Acquisition boosts software firm’s revenue and profit but challenges remain
Software provider Proactis Holdings is expecting to report substantial increases in revenue and profit, boosted by the contribution of a firm it acquired for £94.3m last year, but said challenges in other parts of the business remain.
The acquisition of Perfect Commerce, creating the fifth largest player in the market by revenue, has prompted the Wetherby-based business to expect revenue of approximately £52.0m, up from £25.4m in 2017, and adjusted profit before tax of £11m, up from £5.1m.
However, the group said it continues to monitor its customer retention performance carefully after enduring exceptional losses which it reported in April.
“The group’s customer retention performance has improved in H2 2018 following the exceptional losses reported in the interim results and advanced notifications of termination are now running at levels which the board considers to be more normal,” the company said.
Deal intake for the year was strong, the firm said, with 64 new names secured with a total initial contract value of £8.7m and 120 upsell deals with a total contract value of £3.6m.
The company, which earlier this month also agreed to acquire Netherlands-based procurement software business Esize for £13.5m, said: “The above factors provide the board with confidence that the group will return to normal, stronger rates of revenue growth during the year ending 31 July 2019 and the pipeline of opportunity remains strong for the longer term.”
Net debt as at July 31 2018 is expected to be approximately £29.3m.
Hamp Wall, CEO of Proactis, said: “I am encouraged by the progress made and expected out turn for the year which, although reduced from what I had anticipated coming into the new group, signifies a very substantial business with excellent potential. Proactis has a strong position across all key territories and is well positioned in a growing marketplace.
“Our acquisition of Perfect Commerce has enabled us to create a platform that can deliver sustainable organic growth and our organisational structure is now set for the group to realise the opportunities that we set out at the start of the business combination process and which remain substantial.
“Our new business performance is as strong as we had planned for and our retention performance is recovering after a disappointing period. The new name and upsell performance was strong in both volume and value and this gives me confidence that we will see a return to sustainable organic growth and strong cash generation with a significant opportunity for enhancement in North West Europe following our acquisition of Esize.”
