Ideagen recurring revenue rises in year of growth

by | May 13, 2021

Compliance software company Ideagen reported a year of “continuing growth” on Thursday, both organically and by adding three “significant” acquisitions.
The AIM-traded firm said it closed the year ended 30 April in a “robust” financial position, despite the challenges brought by the Covid-19 pandemic.

As a software-as-a-service (SaaS) business, the board said it considered recurring revenue as its primary metric, with annualised recurring revenue recognised during the year expected to rise to £54.2m from £43.1m, representing 83% of total revenues, up from 76% in the prior year.

The annualised recurring book of contracted revenue to be recognised over the coming 12 months increased by 50% during the year to £69.3m, which the company put down to “strong” organic growth of about 13%, in addition to acquisitions.

It said it was expecting to report total revenue up 16% at £65.6m, and adjusted EBITDA up 24% to £22.9m.

Organic growth was driven by both customer expansion and new customer logo wins across verticals including life sciences, healthcare and financial services.

The group won 557 new customers in the period, including KPMG, Sands Las Vegas, St. James Place, Bank of Greece, Staffordshire County Council, Covance and Morningside Pharmaceuticals.

Cash generated by operations during the year was expected to be more than 105% of adjusted EBITDA, resulting in a gross cash balance at 30 April of £9m and gross bank borrowings of around £20m.

The group said it was in an “excellent position” to fund organic growth and pursue its strategy of acquiring businesses that would extend or reinforce its position in the compliance software for regulated industries market, with a “robust” balance sheet and net bank debt at period end of £11m.

It said it had extended total available debt facilities to £100m through a new committed credit facility of £75m, with an approved but uncommitted accordion facility of up to £25m, on enhanced commercial terms.

That replaced Ideagen’s previous banking facilities of up to £50m.

Its board said it was confident in the group’s prospects for the future based on structural drivers in the sector, as well as continued execution of the company’s strategy.

“Growth in organic and recurring revenue, in addition to excellent cash generation, reflects Ideagen’s resilience during the pandemic,” said chief executive officer Ben Dorks.

“As a SaaS business, we remain focussed on growing recurring revenues and expanding our customer base.

“We continued to execute our strategy, achieving growth organically and through acquisitions, and I am grateful to our team for their effort this year.”

The directors also confirmed that Richard Longdon was succeeding David Hornsby as chairman in a non-executive capacity from Thursday.

Longdon joined Ideagen after a career in the technology sector, having spent 33 years with Aveva Group, where he was chief executive officer for 17 years until December 2016.

Hornsby was retiring as chairman and stepping down from the board, having led the company as chief executive since 2009 and as executive chairman since 2018.

“We are excited to welcome Richard as our new chairman,” Ben Dorks added.

“He brings extensive experience from the technology sector and we look forward to his contribution to the company in his new role.”

Ideagen said it would announce its preliminary full-year results on or around 22 July.

At 1107 BST, shares in Ideagen were down 1.41% at 279p.

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