Sopheon has announced results for calendar 2019 in line with January’s trading update on revenue and ahead of our expectations at the Adjusted EBITDA level, demonstrating the strong finish to the year and continuing delivery on the group’s growing market opportunity. Clearly the outlook for 2020 is entirely shrouded in short-term uncertainty. Consequently, we choose to leave revenue and profit estimates unchanged for now, but will look to revisit them in due course. For the same reasons, we are not introducing 2021 estimates at this point. The group remains very well positioned in our opinion, with strong products and a robust cash balance.
2019 results Although down on the prior year, the group delivered a resilient result for FY 2019 in a tricky year, reporting an improvement over the first half performance in H2 as management had signalled. Confidence in the underlying strength of the business prompts a maintained dividend despite the tough 2019.
Revenue visibility for 2020 and cash strength Revenue visibility for FY 2020E currently stands at $21.2m compared to $20.6m at this time a year ago. In future, Sopheon expectsto focus more on ARR rather than visibility as a metric of progress, and recurring revenue rose to $15.9m from $14.8m at the start of the year.
Forecasts Given the Coronavirus impact and uncertainty, we choose not to introduce 2021 estimates at this point (which would have been our usual practice). We are not, however, making any specific changes to our 2020 revenue or profit forecasts – clearly these are now subject to additional risk and uncertainty, but to effect a specific reduction at this point would suggest a degree of spurious accuracy. We will await further developments in the spread of the disease and its impact, and look to revisit estimates in due course.
Sopheon has delivered a strong finish to 2019 – not enough to completely offset a weaker start to the year, but clearly demonstrating effective delivery against a major market opportunity. The current Coronavirus pandemic is bound to impact near-term performance, but we believe the business to be well positioned with its c.$20m cash balance, and once normality returns, we believe Sopheon will continue to find strong demand for its products in an expanding range of end markets.