Delivering our transformation SDL plc (“SDL”, “the Group” or the “Company”), a leader in global content management and language translation software and services, announces its unaudited interim results for the six months ended 30 June 2017.
- Revenue from Continuing Operations up 15.5% to £139.1 million (1H16: £120.4 million), up 4.9% at constant currency
- Language Services revenue up 19.3% to £89.5 million (+8.9% at constant currency)
- Language Technologies revenue up 17.5% to £22.8 million (+6.0% at constant currency)
- Global Content Technologies revenue up 2.6% at £26.8 million (down 7.7% at constant currency), against strong prior period perpetual licence fees
- Adjusted PBITA for Continuing Operations was £8.0 million, Total Adjusted PBITA £4.9 million (1H16: Continuing Operations £11.6 million, Total £9.5 million)
- Language Services PBITA £5.4 million (1H16: £8.8 million) and margin 6.0% (1H16: 11.7%), as a result of investment and higher short-term use of freelancers to meet the growth in the period
- Technology Divisions Continuing Adjusted PBITA £2.6 million (1H16: £2.8 million)
- Adjusted Continuing Operations Earnings Per Share of 6.95p (1H16: 12.10p) ¬
- Cash generated from Continuing Operations before One-off items of £1.6 million (1H16: £14.4m). Cash absorbed by total operations of £6.1 million (2016: Cash generated from total operations: £6.4million)
- Period-end net cash increased to £26.1 million (30 June 2016: £13.3 million), following the sale of Non-Core businesses
£15.1m cash on balance sheet £0.1m disclosed in Assets held for sale
Profit Before Interest, Tax and Amortisation, adjusted for one-off items and disposal of non-core businesses
- Good progress against our 2017 plan to transform the sales and productivity engines of the business
- 22 cross-sell deals and 77 up-sell deals (1H16: 29 cross sell, 84 up-sell)
- 21 deals in Life Sciences, Marketing Solutions and Machine Translation (1H16: 12)
- Premium Services revenue £15.4 million (1H16: £10.5 million; Full Year 2016 £22.5 million )
- Technology ARR (Annual Recurring Revenue) up 6.0% to £63.5 million at 30 June 2017 (30 June 2016: £60.0 million); Language Services RRR (Repeat Recurring Revenue) 93% on a Last Twelve Months basis (1H16: 93%)
- Linguist utilisation 50.5% (1H16: 50.0%, Full Year 2016: 48.5%)
- Launch of Machine Translation solution for the commercial market, ‘Enterprise Translation Server’, and Neural MT towards the end of the period
- Automation programme on track. First phases now being rolled out across the business and a number of elements brought forward by approximately six months
- Management team has continued to be strengthened, including the appointment of Jim Saunders as Chief Product Officer
Commenting on the results and the outlook for the second half, Adolfo Hernandez, CEO of SDL, said:
“In 2016, we set out a clear 3-year strategy to deliver a sustainable return to higher rates of earnings growth over the medium to long term, through a renewed go-to-market strategy, a major systems transformation programme and investment in innovation.
In the first half, we clearly demonstrated that, with the right focus, SDL can drive its top line. We have performed well against our sales KPIs, in particular by growing the Life Sciences segment and in Asia. These customers have high long-term value to the Group. However, this sales growth has come ahead of the operational efficiencies we are investing to deliver and has incurred higher costs of servicing, predominantly through the use of freelancers. We do not expect the impact of these higher costs in the first half to be recoverable in the second half.
We do expect an improved profit performance in the second half. However, the first half performance has underlined the importance of the actions already under way to invest in our turnaround. We have therefore made the considered decision to maintain our investment plans for the second half. As a result, we expect margins, on an improving revenue performance, to be slightly below those we achieved in the second half of 2016.
Our market opportunity is more exciting than ever, as we deploy our technologies and services to help our customers to manage, translate and deliver localised content on a global scale. We are confident that we have the right strategy to succeed.”