Trading Update
15/08/2023 07:00
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RNS Number : 2886J Instem plc 15 August 2023
15 August 2023
Instem plc
("Instem", or the "Company")
Half Year Trading Update
Instem plc (AIM: INS), a leading provider of IT solutions to the global life
sciences market, announces a trading update for the six months to 30 June 2023
("H1 2023").
Financial Highlights
Revenue for H1 2023 is expected to be in the region of £29.7m (H1 2022:
£27.0m), an increase of approximately 10.2%, with recurring software revenue
growing by 27%. This excludes Samarind Limited, which was sold on 1 April
2023 and will be classified as a discontinued operation in the H1 2023 results
statement. Annual Recurring Revenue ("ARR") at 1 July 2023 was c.£41m (1 July
2022: £32m). Overall performance was broadly in line with management
expectations.
Closing cash at 30 June 2023 was £8.4m (30 June 2022: £10.3m), after £5.8m
of deferred consideration paid in H1 2023 in relation to certain of the
Company's previous acquisitions. The Group's balance sheet remains strong,
retaining the flexibility to execute on acquisition opportunities as they
arise. The Board is currently appraising a healthy pipeline of opportunities
progressed to various stages.
Operational Highlights
The Company commenced the next phase of its development, positioning itself at
the forefront of the growing Artificial Intelligence ("AI") opportunity with
an increased focus on in silico solutions as part of a blended growth
strategy, building on the relationships and fundamentals of the established
business.
The transfer of the ToxHub Platform (the "Platform") and launch of Centrus®
announced in May 2023 enables existing and new clients to utilise a single
repository from which to unlock new knowledge through the application and
deployment of cutting-edge algorithms.
The Company also renewed its long-standing agreement with the National
Toxicology Program ("NTP"), run by the US National Institute of Environmental
Health Sciences ("NIEHS") during the period - providing further potential for
Instem to broaden its in silico presence. The size and scale of this extension
underpins increased revenue visibility.
Post period end, the Company grew its Provantis footprint further, with
Altasciences signing a three-year subscription order worth $3.1m. This follows
the acquisitions of Calvert Labs and Sinclair Research by Altasciences and the
subsequent decision to standardise on Provantis and to transition from
on-premises deployment to Instem's cloud-based solutions, increasing its
Provantis user licences from 250 to more than 600.
Outlook
The Company remains optimistic about the growth potential having positioned
itself to provide solutions across the entire drug discovery and development
life cycle. The in silico growth opportunity, in particular, is expected to
increase as the Company addresses the pressing market need to reduce the cost
and time of life sciences research and development, leveraging the integration
of "Toxhub" data and technology into its existing Centrus suite.
As in 2022, it is expected that revenue growth will be second half weighted
benefitting from increased software recurring revenue, predominantly from new
business already secured and the reliable renewal of contracts with current
clients.
With an increasing number of customer touch points and cross selling
opportunities management is confident that Instem's performance will be
broadly in line with the Board's expectations for the full year.
Phil Reason, Instem CEO, commented: "We are delighted with the continued
momentum we are seeing, advocating our acquisition strategy and highlighting
our standing across the drug research and development lifecycle. We believe
there is significant potential to continue driving value and look forward to
building on the Company's growing market reach."
For further information, please contact:
Instem plc Via Walbrook
Phil Reason, CEO
Nigel Goldsmith, CFO
Singer Capital Markets (Nominated Adviser & Broker) +44 (0) 20 7496 3000
Peter Steel
Alex Bond
Stifel Nicolaus Europe Limited (Joint Broker) +44 (0) 20 7710 7600
Ben Maddison
Richard Short
Walbrook Financial PR +44 (0) 20 7933 8780
Tom Cooper instem@walbrookpr.com
Nick Rome
Joe Walker
About Instem
Instem is a leading IT solutions & services provider to the life sciences
market, radically reducing the cost and time taken for drugs to come to market
across the discovery and development lifecycle. Its workflow software and data
science solutions are targeted at increasing life science R&D efficiency,
and are currently used by over 700 customers worldwide, including the largest
25 pharmaceutical companies.
Instem provides a compelling set of solutions - with more than 50% of global
preclinical drug safety data collected over the past 20 years using its
software. The Company is focused on increasing touchpoints across the drug
development lifecycle - from discovery and non-clinical testing through
clinical trials and up product launch. It is positioning itself at the
forefront of broader market trends - with the aim of monetising growing demand
for data insight that leverages artificial intelligence ("AI") and in
silico-based solutions.
Its AI solutions include predictive data analytics, simulation and modelling,
with a current total addressable market of over £600m, a serviceable
addressable market of c.£150m and multiple opportunities to grow. The Group's
broader portfolio helps clients collect, analyse, report and submit data to
regulatory agencies with confidence and to reveal new insights from public and
proprietary data with a total addressable market worth close to £2.0bn.
It has an established client base and is well positioned to grow revenues from
existing and new clients. Its blended growth strategy will build on strong
relationships and fundamentals with growing levels of high margin SaaS
revenues underpinning continued profitable growth.
To learn more about Instem solutions and its mission, please visit
www.instem.com
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