way people work and
a strengthening mandate for productivity optimisation
· Continuing ARR momentum and resilient customer demand is expected
to drive 2022 Group revenue to at least £18.4m (previous guidance of £17.0m)
· Group expected to remain modestly profitable at the Adjusted
EBITDA level during H2 2022, marginally ahead of current expectations for 2022
· Group continues to invest in its operations and people to support
long-term growth and management's ambition to double ARR over the next five
years
Daniel Rabie, CEO of GetBusy, comments:
"Momentum has continued to build during GetBusy's record first half of 2022,
with constant currency ARR growth of 21%, stronger than we reported in our AGM
update two months ago.
"More than ever, GetBusy's products are delivering tangible value to our
clients, across a larger addressable market, helping them to remain as
productive, efficient and secure as possible in the face of rising cost
pressures and operational complexities. Our very high - and improving -
customer retention rates demonstrate how embedded our growing range of
capabilities have become within our clients' technology stacks, a trend we
expect to continue as the tailwinds of digital transformation, cyber security,
privacy legislation and hybrid working strengthen.
"As we continue to win new clients in our core markets, introduce new
capabilities into our existing client base and establish a foothold in new
markets, we anticipate that ARR growth will remain strong throughout H2, and
we now expect revenue in 2022 to be ahead of previously upgraded
expectations."
*Adjusted EBITDA is Adjusted Loss before Tax stated after capitalised
development costs. A full list of our alternative performance measures,
together with a glossary of certain terms, can be found in note 2.
* Adjusted Loss before Tax is Loss before tax, depreciation and amortisation
on owned assets, share option costs, net capitalised development costs,
finance costs that are not related to leases, and non-underlying items.
(+) Changes at constant currency are calculated by retranslating the
comparative period at the current period's prevailing rate of exchange.
(#) Current market expectations for 2022, in advance of publishing this
announcement, are considered to comprise revenue of £17.0m, Adjusted EBITDA
of £(0.5)m and Adjusted Loss before Tax of £(1.3)m.
A copy of the presentation to investors will be available on the Company's
website, at www.getbusyplc.com (http://www.getbusyplc.com) shortly.
GetBusy plc
investors@getbusy.com (mailto:investors@getbusy.com)
Panmure Gordon (Financial Adviser, Nominated Adviser and Broker) +44 (0)20 7886 2500
Alina Vaskina / James Sinclair-Ford (Corporate
Advisory)
Erik Anderson (Corporate Broking)
Alma PR (Financial PR) +44 (0)20 7886 2500
Hilary Buchanan / Andy Bryant / Hannah Campbell
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION (EU) NO 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN. THE PERSON RESPONSIBLE FOR MAKING THIS ANNOUNCEMENT ON BEHALF OF THE
COMPANY IS PAUL HAWORTH.
About GetBusy
GetBusy's specialist productivity software solutions enable growing businesses
to work securely and efficiently with their customers, suppliers and teams
anytime, anywhere. Our solutions can be delivered flexibly across cloud,
mobile, hosted and on-premise platforms, whilst integrating seamlessly with a
wide variety of other class-leading core business systems.
With over 73,000 paying users across multiple market sectors and
jurisdictions, GetBusy is an established and fast-growing SaaS business
delivering sustained double-digit growth in high-quality recurring
subscription revenue over the long term.
Further information on the Group is available at www.getbusyplc.com
Our focus is on recurring revenue - predictable, scalable and valuable
The strong performance in the first half of the year is driven by continued
execution against the Group's consistent growth strategy: new customers and
markets, customer retention, monetisation and product expansion.
Growing recurring subscription revenue remains our focus.
The reliable and predictable revenue runrate from software subscriptions
provides a solid foundation for mid- to long-term planning. Our high gross
margins, strong customer retention rates and the favourable working capital
profile arising from a high proportion of customers paying annually in
advance, de-risk the investments we can make to drive future growth. Our
business model, allows us to double down responsibly on growth investment in a
cautious macro-economic environment, building a highly valuable base of
customer cashflows that have annuity characteristics.
ARR grew 21% at constant currency to £18.1m (H1 2021: £14.0m), through a
combination of new customer acquisition, strong customer retention rates and
higher monetisation within our established products. ARR is up 9% at constant
currency from the beginning of the current year.
Predictable
Users were up 8% to 73,667, with new business contributing significantly to
this growth. Predictability is key to our customer acquisition model; we
consistently return more than £4 in customer lifetime value for every £1
spent on acquiring a new customer. Once acquired, our customers tend to be
sticky: gross churn is resilient, averaging 0.9% per month In H1, a slight
improvement on H1 2021 (1.0%) despite the anticipated increase arising from
higher monetisation.
ARPU was up 15% at constant currency to £245. The size of our customer base
enables us to draw valuable insights from users, informing product development
and the retention activities of our customer success teams. That insight
also proves the value of the productivity benefits delivered to our customers,
enabling us to set fair prices for our new and existing clients with
confidence.
Our strong net revenue retention of 100.6% (H1 2021: 99.3%) provides us with
outstanding visibility over near-term growth, built from a very stable
foundation of predictable recurring revenue.
The absence of significant customer concentration contributes to the
reliability of revenue generated from our customer base; no single client
accounts for more than 2% of revenue.
Scalable
The professional and financial services markets that the Group targets are
large and under-penetrated. GetBusy's software portfolio adds a productivity
layer to core business applications, simplifying workflows, improving
productivity, enhancing security and delighting clients. With the
strengthening tailwinds of digital transformation, privacy legislation,
mobility and cyber security, these supportive market dynamics will provide
substantial growth opportunities for the Group for years to come. Many
organisations are still very early on their software automation journeys, and
the depth of our expertise within these markets positions us well to provide
an ever-increasing set of solutions to customers on that journey.
Our strong LTV:CAC ratio of 4:1 (H1 2021: 4:1) allows us to ramp our customer
acquisition spend with a high degree of confidence in the return. Typically
more than 65% of our customers elect for contracts that are paid annually in
advance, providing us with structural working capital benefits that fund
additional investment in growth. Our gross margin of 90.4% (H1 2021: 91.6%)
means there are minimal incremental operating costs from acquiring new
customers, which in the long term leads to substantial operating leverage and
cash generation.
The strength of our integrations with core business applications, such as
practice management or tax preparation software, contributes to our strong
customer retention. Those integrations also provide channel opportunities
for us, enabling us to leverage a partner's access to well-defined customers,
improving customer acquisition scalability. We are aiming to build stronger
channels for our established products, notably in the insolvency sector and
within the SME accounting market in the US. Channels are also a key part of
our customer acquisition strategy for our emerging products Workiro and
Certified Vault, with the former increasing the number of NetSuite value-added
reseller partners to five during H1.
Valuable
GetBusy focuses on the professional and financial services markets, with over
70% of revenue derived from the accountancy sector. These markets have
remained buoyant during H1 and historically have proved resilient in the face
of significant economic uncertainty. The battle to recruit and retain
professional talent, and the well-documented related inflationary challenges,
will drive increased adoption of productivity and automation tools. The
insolvency sector, a key growth area for GetBusy, is expected to become
particularly active as the strain of two years of extraordinary financial
pressures takes its toll on vulnerable sectors.
The degree to which our products are embedded in our customers' everyday
workflows, and integrated into other mission-critical applications,
contributes to our low churn rates and high levels of net revenue retention.
This leads to a subscription revenue base that has valuable annuity
characteristics; the Group's customer base at its initial public offering in
2017 generates more ARR today than it did then as a result of strong
retention, increased penetration, revenue expansion from upsell and price
uplifts.
This high-quality customer base has considerable strategic value. Through
over 20 years of product and brand development, we have, through our portfolio
of innovative products, built leading positions in attractive markets with
high barriers to entry. Transaction multiples paid within the broader
professional services software market - frequently in excess of 7x ARR -
validate the importance of those customer relationships and how selling
additional products to those customers can create significant value over the
long term. Our continuing investments in additional capabilities are made
with this in mind. Over the longer term, we expect our emerging products,
including Workiro and Certified Vault, to contribute more meaningfully to
growth as the products mature and brand recognition is established.
Business and financial review
Group H1 2022 H1 2021 Change
Reported currency Constant currency
ARR at 30 June £18.1m £14.0m 29% 21%
Recurring revenue £8,519k £6,940k 23% 19%
Total revenue £9,070k £7,489k 21% 18%
Adjusted EBITDA £24k £(148)k n/a
Adjusted loss before tax £(724) £(472)k (53%)
Paying users at 30 June 73,667 68,030 8%
ARPU at 30 June £245 £207 18% 15%
Net revenue retention 100.6% 99.4% n/a
Established products
SmartVault and Virtual Cabinet have clear leading positions in their
respective markets.
SmartVault has particular strength within the SME accounting and tax space in
the US, a market which we estimate to exceed $250m in ARR. SmartVault is the
only fully-integrated cloud document management provider for Intuit's leading
Lacerte and ProSeries tax preparation products; the workflow productivity
benefits from this tight integration lead to outstanding customer retention
rates, typically five times better than for the broader customer base.
SmartVault's product development continued apace during H1. Our recently
released e-mail capture capability was iterated, and we introduced
custom-branded e-mail messaging and a significantly updated and refreshed user
interface for large parts of the product.
During H1, Virtual Cabinet further enhanced its position in the insolvency
sector, including securing the insolvency division of another UK top 10
accounting firm. This position is strengthened through Virtual Cabinet's
integration with Workiro, providing a clear path for customers embarking on
their cloud journey whilst retaining the class-leading capabilities of Virtual
Cabinet and its deep integrations into a wide range of core professional
applications.
As well as a refreshed user interface and branding for Virtual Cabinet,
next-generation search capabilities were developed and launched together with
user analytics, improved OneDrive integration and an integration with
PostWorks, the digital mailroom provider, which is a core technology for many
insolvency firms. The Workiro technology is also proving to be an attractive
cloud pathway for many Virtual Cabinet customers, with substantial overlap
between the requirements of the ERP market and Virtual Cabinet's established
and target customer base.
Emerging products
Our emerging products provide further growth potential for the Group. Each
addresses a validated productivity need within a clearly identified and large
market that shares the favourable characteristics and helpful tailwinds of our
core professional services markets.
Workiro provides intuitive document management, task, communication and
approval capability, with an initial focus on Oracle's NetSuite cloud ERP
application, into which Workiro is deeply integrated. NetSuite's installed
base of over 30,000 enterprise customers provides a considerable market
opportunity for Workiro, with the broader cloud ERP market being significantly
larger.
During H1 we have added four value-added resellers, bringing the total to
five, and have focused on brand recognition to help establish initial sales
momentum. Workiro was identified as "truly innovative" and selected by
accountancy and business advisory firm, BDO, from hundreds of high-growth
businesses for the inaugural Growth Programme, dedicated to helping high
growth technology businesses to scale up.
Certified Vault was introduced into the asset finance market in the US in
2021, providing secure custody of electronic chattel paper on behalf of
secured lending institutions. Following an encouraging start towards the end
of 2021, we have tempered customer acquisition while we further develop and
prepare the product, and the surrounding operational infrastructure, for the
rigorous security and compliance demands of the larger financial services
market. This essential work, which will create a very solid and sustainable
foundation for Certified Vault in what is a large, highly attractive and
under-served market, is progressing well and we expect to start to scale
customer acquisition efforts in 2023.
Integration with our established products of the form-fill and quoting
technologies acquired last year is progressing to plan. We expect these
capabilities to be available initially to our SmartVault user base during Q4
2022, with Virtual Cabinet integrations to follow. These technologies
provide valuable expansion revenue opportunity among our substantial base of
over 73,000 users.
Financials
Recurring revenue grew 19% at constant currency to £8.5m, reflecting the
strong ARR momentum carried forward at the start of the year and the
subsequent ARR growth. 51% of recurring revenue in H1 was denominated in USD,
driving reported recurring revenue growth of 23%.
Non-recurring revenue of £0.6m was essentially flat compared to H1 2021;
growth in non-recurring add-ons in SmartVault was offset by the planned
reduction in Virtual Cabinet as older customers converted onto pure SaaS
models, a process which is now largely complete. Total revenue was up 18% at
constant currency to £9.1m.
Gross margin of 90.4% (H1 2021: 91.6%) reflects the greater proportion of
revenue from our cloud products, including SmartVault.
SG&A costs of £6.8m (H1 2021: £5.5m) reflect a number of investments
across the business to underpin future growth and improve the infrastructure
of the Group to support additional scale. This includes investments in
customer acquisition teams across the Group, customer success teams, which
drive customer retention and expansion revenue campaigns, and a
professionalisation of our cyber security capabilities. We continued to
build out our product development functions to support capability improvements
across the Group, and developer costs of £2.1m were 15% higher (H1 2021:
£1.9m).
£0.7m of development costs were capitalised (H1 2021: £0.3m), including a
variety of capability enhancements across Virtual Cabinet and SmartVault and
elements of the core application builds for Certified Vault and Workiro.
Adjusted EBITDA was £0.0m (H1 2021: £(0.1)m), whilst Adjusted Loss, which is
stated before development capitalisation, was £(0.7)m (H1 2021: £(0.5)m).
The increase in depreciation on owned assets and amortisation is due to the
impact of continued capitalisation of development costs. Share option costs
remained at £0.3m (H1 2021: £0.3m) and reflect both the IFRS2 charge on the
options granted and the increase in the provision for employment taxes due if
options are exercised. Non-underlying costs of £0.1m (H1 2021: £0.1m)
comprise corporate restructuring costs together with an increase in the
provision for potential historic sales tax liabilities in certain
jurisdictions in the US.
The tax credit of £0.3m (H1 2021: credit of £0.2m) reflects the expected UK
research and development tax credit offset by overseas tax payable in
Australia and New Zealand. The Group still has sizeable carried forward tax
losses in the UK and US.
Working capital movements were broadly neutral in H1, with favourable deferred
revenue movements offsetting payables outflows. Capital expenditure of
£0.2m and the adjusted loss of £(0.7)m were offset by net tax receipts,
mostly from the UK research and development tax credit.
Consolidated income statement
For the six months ended 30 June 2022
H1 2022 H1 2021 FY 2021
Note £'000 £'000 £'000
Unaudited Unaudited Audited
Revenue 3 9,070 7,489 15,448
Cost of sales (873) (630) (1,295)
Gross profit 8,197 6,859 14,153
Operating costs (9,010) (7,741) (16,355)
Net finance costs (67) (67) (133)
Loss before tax 3 (880) (949) (2,335)
Loss before tax (880) (949) (2,335)
Depreciation and amortisation on owned assets 487 408 706
Share option costs including social security 287 309 667
Non-underlying costs 99 58 400
Finance costs / (income) not related to leases 31 26 52
Adjusted EBITDA 24 (148) (510)
Capitalised development costs (748) (324) (712)
Adjusted loss before tax (724) (472) (1,222)
Tax 332 206 771
Loss for the period attributable to owners of the Company (548) (743) (1,564)
Loss per share (pence)
Basic 4 (1.10) (1.50) (3.16)
Diluted 4 (1.10) (1.50) (3.16)
Consolidated statement of comprehensive income
For the six months ended 30 June 2022
H1 2022 H1 2021 FY 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Loss for the period (548) (743) (1,564)
Other comprehensive income / (expense)
Exchange differences on translation of foreign operations (335) 21 (17)
Other comprehensive income / (expense) net of tax (335) 21 (17)
Total comprehensive loss for the period (883) (722) (1,581)
Consolidated balance sheet
At 30 June 2022
30 June 31 December 2021 30 June 2021
2022
£'000 £'000 £'000
Unaudited Audited Unaudited
Non-current assets
Intangible assets 1,591 1,110 831
Right of use assets - leases 1,463 1,544 1,661
Property, plant and equipment 426 426 435
3,480 3,080 2,927
Current assets
Trade and other receivables 1,939 1,907 1,599
Current tax receivable 451 1,021 154
Cash and bank balances 2,131 2,670 1,991
4,521 5,598 3,744
Total assets 8,001 8,678 6,671
Current liabilities
Trade and other payables (3,865) (3,917) (2,574)
Deferred revenue (5,701) (5,469) (4,336)
Lease liabilities (373) (333) (288)
Current tax payable (280) (378) (91)
(10,219) (10,097) (7,289)
Non-current liabilities
Deferred revenue - (4) -
Lease liabilities (1,465) (1,533) (1,670)
(1,465) (1,537) (1,670)
Total liabilities (11,684) (11,634) (8,959)
Net assets (3,683) (2,956) (2,288)
Equity
Share capital 74 74 74
Share premium account 3,018 3,018 3,018
Demerger reserve (3,085) (3,085) (3,085)
Retained earnings (3,690) (2,963) (2,295)
Equity attributable to shareholders of the parent (3,683) (2,956) (2,288)
Consolidatd statement of changes in equity
For the six months ended 30 June 2022
Share premium account
Share capital Demerger Retained earnings
Reserve Total
2022 Unaudited £'000 £'000 £'000 £'000 £'000
At 1 January 2022 74 3,018 (3,085) (2,963) (2,956)
Profit for the period - - - (548) (548)
Exchange differences on translation of foreign operations, net of tax - - - (335) (335)
Total comprehensive profit attributable to equity holders of the parent - - - (883) (883)
Issue of ordinary shares - - - - -
Total transactions with owners of the Company - - - - -
Share option costs - - - 156 156
- - - 156 156
At 30 June 2022 74 3,018 (3,085) (3,690) (3,683)
Share premium account
Share capital Demerger Retained earnings
Reserve Total
2021 Unaudited £'000 £'000 £'000 £'000 £'000
At 1 January 2021 74 3,018 (3,085) (1,782) (1,775)
Profit for the period - - - (743) (743)
Exchange differences on translation of foreign operations, net of tax - - - 21 21
Total comprehensive loss attributable to equity holders of the parent - - - (722) (722)
Issue of ordinary shares - - - - -
Total transactions with owners of the Company - - - - -
Share option costs - - - 209 209
- - - 209 209
At 30 June 2021 74 3,018 (3,085) (2,295) (2,288)
Share premium account
Share capital Demerger Retained earnings
Reserve Total
2021 Audited £'000 £'000 £'000 £'000 £'000
At 1 January 2021 74 3,018 (3,085) (1,782) (1,775)
Profit for the period - - - (1,564) (1,564)
Exchange differences on translation of foreign operations, net of tax - - - (17) (17)
Total comprehensive loss attributable to equity holders of the parent - - - (1,581) (1,581)
Issue of ordinary shares - - - - -
Total transactions with owners of the Company - - - - -
Share option costs - - - 400 400
- - - 400 400
At 31 December 2021 74 3,018 (3,085) (2,963) (2,956)
Consolidated cash flow statement
For the six months ended 30 June 2022
H1 2022 H1 2021 FY 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Adjusted loss before tax (724) (472) (1,222)
Depreciation of right of use asset - leases 158 153 316
Income statement cost of interest on finance leases 36 41 81
(Increase)/ decrease in receivables (31) 216 (92)
(Decrease) / increase in payables (288) (156) 1,093
Increase/ (decrease) in deferred income 228 (330) 806
Cash used in operations (621) (548) 982
Non-underlying costs (99) (58) (400)
Income taxes received 790 638 623
Interest paid (25) (26) (52)
Net cash from operating activities 45 6 1,153
Purchases of property, plant and equipment (77) (124) (181)
Purchases of other intangible assets (143) (42) (163)
Net cash used in investing activities (220) (166) (344)
Principal portion of lease payments (130) (147) (261)
Interest on lease liabilities (36) (16) (81)
Net cash from financing activities (166) (163) (342)
Net increase/(decrease) in cash (341) (323) 467
Cash and bank balances at beginning of period 2,670 2,283 2,283
Effects of foreign exchange rates (198) 31 (80)
Cash and bank balances at end of period 2,131 1,991 2,670
Notes to the financial information
1. General information
These interim financial statements are for the six months ended 30 June
2022. They do not require all the information required for full annual
financial statements and should be read in conjunction with the consolidated
financial statements of the Group for the year ended 31 December 2021.
These financial statements are presented in pounds sterling because that is
the currency of the primary economic environment in which the group operates.
2. Basis of preparation and accounting policies
The financial information set out above does not constitute statutory accounts
within the meaning of section s434(3) of the Companies Act 2006 or contain
sufficient information to comply with the disclosure requirements of
UK-adopted International Accounting Standards ("IFRS").
The financial statements of GetBusy plc for the year ended 31 December 2021
were authorised for issue by the Board of Directors on 28 February 2022. The
auditors have reported on these accounts and their reports were unqualified,
did not draw attention to any matters by way of emphasis and did not contain
any statements under s498 (2) or (3) of the Companies Act 2006.
These interim financial statements are prepared on the same basis as the
financial statements for the year ended 31 December 2021, in which our full
set of accounting policies, including critical judgements and key sources of
estimation uncertainty, can be found.
Alternative performance measures
The Group uses a series of non-IFRS alternative performance measures ("APMs")
in its narrative and financial reporting. These measures are used because we
believe they provide additional insight into the performance of the Group and
are complementary to our IFRS performance measures. This belief is supported
by the discussions that we have on a regular basis with a wide variety of
stakeholders, including shareholders, staff and advisers.
The APMs used by the Group, their definition and the reasons for using them,
are provided below:
Recurring revenue. This includes revenue from software subscriptions and
support contracts. A key part of our strategy is to grow our high-quality
recurring revenue base. Reporting recurring revenue allows shareholders to
assess our progress in executing our strategy.
Adjusted Profit / Loss before Tax. This is calculated as profit / loss
before tax and before certain items, which are listed below along with an
explanation as to why they are excluded:
Depreciation and amortisation of owned assets. These non-cash charges to the
income statement are subject to judgement. Excluding them from this measure
removes the impact of that judgement and provides a measure of profit that is
more closely aligned with operating cashflow. Only depreciation on owned
assets is excluded; depreciation on leased assets remains a component of
adjusted profit / loss because, combined with interest expense on lease
liabilities, it is a proxy for the cash cost of the leases.
Share option costs. Judgement is applied in calculating the fair value of
share options and subsequent charge to the income statement, which has no cash
impact. The impact of potentially dilutive share options is also considered
in diluted earnings per share. Therefore, excluding share option costs from
Adjusted Profit / Loss before Tax removes the impact of that judgement and
provides a measure of profit that is more closely aligned with cashflow.
Capitalised development costs. There is a very broad range of approaches
across companies in applying IAS38 Intangible assets in their financial
statements. There are also many examples of companies being criticised for
using the capitalisation and amortisation of development costs as a method of
manipulating profit, due to the substantial management judgement involved in
applying the standard. To assist transparency, we exclude the impact of
capitalising development costs from Adjusted Profit / Loss before Tax in order
that shareholders can more easily determine the performance of the business
before the application of that significant judgement. The impact of
development cost capitalisation is recorded within operating costs. The
cashflow statement reconciles from Adjusted Profit / Loss before Tax, and so
there is no adjustment for development amortisation within operating cashflows
and no adjustment for development capitalisation within cashflows from
investing activities.
Non-underlying costs. Occasionally, we incur costs that are not
representative of the underlying performance of the business. In such
instances, those costs may be excluded from Adjusted Profit / Loss before Tax
and recorded separately. In all cases, a full description of their nature is
provided.
Finance costs / (income) not related to leases. These are finance costs and
income such as interest on bank balances. It excludes the interest expense
on lease liabilities under IFRS16 because, combined with depreciation on
leased assets, it is a proxy for the cash cost of the leases.
Adjusted EBITDA. This is calculated as Adjusted Profit / Loss before Tax
with capitalised development costs added back.
Constant currency measures. As a Group that operates in different
territories, we also measure our revenue performance before the impact of
changes in exchange rates.
Glossary of terms
The following terms are used within these financial statements:
MRR. Monthly recurring revenue. That is, the monthly value of subscription
and support revenue, both of which are classified as recurring revenue.
ARR. Annualised MRR. For a given month, the MRR multiplied by 12.
CAC. Customer acquisition cost. This is the average cost to acquire a
customer account, including the costs of marketing staff, content, advertising
and other campaign costs, sales staff and commissions.
LTV. Lifetime value, calculated as the average revenue per account
multiplied by the average gross margin and divided by gross MRR churn.
MRR churn. The average percentage of MRR lost in a month due to customers
leaving our platforms.
Net revenue retention. The average percentage retained after a month due to
the combined impact of customers leaving our platforms, customers upgrading or
downgrading their accounts and price increases or reductions.
ARPU. Annualised MRR per paid user at a point in time.
3. Revenue and operating segments
The Group's chief operating decision maker is considered to be the Board of
Directors. Performance of the business and the deployment of capital is
monitored on a group basis. Additional revenue analysis is presented by
territory.
H1 2022 Unaudited UK USA AUS/NZ Total
£'000 £'000 £'000 £'000
Recurring revenue 3,207 4,330 982 8,519
Non-recurring revenue 275 233 43 551
Revenue from contracts with customers 3,482 4,563 1,025 9,070
Cost of sales (873)
Gross profit 8,197
Sales, general and admin costs (6,792)
Development costs (2,129)
Adjusted loss before tax (724)
Capitalisation of development costs 748
Adjusted EBITDA 24
Depreciation and amortisation on owned assets (487)
Share option costs (287)
Non-underlying costs (99)
Other finance income / (costs) (31)
Loss before tax (880)
H1 2021 Unaudited UK USA AUS/NZ Total
£'000 £'000 £'000 £'000
Recurring revenue 3,133 2,835 972 6,940
Non-recurring revenue 324 198 27 549
Revenue from contracts with customers 3,457 3,033 999 7,489
Cost of sales (630)
Gross profit 6,859
Sales, general and admin costs (5,479)
Development costs (1,852)
Adjusted loss before tax (472)
Capitalisation of development costs 324
Adjusted EBITDA (148)
Depreciation and amortisation on owned assets (408)
Share option costs (309)
Non-underlying costs (58)
Other finance income / (costs) (26)
Loss before tax (949)
2021 Audited UK £'000 USA AUS/NZ Total
£'000 £'000 £'000
Recurring revenue 6,280 6,119 1,944 14,343
Non-recurring revenue 661 365 79 1,105
Revenue from contracts with customers 6,941 6,484 2,023 15,448
Cost of sales (1,295)
Gross profit 14,153
Sales, general and admin costs (11,588)
Development costs (3,787)
Adjusted loss before tax (1,222)
Capitalisation of development costs 712
Adjusted EBITDA (510)
Depreciation and amortisation on owned assets (706)
Share option costs (400)
Social security costs on share options (267)
Non-underlying costs (400)
Other finance costs (52)
Loss before tax (2,335)
4. Loss per share
The calculation of loss per share is based on the loss for the period of
£548k (H1 2021: loss of £743k).
Weighted number of shares calculation H1 2022 H1 2021 FY 2021
'000 '000 '000
Unaudited Unaudited Audited
Weighted average number of ordinary shares 49,580 49,471 49,516
Effect of potentially dilutive share options in issue n/a n/a n/a
Weighted average number of ordinary shares (diluted) n/a 49,471 n/a
Loss per share H1 2022 H1 2021 FY 2021
pence pence pence
Unaudited Unaudited Audited
Basic (1.10) (1.50) (3.16)
Diluted (1.10) (1.50) (3.16)
At 30 June 2022 there were 7,427,628 shares under option. As required by
IAS33 (Earnings per Share), the impact of potentially dilutive options was
disregarded for the purposes of calculating diluted loss per share in the
Period as the Group was loss making.
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