("Sopheon" or the "Company")
Sopheon, the international provider of software, expertise, and best practices for enterprise innovation management solutions, holds its Annual General Meeting ("AGM") today. Given the Coronavirus situation, Shareholders are not expected to attend the meeting in person, and were encouraged in the notice to submit a proxy vote. The Board takes this opportunity to give shareholders the following update and review of the business.
2020 in review
We were proud to report a growth in contractual bookings in a year of unpredictability and unparalleled disruption. Revenue at $30m matched 2019, showing resilience, and several transformational indicators showed rising commercial traction, even in the face of two separate headwinds - the pandemic introduced new challenges to sales and retention; and our strategy to make selling new SaaS contracts a priority. Transition to SaaS contracts reduces revenue recognition in the first year compared to traditional perpetual licenses, trading this for a higher quality and predictable ongoing recurring revenue stream in the future. In spite of these challenges, Total Contract Value (TCV) of sales booked in the year was up almost a quarter, and we nearly tripled the TCV of new SaaS contracts booked. Six of the new deals signed exceeded $1m in initial TCV, and Annual Recurring Revenue (ARR) closed at $18m, an historic high up from $15.9m a year ago. As always, much of this activity concentrated into the fourth quarter. Retention was impacted during the initial stages of the pandemic, then rebounded later in the year. We achieved this while delivering a solidly profitable and cash generative year, also reporting new highs in cash balances and closing net assets. In parallel, we embarked on the development of new cloud-native products, which will bring value to personal and workgroup productivity alongside the corporate value points we are well known for. In addition, in early 2021, we introduced new leadership with the appointment of Greg Coticchia as CEO, Andy Michuda moving to the executive chairman role with a particular focus on partnerships and acquisitions, and Barry Mence stepping back to become a non-executive director. Our dividend was maintained at 3.25p per share, and is proposed to shareholders in today's meeting.
Since the start of the year, under Greg's leadership we have continued to execute on our transformational strategy. This is exemplified by the recent appointments of Mike Bauer as Chief Product Officer, John Beischer as Americas VP of Sales, and Ann Marie Beasley as Chief Marketing Officer. Each one of these appointees bring an impressive track record and their experience, creativity, and drive will be valuable assets to Sopheon during this exciting period of transformation and growth. Mike has introduced over 100 products to market in his career, and offers deep experience in creating cloud-based solutions working across a range of companies, from start up to established enterprise such as Avnet and 3Com. John has led transformation efforts at various companies, from emerging enterprises to industry powerhouses like IBM and has an impressive record of creating and expanding industry leading go-to-market distribution channels in competitive and complex marketplaces. Ann Marie boasts an exceptional track record for developing and executing successful marketing strategies at companies like Allscripts, CA Technologies and Symantec.
Another milestone was the launch of Accolade® for Smart Products, the first innovation management solution to bring together traditionally siloed software and physical product development - a new SaaS-based solution that enables companies to develop innovative digitally-enabled physical products in a new collaborative and efficient way with speed.
We are pleased to report 27 software transactions closed so far this year, of which just under half were SaaS related. So far these have been mainly customer extension deals and smaller in size - metrics we expect to balance out through the year as normal with some new and larger deals in the pipeline. Customer retention has been strong; and coupled with new orders, ARR has risen above $19m compared to $18m at the end of 2020. Visibility for the full year 2021 now stands at $28m, compared to $23.2m at the time of our AGM announcement last year, which is very encouraging. In parallel with this continued evidence of commercial traction, we continue to see a strong appetite for innovation solutions. With our new senior appointments, we are undertaking a detailed review of our sales pipelines as companies work to find the new norm of conducting business post Covid. We are already seeing the benefits of alternative approaches and fresh ideas. Net cash at the end of May was $23.3m (2020: $21.3m), though a seasonal peak always occurs this time of year, it underlines our financial strength. These commercial and financial proof points give us the confidence to proceed with our strategy both in terms of operational expansion - we continue to hire and invest for growth - and with continuing our search of the right M&A candidates.
For further information contact:
Andy Michuda (Executive Chairman)
+ 44 (0) 1276 919 560
Carl Holmes/Edward Whiley (Corporate Finance)
+ 44 (0) 20 7220 0500
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
About Sopheon. 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. For more information, please visit www.sopheon.com.