SysGroup board posts revenue dip but says future bright in AI and machine learning

Liverpool headquartered hosting and cyber security business SysGroup has posted half yearly revenues slightly down on last year, but claims a strategic investment in AI and machine learning will reap rewards in the longer term.

During the period for the six months ended 30 September 2023, SysGroup made revenue of £10.96m, a decrease of 3% from £11.32m. 

Claiming this is “consistency” and that it reflects growth in Truststream, a cyber security business it acquired in April 2022, and counterbalances a decrease in traditional SysGroup revenues.  

Notably, managed IT services now constitute 84% of revenues, an increase from 75% last year. The results were in line with a trading update at the beginning of November.

The company posted “Adjusted EBITDA” of £1.57m, maintaining a margin comparable to last year.

Heejae Chae

Heejae Chae, executive chair, who took over earlier this year, warned that short term impacts of the investment may hit the bottom line.

“Our strategy aims to position SysGroup as the go-to end-to-end data solution provider for small and medium sized businesses (“SMB”) embarking on their AI/ML journey,” he said. 

“AI’s prominence is undeniable with daily media coverage and increasing demand for AI strategies at the board level of every company.  We recognise a significant market gap: while many SMBs are eager to adopt AI/ML, they often lack a clear strategy or implementation path. There is a great demand for a partner to support their development of an AI/ML strategy and transition from the current platform.”

He went on to say that the business has made “significant investments” in technology and people. “We have recruited a team of ML engineers from industry leaders such as AWS, JP Morgan, Validus and McLaren.  We have significantly strengthened the senior management team to help take us on this journey, bringing together the right skillsets and mindsets,” he said. 

He said many providers claim to be AI/ML experts but lack the capability to provide an end-to-end solution.  “Traditionally, most IT providers specialise in specific technology stacks.  AI/ML strategy requires a holistic approach where the outcome is delivered from both software and hardware solutions.  Over 80% of all AI projects fail because they have not taken a holistic approach, for example, by not defining the correct business case or not employing appropriate data architecture framed by the right technology infrastructure.  Whilst gaps still exist in our offerings, we believe that we have the framework to build our strategy, underpinned by the relationship with our customers.”

He added: “Throughout the organisation, we are reinforcing a culture of customer focus and outstanding service underpinned by innovation, entrepreneurialism and high performance. Whilst we are at the early stage of our journey, I am excited at the potential of what we are building at SysGroup combined with the considerable unexploited market opportunity that lays ahead of us.

“Finally, the core business, which has more than 80% recurring revenues provides a very solid base from which we can expand, giving us very good revenue certainty and visibility, albeit that in the short term we may see our overall bottom line performance impacted marginally, reflecting the investment we are making in the Company to drive revenue growth in future financial years.”

Click here to sign up to receive our new South West business news...