Trading Update
30/01/2023 07:00
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RNS Number : 1768O Sopheon PLC 30 January 2023
SOPHEON PLC
("Sopheon", the "Company" or the "Group")
TRADING UPDATE
Sopheon, the international provider of software and services for Innovation
Management, is pleased to provide the following trading update for the year
ended 31 December 2022.
We are pleased to report that we expect revenues for the year ended 31
December 2022 to be in line with market expectations at approximately $36.5m
(FY2021: $34.3m). On a constant currency basis, revenues would comfortably
exceed market expectations.
The Board considers Annual Recurring Revenue ("ARR(1)") as the driver for long
term growth and therefore its primary growth metric and focus. ARR at the end
of 2022 is expected to reach approximately $24.3m (FY2021: $20.7m)
representing solid growth of 17.5% over 2021, in a challenging market
environment. Adding ARR to contracted consulting services means revenue
visibility(2) for 2023 is already $28m, compared to $23.4m at this time last
year.
Adjusted EBITDA is expected to approach $7m (2021: $6m) comfortably exceeding
market expectations, after absorbing the write down of $1.6m in costs
previously capitalized in connection with the Group's original next-generation
cloud platform, in light of the two recent acquisitions. The stronger than
expected profitability was driven by several factors including careful cost
management.
Net cash on 31 December 2022 was $21m (2021: $24m). A large part of this
reduction reflects a fall in the Dollar value of Euro and Sterling cash
deposits due to currency movements, the extended payment terms for the US Navy
contract announced in July, as well as the impact of acquisition payments.
These impressive financial results were achieved in conjunction with major
strategic accomplishments. We integrated two acquisitions and have launched
three software-as-a-service (SaaS) products under the Acclaim™ banner:
Acclaim Ideas (formerly Solverboard), Acclaim Projects (formerly ROI
Blueprints), and Acclaim Products. The launch of these new solutions expands
Sopheon's addressable market by an estimated $2bn and reinforces the Company's
competitive advantage.
As evidenced by the impressive ARR growth achieved in the year, we have
embedded our transition to a SaaS recurring revenue model, in line with our
strategy. All but one of our 16 new customers in 2022 contracted on a SaaS
basis, and we converted an additional 13 existing customers from perpetual to
SaaS. With these advances under our belts, we have now determined that our
strategic, operational, and financial goals are best served by completing this
transition to SaaS as soon as practically possible. This means that we intend
to sell all new customers as SaaS, and any existing customer extensions will
be used as an opportunity to convert to SaaS. Accordingly, we expect perpetual
license sales to fall in 2023 and 2024, offset by growth in ARR. Due to
revenue recognition timing differences between SaaS and perpetual license
sales, this will slow revenue and profit development in 2023, but should
accelerate ARR growth - delivering traction and more predictable growth in
subsequent years, with a higher quality of revenue.
Financial expectations noted above are preliminary, and subject to year-end
financial close and audit review processes. In line with our normal reporting
schedule, Sopheon plans to issue its results for the year ended 31 December
2022 on 24 March 2022.
Sopheon's Chairman, Andy Michuda commented: "I am very proud that the company
has delivered such strong commercial and financial performance - while also
absorbing two acquisitions, transitioning our core business model and
launching a set of new products. We have now expanded our end-to-end
capability to operationalize innovation, offering immediate value to both
corporate executives as well as their supporting cross-functional teams,
expanding our addressable market. We have made big strides in our transition
to a SaaS model, and the benefits are becoming clear in our ARR and visibility
development. As I said in our half year report, this is one of the most
exciting periods in my time at Sopheon, and I am delighted to now share such
strong evidence of that sentiment.
For further information contact:
Andy Michuda (Chairman) Sopheon plc + 44 (0) 1276 919 560
Arif Karimjee (CFO)
Carl Holmes / Abigail Kelly / George Dollemore (Corporate Finance) finnCap Ltd + 44 (0) 20 7220 0500
Alice Lane / Sunila de Silva (ECM)
About Sopheon. Sopheon (LSE: SPE) provides complete Innovation Management
software and expertise to help customers achieve exceptional long-term revenue
growth and profitability. Sopheon's Accolade and Acclaim offerings deliver
unique, fully integrated coverage for the entire innovation management and
product development life cycle. Sopheon's leadership in innovation management
was highlighted in the comprehensive MarketsandMarkets™ report on the
Innovation Management Market where Sopheon was listed in the "Stars" category,
the highest recognition. Sopheon's solutions have been implemented by over 200
customers with over 125,000 users in over 50 countries. Sopheon is listed on
AIM, operated by the London Stock Exchange. For more information, please visit
www.sopheon.com (http://www.sopheon.com) .
(1) ARR is the annual value of all ongoing contracts for SaaS, hosting and
maintenance in force at the measurement date including pending renewals but
excluding confirmed terminations
(2) Revenue visibility is defined on page 7 of Sopheon's 2021 annual report
which is available from the investor section of www.sopheon.com
(http://www.sopheon.com) .
Sopheon(®), Accolade(®) and Acclaim™ are trademarks of Sopheon plc. All
other trademarks are the property of their respective owners.
The information communicated in this announcement contains inside information
for the purposes of Article 7 of the Market Abuse Regulation (EU) No.
596/2014 as it forms part of United Kingdom domestic law by virtue of the
European Union (Withdrawal) Act 2018 (as amended) ("UK MAR").
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