REG - itim Group PLC - Trading Update

ITIMAnnouncement

10/02/2023 07:00

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RNS Number : 4630P  itim Group PLC  10 February 2023

itim Group plc

("itim" or "the Company" and together with its subsidiaries "the Group")

Trading Update

itim Group plc, a SaaS based technology company that
enables store-based retailers to optimise their businesses to improve
financial performance, is pleased to provide the following unaudited trading
update for the financial year ended 31 December 2022.

 

Financial highlights

 

·    Increased revenues are in line with current market expectations at
approximately £14.0m (2021: £13.5m)

 

·    Annual recurring revenue ("ARR") at the year-end is approximately
£13.0m (2021: £11.1m)

 

·    EBITDA for the year is expected to be circa £0.2m below current
market expectations at approximately £0.2m (2021: £2.2m) with a similar
impact in the pre-tax loss outturn

 

·    The Group ended the year with cash balances of £3.9m with no
outstanding loans.

 

In the year ended 31 December 2022, the Group showed steady revenue growth of
4.5% increasing from £13.4m to £14.0m, with subscription revenues
representing 84% of total turnover (2021: 77%). Since the IPO in mid-2021, the
Group has ramped up its sales effort and ARR which increased from £11.1m in
2021 to £13.0m in 2022. The Group's pipeline for 2022 was strong, although
contract conversion continued to be a risk given the prevailing economic
climate while sales were challenged by a slowdown in decision-making at the
enterprise level. Many of the Group's prospects have moved into 2023 and with
the macro-economic challenges of 2022, it was too early to see the benefits of
the investment feeding through to top line performance.

 

The Group has signed two new retailers during the year and has also
experienced growth in the existing customer base. This year, management has
put in place a streamlined team which will target a smaller number of
high-value, high-margin deals, with a focus on developing enterprise corporate
accounts to improve long-term ARR. With close to 80 customers using all or
some elements of our Retail Suite platform, this provides itim with a stable
recurring revenue base and a good mix of UK and international growing
revenues.

 

In the current market conditions, the Group's core products have continued to
perform well but risk remains around the pace of growth of our enterprise
offering, where budgets are under pressure.

 

After admission to trading on AIM, the Board adopted a strategy that most SAAS
businesses use, which is to finance projects ourselves to drive growth by
offering to do the transition onto our platform at no cost. Consequently, the
Group increased its cost base to allow for this and EBITDA subsequently fell
to £0.2m from £2.2m in 2021. The Board increased its investment in its head
count to support implementation projects in 2023, in addition, wage inflation
has been higher in our sector because of the acute shortage of technology
resources.

 

itim's focus is now on improving margin and cash generation with the Group
targeting an improvement in the adjusted EBITDA margin during the current
financial year before moving substantially higher from 2024. To do so, the
Company will be pivoting away slightly from the strategy proposed during IPO
and focussing on achieving greater revenues and increasing our margins for our
services that will consequently improve EBITDA over time.

 

Ali Athar, Chief Executive officer, commented; "I am pleased to report steady
revenue growth, increased ARR, as well as growth in our existing customer base
for the year ended 31 December 2022. The Board has invested heavily in the
period which has impacted the bottom line in the short term, however, the
Group's renewed focus is on margin enhancement and cash generation as it looks
to further build shareholder value. Selling additional services into our
considerable existing client base is bearing fruit as we continue to see an
increased demand for our products. The Board will continue with investments in
its next-generation products during 2023 and expects to experience an
acceleration in ARR growth in the UK. As a result, we are confident about the
outlook for the business."

This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR").  Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.

Enquiries:

 

 Itim Group plc                   Ali Athar, CEO      0207 598 7700

                                  Ian Hayes CFO

 WH Ireland (NOMAD & Broker)      Katy Mitchell       0207 220 1666

                                  Harry Ansell

                                  Darshan Patel

 IFC Advisory                     Graham Herring      0207 3934 6630

                                  Florence Chandler

 

ABOUT ITIM

itim was established in 1993 by its founder, and current Chief Executive
Officer, Ali Athar. itim was initially formed as a consulting business,
helping retailers' effect operational improvement. From 1999 the Company began
to expand into the provision of proprietary software solutions and by 2004 the
Company was focused exclusively on digital technology. itim has grown both
organically and through a series of acquisitions of small, legacy retail
software systems and associated applications which itim has redeveloped to
create a fully integrated end to end Omni-channel platform.

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