Sopheon, the international provider of software, expertise, and best practices for enterprise innovation management solutions, holds its Annual General Meeting (“AGM”) today. The Board takes this opportunity to give shareholders the following update and review of the business.
2021 in review
Our 2021 performance was gratifying both for the strategic progress we made and for exceeding our financial market expectations despite the continued market uncertainty. Both recognized revenues and annual recurring revenues (“ARR”) grew by approximately 15% to $34.4m and $20.7m respectively. We remind shareholders that we are on a journey of transition from a traditional perpetual software license business to a higher-quality recurring revenue business. The goal is to deliver more predictable and reliable growth over the medium term; in the shorter term, this transition naturally weighs on profits as we accelerate go-to-market investment while simultaneously shifting software revenue recognition from an up-front to a rateable model. It was therefore very encouraging to also show continued profitability with both EBITDA and net cash growing. In addition to our financial results, 2021 was a year of unusually high activity and change for Sopheon. We appointed a new CEO, Greg Coticchia, and also strengthened our leadership team with appointments in key marketing, sales, and product areas. We have introduced and driven three key programs to support our strategic direction to:
- Transition our customer base and new sales engine to Software-as-a-Service (“SaaS”). By year end, 90 percent of the new customer pipeline by value was SaaS focused.
- Embrace a multi-product future by introducing new cloud-based applications. These new applications are intended to drive lead generation for our Accolade enterprise solution, as well as being stand-alone solutions that solve individual and workgroup productivity needs. At year end we completed the acquisition of ROI Blueprints, which is already playing a material role in both existing and new customer opportunities.
- Extend market reach beyond the very largest customers and thereby improve scalability and predictability. We made significant investments in marketing which are already increasing our metrics for market reach, prospect engagement and ultimately lead generation.
2022 update and outlook
Our most recent acquisition of Solverboard, announced in May 2022, accelerates our SaaS strategy from both functional and go-to-market perspectives. Solverboard's multi-tenant, SaaS product is used by both individual innovators and product professionals, and is sold using an online, product-led model. Solverboard brings the innovation and product needs of professionals together so that they can focus on addressing front-end innovation challenges, by helping companies dynamically find, align, test and deliver the best innovation and product ideas from employees and customers. We expect to further develop Solverboard’s product sales led distribution capabilities and introduce additional Sopheon products to be sold through the Solverboard channel by the end of the year.
In parallel with our strategic progress, we have continued delivering growth in our core business. Since the start of the year, we have closed six new customer wins – compared to ten in the whole of 2021. All six were SaaS. ARR has risen to $21.7m compared to $19m a year ago, and gross retention has held above 98% on a year-to-date basis. These metrics demonstrate continued success with our transition towards a more recurring revenue model – which in turn improves our multi-year visibility and predictability. A lower share of one-off revenue contributions from perpetual and consulting sales year to date means that full year visibility for recognizable 2022 revenue is currently at $28m, a similar level to this time last year. Confidence in our full year performance is sustained by a sales pipeline that includes several major extensions with existing customers, alongside a growing list of new prospects. Net cash at the end of May stood at $25m compared to $23m at this time last year, underlining our cash generative nature and our ability to execute.
Sopheon’s Chairman Andy Michuda said: “Sopheon’s shift towards a pure play SaaS model and associated ARR growth is moving forward as planned, supported by delivery of two key acquisitions in ROI Blueprints and most recently Solverboard. We see growing commercial traction on both sides of the Atlantic, responding to our broader product offering and our more assertive marketing investment, and we remain focused on exploring other additive M&A opportunities.”
For further information contact:
|Andy Michuda (Executive Chairman)
Arif Karimjee (CFO)
|Sopheon plc||+ 44 (0) 1276 919 560|
|Carl Holmes/ Edward Whiley (Corporate Finance)
Alice Lane (ECM)
|finnCap||+ 44 (0) 20 7220 0500|
Sopheon (LSE: SPE) partners with customers to provide complete Enterprise Innovation Management solutions, including software, expertise, and best practices, that enable them to achieve exceptional long-term revenue growth and profitability. Sopheon's Accolade solution provides unique, fully-integrated coverage for the entire innovation management and new product development lifecycle, including strategic innovation planning, roadmapping, idea and concept development, process and project management, portfolio management, and resource planning. Sopheon's solutions have been implemented by over 250 customers with over 60,000 users in over 50 countries. Sopheon is listed on AIM, operated by the London Stock Exchange.