REG - GetBusy PLC - 2024 Half-year Results
03/09/2024 07:00
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RNS Number : 5900C GetBusy PLC 03 September 2024
3 September 2024
GetBusy plc
2024 Half-year Results
A clear strategy to create and realise value
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 2024 (the
"Period", "H1" or "H1 2024").
H1 2024 H1 2023 Change
£'000 £'000 Reported currency Constant currency(***)
Group ARR 20,982
20,121 4% 5%
Group recurring revenue 10,354
10,102 3% 4%
Group total revenue 10,739
10,521 2% 4%
Group adjusted EBITDA* 403 150%
164
Group adjusted loss before tax** (334) 45%
(603)
Group loss before tax (8) 99%
(782)
Available cash funds 2,178 3,659 (41)%
Net cash 178 (89)%
1,659
Financial highlights
· Recurring revenue growth of 4% at constant currency to £10.4m
(H1 2023: £10.1m)
· ARR growth of 5% at constant currency to £21.0m (H1 2023:
£20.1m) and up 3% at constant currency since the start of the year
· Gross margin remains strong at 89.3% (H1 2023: 89.9%) with
greater volume of cloud revenue
· Increase in Adjusted EBITDA to £0.4m (H1 2023 £0.2m)
· Narrowing of Adjusted Loss to £0.3m (H1 2024: £0.6m), a 45%
improvement on H1 2023
· Gross cash of £0.9m (H1 2023: £1.7m) and drawn debt of £0.7m
(H1 2023: £nil), meaning total available funds of £2.2m
· Net Cash of £0.2m (H1 2023: £1.7m) reflecting a later receipt
of UK R&D tax credit than in H1 2023 (expected to be £0.6m) and the
acquisition of SmartPath (£0.2m)
Operational highlights
· Net revenue retention of 99.7% (H1 2023: 100.5%)
· Group ARPU(****) up 9% at constant currency to £316 (H1 2023:
£291)
· 4% reduction in paying users(****) to 66,424 (H1 23: 69,208),
reflecting strategy to focus on higher value customers and churn within legacy
Virtual Cabinet business
· Completed acquisition of SmartPath, the revenue optimisation and
pricing intelligence platform, enhancing the Group's product offering in the
highly attractive and strategically valuable US market
· SmartVault platform transacted a record 106 million documents
during peak US tax season with 100% availability
· Substantial order traction for Workiro in ERP market,
representing 75% of new sales in the combined Virtual Cabinet / Workiro
business
· Workiro ARR up 150% since start of year, demonstrating
encouraging potential in significantly enlarged target market
Outlook
· The Group reconfirms group revenue expectations(+) for the year,
whilst flagging increasing exchange rate pressure from the weaker USD
· Prospects for the Group, including cash returns in the medium
term from SmartVault and the long-term potential from Workiro, remain
excellent
Daniel Rabie, CEO of GetBusy, comments:
"We have made encouraging strategic progress in H1 2024 to keep the business
on track to achieve our value creation and realisation objectives in the
medium- and long-term.
"We're excited to have added SmartPath's pricing technology into SmartVault's
suite, providing an excellent platform on which we can build a more extensive
offering to help accountants transition to become advisory-led firms. Within
Workiro, encouraging order intake through our strategic channel partners
provides validation of the value of our solution within the ERP market, and
the size and reliability of our pipeline provides confidence for the future.
"Whilst ARR growth over H1 has been more modest than in previous periods, we
are confident we have the foundations in place for a return to stronger growth
and significant value creation over the next few years."
(+) Expectations for the year-ending 31 December 2024 are considered to
comprise Revenue of £22.9m and Adjusted EBITDA of £1.2m.
*Adjusted EBITDA is Adjusted Loss before Tax with capitalised development
costs added back. 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, long-term incentive 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.
**** Following a review of the way the volume of paying users is captured in
the Group's reporting systems, it has been identified that in some
circumstances deactivated users or other non-paying users were being included
incorrectly in the Group's paying user count. The Group is therefore
restating previously reported paid user count information, and the related
Group ARPU figures, as shown in the table below. There is no impact on the
Group's revenue in any period and no customers have been billed for
deactivated or otherwise non-paying users as a result of this error.
30 June 2020 31 Dec 2020 30 June 2021 31 Dec 2021 30 June 2022 31 Dec 2022 30 June 2023 31 Dec 2023
Paid users 64,387 65,691 66,844 69,378 68,855 69,342 69,208 68,227
ARPU (£) 203 209 208 228 262 277 291 301
GetBusy plc
investors@getbusy.com
Cavendish Capital Markets Limited (Nominated Adviser and Broker) +44 (0)20 7220 0500
Matt Goode / Trisyia Jamaludin (Corporate Finance)
Harriet Ward (ECM)
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 nearly 70,000 paying users and over 3 million collaborators 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
A clear strategy for value creation and cash returns
We are building a strategically valuable business in the US accounting market,
through SmartVault, that we believe will enable substantial value realisation
in the medium term. Additionally, we are capitalising on our excellent
reputation within professional services to establish and scale Workiro in the
ERP market, building long-term shareholder value.
The Group is committed to sustained investment, from its current funds and
further self-generated cash resources, in the pursuit of both medium- and
long-term growth. The underlying Virtual Cabinet and Workiro business is
profitable and cash generative, and our SmartVault business is on the point of
generating significant and scaling cash profits over the next couple of years.
We believe there is a substantial long-term growth opportunity for software
that supports the productivity of knowledge workers, enhances their working
day by improving workflows, and contributes to the profitability of the
organisations that employ them. AI capabilities will be transformational in
these markets. This opportunity is supported by enduring structural drivers
such as stricter regulatory requirements, a more hostile cybersecurity
landscape, tightening labour markets and increasing workforce flexibility
demands.
By remaining focused on specific, valuable markets, in particular the
accounting market, we can build a high quality, sticky customer base for whom
our products have infrastructural characteristics. We believe our base of
customers can become strategically very attractive as a result of the access
we have to a very well-defined set of customers with similar software
requirements.
Whilst medium-term growth is expected to be driven largely by the accounting
market, in which we are experienced and proven, growth over the longer-term is
expected to be significantly enhanced by the opening of larger enterprise
markets and the provision of enterprise content management solutions via
Workiro. As in accounting, we expect success to come through the depth of
our integrations with other mission-critical software platforms, such as ERP
applications. The scale of the Workiro opportunity warrants the sustained
investments we are making with the expectation that the solution will open
substantially larger markets over the longer term.
H1 overview
Marked strategic progress was made across the business in H1, setting the
business up well for stronger growth in the future and to achieve our value
creation and realisation objectives in the medium- and long-term. In
SmartVault, we extended our product capabilities with the acquisition of
SmartPath, providing a platform on which we can build a more extensive
offering to help accountants transition to become advisory-led firms. Within
Workiro, we saw significant first fruits from our strategic channel
partnerships in the ERP market, with notable success within certain
clearly-defined and sizeable industries. We anticipate further strategic
progress in these areas over H2.
ARR increased 5% year-on-year to £21.0m at 30 June 2024 (30 June 2023:
£20.1m), a more modest growth rate than in previous periods mostly reflecting
slower than anticipated return on the customer acquisition investments we have
made within SmartVault in the US. Strong and responsive cost control led to
a reduction in the adjusted loss to £0.3m. H1 seasonal net cash outflow
increased by £0.5m as the UK research and development tax credit (usually
paid in H1) has not yet been received, together with the acquisition of
SmartPath. Available cash funds at 30 June 2024 were £2.2m and the Board
considers the Group to be well capitalised to execute its strategy.
SmartVault
SmartVault is the leading cloud document management and client portal software
serving US accountants. Through deep integrations and a commercial
partnership, SmartVault has built an enviable position as the cloud document
management software of choice for the c. 100,000 users of Intuit's Lacerte and
ProSeries tax products. In 2023, SmartVault completed its integration into
Thomson Reuters' Ultratax, which roughly doubles the medium-term market
opportunity, providing a reusable blueprint for further integrations into
other tax software platforms as well as other specialist tools within the tax
ecosystem, such as Liscio's client portal, creating a route to even broader
adoption in the future.
The acquisition of SmartPath, the pricing intelligence and revenue
optimisation platform, provides an important tool to enable accounting firms
to expand from tax compliance services, which are becoming increasingly
commoditised, into value-added advisory services. The importance of advisory
to the future of US tax accountants cannot be overstated; a recent survey by
Accounting Today found that 80% of firms were seeing substantially higher
demand for advisory services. Starting with SmartPath, we plan to
selectively add to the capabilities of SmartVault, including the ability for
our customers to surface actionable insights from their clients' data and
documents, to create a valuable toolset that facilitates the advisory
transition for our customers, increasing ARPU and the embeddedness of the
SmartVault platform into our customers' workflows.
SmartVault ARR grew 8.4% to $14.3m (30 June 2023: $13.2m).
New customer acquisition during H1 was roughly in line with H1 2023, with
strengthening contributions from our reseller channels and encouraging
traction from SmartPath. However, our investments in direct customer
acquisition have not yet led to the acceleration we were seeking and so we
have scaled those back to be commensurate with the demand we are seeing. We
continue to see improvements in average selling price for our direct
customers, a product of a greater proportion of larger customers and improving
adoption of our premium "Unlimited" plan, which packages an unrivalled feature
set including e-signature and the form-fill and quoting technology acquired in
2021.
Churn and net revenue retention were both in line with H1 2023. Following
the successful introduction of the Unlimited plan in Q4 last year, we
anticipate continued strong adoption of Unlimited by existing customers over
the rest of the year during the key pre-tax season buying period, which can
improve customer ARPU by up to 40% and drive improvements to net revenue
retention. Additionally, after the completion of our first round of product
improvements we expect to make the SmartPath pricing tool available to the
existing customer base during Q4, ahead of integrating the product into the
core SmartVault application.
Workiro
Collectively, Virtual Cabinet and Workiro serve enterprise customers in the
professional and financial services sector together with a broad range of
industries through Workiro's deep integration into ERP systems, with an
initial focus on Oracle's NetSuite application. NetSuite's installed base of
over 38,000 enterprise customers provides a considerable market opportunity
for Workiro, with the broader cloud ERP market being significantly larger.
Product development continues apace, ensuring we are meeting the capability
and security requirements of larger enterprise customers, deepening our
integration with NetSuite and putting in place the building blocks for further
additional integrations in ERP and CRM.
Our go-to-market activities are now dominated by Workiro. Our presence at
Accountex, the world's largest accounting and finance technology exhibition,
was entirely under the Workiro brand, showcasing the Group's most advanced and
scalable content workflow technology to our core market and customer base.
Migration of customers from Virtual Cabinet to Workiro, typically generating
an additional 20% of revenue per user (and in many cases considerably more),
has gained a reasonable momentum and we are exploring ways to automate
substantial parts of the process, providing customers with as seamless a
migration experience as possible and reducing the overhead burden.
Within the combined Workiro and Virtual Cabinet business, Workiro accounted
for over 75% of the annual contract value of new orders in H1, with average
selling price about 50% higher than for new business within Virtual Cabinet.
Partners, and particularly those on our platinum tier, contributed a little
more than 50% of new business. Partnerships enable us to leverage domain
expertise from those partners in a wider variety of industries, enabling us to
identify high-value vertical markets served by NetSuite that have complex
content workflow requirements that Workiro can solve. We are seeing
particular strength in the mid-tier US accounting firm market through our
integration with PracticeERP, which provides a customised NetSuite instance
for CPA firms; Workiro's origins from within Virtual Cabinet, which pioneered
document management software for accountants, lends significant credibility to
the offering.
ARR of £9.7m, was up 1% on 30 June 2023, a result of new business being
offset by higher than usual churn, principally a result of mid-market
accounting firm consolidation and the mandating of specific cloud technology
stacks, the decisions for which were made before Workiro was a credible
alternative. Of that, Workiro ARR was £0.4m at 30 June, up over 150% since
the start of the year.
Financial review
Group H1 2024 H1 2023 Change
Reported currency Constant currency
ARR at 30 June £21.0m £20.1m 4% 5%
Recurring revenue £10,354k £10,102k 3% 4%
Total revenue £10,739k £10,521k 2% 4%
Adjusted EBITDA £403k £164k 149%
Adjusted loss before tax £(334)k £(603)k 45%
Paying users at 30 June 66,424 69,208 (4)%
ARPU at 30 June £316 £291 9% 9%
Net revenue retention 99.7% 100.5% (0.8)%
Recurring revenue was up 4% at constant currency (3% at reported currency) to
£10.4m (H1 2023: £10.1m), with growth in the US, through SmartVault,
tempered by flat performance in the UK and ANZ (which comprises Virtual
Cabinet and Workiro).
ARR, which is our recurring revenue runrate, grew by 5% at constant currency
to £21.0m (30 June 2023: £20.1m), and is up 3% at constant currency since
the start of the year. ARR growth over H1 was largely from higher ARPU as a
result of expansion revenue (driven by the Accounting Unlimited plan in
SmartVault and the migration of customers from Virtual Cabinet to Workiro).
ARPU was up 6% at constant currency since 1 January 2024 to £316. As
described more fully in note 1, we have restated historic user count and ARPU
numbers following a review of the method used to collect that data.
Net revenue retention of 99.7% per month was an improvement on H2 2023
(99.5%), with the reduction compared to H1 2023 (100.5%) due the comparative
period containing the impact of the final set of UK customers moving to the
Virtual Cabinet Unlimited pricing plan.
Non-recurring revenue of £0.4m was in line with H1 2023, taking total revenue
to £10.7m (H1 2023: £10.5m), up 2% (4% at constant currency).
Gross margin of 89.3% (H1 2023: 89.9%) reflects the greater proportion of
revenue from our cloud products, principally SmartVault and Workiro, as
opposed to on-premise products for which there is very little ongoing cost of
sale.
SG&A costs of £7.6m were tightly controlled (H1 2023: £7.7m).
Investments in customer acquisition in SmartVault have been tempered to
reflect new business performance, although we retain the ability to flex this
spend to the circumstances should we see a significant increase in demand.
Total development expenditure was down a little at £2.3m (H1 2023: £2.4m),
although headcount remains consistent and the reduction simply reflects
currency differences.
Adjusted EBITDA was £0.4m (H1 2023: £0.2m), whilst Adjusted Loss, which is
stated before development capitalisation, was £(0.3)m (H1 2023: £(0.6)m).
Depreciation and amortisation increased to £0.6m (H1 2023: £0.4m) as a
result of an additional year of capitalised costs relating to Workiro, which
only started to be capitalised in 2022.
The credit for long-term incentive costs of £0.3m (H1 2023: charge of
£0.3m), reflects modifications made to the SmartVault Leadership Incentive
Plan to make reward under the plan entirely contingent on an acquisition by a
third party.
Cashflow and working capital
H1 is typically a cash absorptive period for the Group as a result of the
seasonality of cash receipts for annual customer renewals, which are heavily
weighted towards Q4. H1 2024 had some additional pressures on cash compared
to the comparative period:
· Historically we have received our research and development tax
credit in H1. Due primarily to changes in HMRC's documentation requirements,
and a lengthier process to submit our claim, our 2023 claim for approximately
£0.6m had not been received by 30 June 2024; and
· The acquisition of SmartPath included £0.2m of upfront cash
investment.
These pressures were mitigated to an extent by a smaller reduction in deferred
revenue compared to H1 2023.
Net cash at 30 June 2024 was £0.2m (30 June 2023: £1.7m), comprising £0.9m
of cash and £0.7m of drawn loan facilities.
The £2m revolving credit facility is committed until February 2027.
Consolidated income statement
For the six months ended 30 June 2024
H1 2024 H1 2023 FY 2023
Note £'000 £'000 £'000
Unaudited Unaudited Audited
Revenue 3 10,739 10,521 21,112
Cost of sales (1,144) (1,058) (2,095)
Gross profit 9,595 9,463 19,017
Operating costs (9,535) (10,176) (19,389)
Net finance costs (69) (69) (137)
Loss before tax 3 (9) (782) (509)
Loss before tax (9) (782) (509)
Depreciation and amortisation on owned assets 624 408 941
Long-term incentive costs (315) 262 312
Social security on long-term incentives 55 61 21
Non-underlying costs - 173 196
Finance costs not related to leases 47 42 84
Adjusted EBITDA 402 164 1,045
Capitalised development costs (737) (767) (1,674)
Adjusted loss before tax (335) (603) (629)
Tax 124 140 202
Profit/(loss) for the period attributable to owners of the Company 115 (642) (227)
Profit/(loss) per share (pence)
Basic 4 0.23 (1.28) (0.45)
Diluted 4 0.21 (1.28) (0.45)
Consolidated statement of comprehensive income
For the six months ended 30 June 2024
3 2 2
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Unaudited Unaudited Audited
Profit/(loss) for the period 115 (642) (227)
Other comprehensive items that may be subsequently reclassified to profit or
loss
Currency movement on net investment 10 - 158
Exchange differences on translation of foreign operations net of tax (84) 168 42
Other comprehensive income/(loss) net of tax (74) 168 200
Total comprehensive income/(loss) for the period 41 (474) (27)
Consolidated balance sheet
At 30 June 2024
21
30 June 30 June 31 December 2023
2024 2023
£'000 £'000 £'000
Unaudited Unaudited Audited
Non-current assets
Intangible assets 3,959 3,144 3,620
Goodwill 625 - -
Right of use assets - leases 742 995 913
Property, plant and equipment 236 345 299
5,562 4,484 4,832
Current assets
Trade and other receivables 1,975 2,001 1,867
Current tax receivable 888 426 610
Cash and bank balances 928 1,659 1,942
3,791 4,086 4,419
Total assets 9,353 8,570 9,251
Current liabilities
Trade and other payables (3,087) (3,719) (3,585)
Deferred revenue (6,345) (6,021) (6,544)
Provisions (559) (545) (504)
Lease liabilities (341) (373) (423)
Current tax payable (131) (361) (146)
(10,463) (11,019) (11,202)
Non-current liabilities
Loan payable (750) - -
Lease liabilities (618) (904) (741)
Contingent consideration (489) - -
Provisions - - (326)
(1,857) (904) (1,067)
Total liabilities (12,320) (11,923) (12,269)
Net liabilities (2,967) (3,353) (3,018)
Equity
Share capital 76 76 76
Share premium account 3,018 3,018 3,018
Demerger reserve (3,085) (3,085) (3,085)
Retained earnings (2,977) (3,362) (3,027)
Equity attributable to shareholders of the parent (2,967) (3,353) (3,018)
Consolidated statement of changes in equity
For the six months ended 30 June 2024
Share premium account
Share capital Demerger Retained earnings
reserve Total
H1 2024 Unaudited £'000 £'000 £'000 £'000 £'000
At 1 January 2024 76 3,018 (3,085) (3,027) (3,018)
Profit for the period - - - 115 115
Currency movement on net investment - - - 10 10
Exchange differences on translation of foreign operations, net of tax - - - (86) (86)
Total comprehensive income for the period - - - 39 39
Long-term incentive costs - - - 12 12
Total transactions with owners of the Company - - - 12 12
At 30 June 2024 76 3,018 (3,085) (2,976) (2,967)
Share premium account
Share capital Demerger Retained earnings
Reserve Total
H1 2023 Unaudited £'000 £'000 £'000 £'000 £'000
At 1 January 2023 75 3,018 (3,085) (2,986) (2,956)
Loss for the period - - - (642) (642)
Exchange differences on translation of foreign operations, net of tax - - - 168 168
Total comprehensive income for the period - - - (474) (474)
Issue of ordinary shares 1 - - - 1
Long-term incentive costs - - - 98 98
Total transactions with owners of the Company - - - 98 99
At 30 June 2023 76 3,018 (3,085) (3,362) (3,353)
Share premium account
Share capital Demerger Retained earnings
Reserve Total
2023 Audited £'000 £'000 £'000 £'000 £'000
At 1 January 2023 75 3,018 (3,085) (2,986) (2,978)
Loss for the year - - - (227) (227)
Other comprehensive income, net of tax - - - 200 200
Total comprehensive income for the year - - - (27) (27)
Issue of ordinary shares 1 - - - 1
Equity-based long-term incentive credit - - - (14) (14)
Total transactions with owners of the Company 1 - - (14) (13)
At 31 December 2023 76 3,018 (3,085) (3,027) (3,018)
Consolidated cash flow statement
For the six months ended 30 June 2024
H1 2024 H1 2023 FY 2023
£'000 £'000 £'000
Unaudited Unaudited Audited
Profit/(loss) for the period 115 (642) (227)
Finance costs 50 42 137
Income tax credit (124) (140) (282)
Depreciation of property, plant and equipment 85 82 169
Depreciation on right of use asset - leases 197 179 316
Amortisation of intangible assets 539 326 772
Long-term incentive (credits)/costs (260) 323 312
(Increase)/decrease in receivables (113) 103 172
Decrease in payables (208) (235) (584)
(Decrease)/increase in provisions (271) - 271
(Decrease)/increase in deferred revenue (247) (639) (114)
Cash (used in)/generated by operations (237) (601) 942
Net income taxes (paid)/received (207) 628 519
Interest paid (50) (42) (84)
Net cash (used in)/from operating activities (494) (15) 1,377
Purchases of property, plant and equipment (23) (45) (90)
Purchases of other intangible assets (25) (217) (232)
Acquisition (204) - -
Capitalised internal development costs (737) (767) (1,674)
Net cash used in investing activities (989) (1,029) (1,996)
Principal portion of lease payments (208) (179) (371)
Interest on lease liabilities (23) (27) (53)
Proceeds on issue of shares - 1 1
Draw down of loan facility 750 - -
Net cash (used in)/from financing activities 519 (205) (423)
Net decrease in cash (964) (1,249) (1,042)
Cash and bank balances at beginning of period 1,942 2,972 2,972
Effects of foreign exchange rates (50) (64) 12
Cash and bank balances at end of period 928 1,659 1,942
Net cash reconciliation
At 1 January 2024 Cash flow Interest accretion Foreign exchange movement At 30 June 2024
£'000 £'000 £'000 £'000 £'000
Finance lease liability (1,163) 231 (23) (4) (959)
Cash and cash equivalents 1,942 (964) - (50) 928
Loan payable - (750) - - (750)
Net cash / (debt) (including lease liabilities) 779 (1,483) (23) (54) (781)
Notes to the financial information
1. General information
These interim financial statements are for the six months ended 30 June
2024. 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 2023.
These financial statements are presented in pounds sterling because that is
the currency of the country in which the Group has its stock market listing
and where most of its investors reside.
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 2023
were authorised for issue by the Board of Directors on 25 March 2024. 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 2023, in which our full
set of accounting policies, including critical judgements and key sources of
estimation uncertainty, can be found.
Alternative performance measures and glossary of terms
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.
Long-term incentive costs. Judgement is applied in calculating the fair
value of long-term incentives, including share options, and the subsequent
charge to the income statement, which may differ significantly to the cash
impact in quantum and timing. The impact of potentially dilutive share
options is also considered in diluted earnings per share. Therefore,
excluding long-term incentive costs from Adjusted 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. For transparency, we exclude the impact of capitalising
development costs from Adjusted 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.
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. This is achieved by re-stating the comparative
figure at the exchange rate used in the current period.
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, plus the
annual value of any contracted but not implemented customer contracts.
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.
Restatement of paying users and ARPU
Following a review of the way the volume of paying users is captured in the
Group's reporting systems, it has been identified that in some circumstances
deactivated users or other non-paying users were being included incorrectly in
the Group's paying user count. The Group is therefore restating previously
reported paid user count information, and the related Group ARPU figures, as
shown in the table below. There is no impact on the Group's revenue in any
period and no customers have been billed for deactivated or otherwise
non-paying users as a result of this error.
30 June 2020 31 Dec 2020 30 June 2021 31 Dec 2021 30 June 2022 31 Dec 2022 30 June 2023 31 Dec 2023
Paid users 64,387 65,691 66,844 69,378 68,855 69,342 69,208 68,227
ARPU (£) 203 209 208 228 262 277 291 301
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 2024 Unaudited UK USA AUS/NZ Total
£'000 £'000 £'000 £'000
Recurring revenue 4,020 5,433 901 10,354
Non-recurring revenue 110 263 12 385
Revenue from contracts with customers 4,130 5,696 913 10,739
Cost of sales (1,144)
Gross profit 9,595
Sales, general and admin costs (7,609)
Development costs (2,320)
Adjusted loss before tax (334)
Capitalisation of development costs 737
Adjusted EBITDA 403
Depreciation and amortisation on owned assets (624)
Long-term incentive costs 315
Social security on long-term incentives (55)
Other finance income / (costs) (47)
Loss before tax (8)
H1 2023 Unaudited UK USA AUS/NZ Total
£'000 £'000 £'000 £'000
Recurring revenue 3,941 5,179 982 10,102
Non-recurring revenue 155 251 13 419
Revenue from contracts with customers 4,096 5,430 995 10,521
Cost of sales (1,058)
Gross profit 9,463
Sales, general and admin costs (7,701)
Development costs (2,365)
Adjusted loss before tax (603)
Capitalisation of development costs 767
Adjusted EBITDA 164
Depreciation and amortisation on owned assets (408)
Long-term incentive costs (262)
Social security on long-term incentive costs (61)
Non-underlying costs (173)
Other finance income / (costs) (42)
Loss before tax (782)
2023 Audited UK £'000 USA AUS/NZ Total
£'000 £'000 £'000
Recurring revenue 7,979 10,407 1,925 20,311
Non-recurring revenue 295 458 48 801
Revenue from contracts with customers 8,274 10,865 1,973 21,112
Cost of sales (2,095)
Gross profit 19,017
Sales, general and admin costs (14,807)
Development costs (4,839)
Adjusted loss before tax (629)
Capitalisation of development costs 1,674
Adjusted EBITDA (1,045)
Depreciation and amortisation on owned assets (941)
Long-term incentive costs (312)
Social security costs on long-term incentives (21)
Non-underlying costs (196)
Other finance income / (costs) (84)
Loss before tax (509)
4. Loss per share
The calculation of loss per share is based on the profit for the period of
£115k (H1 2023: loss of £642k, 2023: loss of £227k).
Weighted number of shares calculation H1 2024 H1 2023 FY 2023
'000 '000 '000
Unaudited Unaudited Audited
Weighted average number of ordinary shares 50,571 50,175 50,378
Effect of potentially dilutive share options in issue 3,200 n/a n/a
Weighted average number of ordinary shares (diluted) 53,771 50,175 50,378
Loss per share H1 2024 H1 2023 FY 2023
pence pence pence
Unaudited Unaudited Audited
Basic 0.23 (1.28) (0.45)
Diluted 0.21 (1.28) (0.45)
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