In today’s more detailed trading update, Sopheon has confirmed its brief statement in early January that revenue and profit for FY 2017E will exceed market expectations. As well as providing an anticipated revenue figure above U$28 million, it states that both EBITDA and pretax profits will be ‘significantly ahead of current market expectations.’ Today’s update notes that volume of transactions increased with a greater number of license deals and new SaaS customers – and Q4 contained two substantial deals. Sopheon ended 2017 with net cash of U$9.5 million. The group has a higher recurring revenue base and greater revenue visibility overall. We adjust FY 2017E numbers to reflect the guidance given today, driving a 31% increase in our Adjusted EBITDA estimate to U$6.9 million. We also adjust estimates for December’s conversion of loan stock and that is the only influence on our estimates for subsequent years where we retain a conservative stance and note future investment in the Accolade platform. We will look to revisit those estimates when further detail is available at the time of the results announcement.
Sopheon states that the final quarter of 2017 included the signing of two substantial deals in the USA and Germany reflecting the increasing recognition of the wide range of applications for the Accolade platform.
The update notes that licenses sold in 2017 included applications for Accolade beyond its traditional innovation ‘footprint’ – such as capital expenditure management, IP management, IT project and portfolio management and enterprise initiative management.
The Group recorded 59 license deals during 2017 compared to 49 in the prior year. Three new SaaS customers added to recurring revenue alongside the more traditional perpetual license sales.
The update highlights that overall revenue visibility for 2018 is currently U$18 million compared to U$13 million a year ago. This reflects closed license orders including those conditional on client acceptance, contracted services business, and recurring maintenance, hosting, SaaS and rental streams.
Predominantly as a result of the conversion of the loan stock in December, the year end net cash position of U$9.5m (2016: $4.2m) is ahead of our expectation of U$6.9 million and our revised estimates reflect that improved position.