UNIT4 Group, the global leader in software that supports business change, has reported its financial results for 2013.
• Total revenue increased by 4.4% to €490.5 million (2012: €469.8 million)
• FinancialForce.com revenue increased 85% with annual run rate up 80% to $30.6 million
• EBITDA, excluding FinancialForce.com and costs related to the potential public-to-private acquisition of UNIT4, rose 14.7% to €109.3 million (2012: €95.3 million)
SaaS and subscription revenues continued to show a strong upward trend, with growth of 42.3% compared with 2012. Traditional perpetual product revenue showed a small decline of 5.5% to an amount of €72.2 million. The strong growth in SaaS and subscription resulted in growth in the annual run rate of SaaS and subscriptions from €57.0 million at year-end 2012 to €79.4 million at year-end 2013, an increase of €22.4 million or approximately 40%.
The trend towards SaaS and subscription is clearly evident and UNIT4 is actively shifting towards this model. Increasing numbers of potential customers are considering moving to the cloud, including for full ERP suites, and UNIT4 is able to meet that demand.
In 2013 total revenue grew by 4.4% to €490.5 million (2012: €469.8 million). Total recurring revenues now represent almost 54% of total revenues (2012: 52%).
2013 saw strong growth group-wide in SaaS and Cloud based solutions, and UNIT4 is well positioned to further benefit from the rapid market trend away from traditional on-premises systems.
In the UK we enjoyed significant success from a strategic partnering model which we are now seeking to develop across the group. The UK’s long-term partner strategy delivered major joint initiatives. Following a contract with arvato, Agresso became the cloud based platform for the UK Government’s first independent shared service centre. The BT Global Services contract for London Tri-Boroughs shared service saw Agresso again delivered via an outsourced cloud based service.
In North America SaaS revenues grew 41%. We continued to build momentum in key service sectors including non-profit, financial services and local government, with successes including a $2.3 million agreement with the City of Medicine Hat.
In Germany we signed significant local government contracts and successfully went live on Agresso in four Saxony state organizations in less than six months. We signed up more than 20 new partners to implement and resell UNIT4 solutions.
In Spain and Portugal, the Ekon cloud business grew by 60% while Agresso sales were up 80% including contracts at Randstad in Portugal and Kutxa Bank in Spain.
In Benelux, the Business Software division made significant progress in Higher Education (signing Wageningen University & Research Centre, its first University), healthcare, the commercial sector, the Belgian government sector and with Agresso Wholesale. The Accountancy division added 175 new customers while the Healthcare division achieved double digit growth and proved successful in larger organizations including Stichting Philadelphia and Cicero Zorggroep.
In Sweden strategic deals included the City of Gothenburg and HSB GIT and cloud sales continued strongly. A record year in Norway saw double digit growth and 31 new customers, including 13 in local government and 10 resulting from a new focus with partner IT-Nor on fast growing SMEs mainly in the oil service sector. In Denmark revenue grew 79% with SaaS up 30%. Agresso was sold to one of the country’s largest companies.
In France we bought our distributor Agresso France, and consolidated three operations into a single entity. Even with all this change license revenue grew 25%.
In Asia, we saw a remarkable 50% growth in licenses and 35% growth in SaaS. UNIT4 Prosoft’s HRMS introduced Chinese payroll capabilities, which will open up more market opportunities in the region.
FinancialForce.com, the US-based cloud applications company formed with minority investment from salesforce.com, again grew strongly in 2013. Investment in FinancialForce.com was increased to support the growing momentum and opportunities in the fast-growing cloud applications market.
Total revenue grew 85%, with the annual run rate in December 2013 (including services) reaching $30.6 million, compared to $17.0 million in December 2012 (+76%) and $21.5 million in June 2013. This illustrates how strongly growth accelerated in the last few months, where only limited revenues could be recognized. The number of new customer deals was up more than 50% over 2012, with growth achieved across the small business, mid-market and enterprise sectors. Notably, FinancialForce.com’s penetration of the enterprise market increased, particularly with its Billing and PSA applications. The number of customers using both core applications – Accounting and Professional Services Automation (PSA) – more than doubled and deal size (annual run rate) also grew.
In order to drive growth staff numbers increased 60% in 2013 to 250 FTEs across the US, UK and Spain and investment in marketing grew by more than 75%. In November, the company moved closer to providing a full cloud ERP with two acquisitions: Vana Workforce, a global human capital software provider and maker of a leading HR application on the Salesforce platform; and the business and assets of Less Software including the firm’s Supply Chain Management (SCM) solutions. The applications have been re-branded FinancialForce Human Capital Management (HCM) and FinancialForce Supply Chain Management (SCM) respectively. FinancialForce.com can now offer companies a unified set of applications sharing the same cloud as Salesforce CRM including Financial Management, Professional Services Automation, Supply Chain Management and Human Capital Management.
On 18 November 2013 UNIT4 and Al Avocado B.V., a company ultimately indirectly controlled by funds advised and managed by Advent International Corporation, jointly announced that they had reached conditional agreement on the intended public offer for all issued and outstanding ordinary shares in the capital of UNIT4 at an offer price of EUR 38.75 (cum dividend) in cash per issued and outstanding ordinary share of UNIT4 (the “Offer”). The Offer Memorandum was published on 20 December 2013. The Offer values 100% of the UNIT4 shares at EUR 1,172 million. The Offer condition in relation to competition clearance has been satisfied following regulatory clearance from the European Commission and the Federal Trade Commission and Antitrust Division of the US Department of Justice in connection with the Offer. An extraordinary general meeting of shareholders shall be held at 15:00 hours on 19 February 2014. Holders of shares in the capital of UNIT4 shall have the opportunity until 28 February 2014 at 17:40 hours CET to tender their shares under the Offer, unless the Offer period is extended.
Commenting on the future, UNIT4’s new CEO, José Duarte said: “Business change is the norm now and it’s accelerating. Business agility is not something most ERP software has traditionally provided. Enterprise IT infrastructures were built to last, not built to change, but vendors have to re-architect and re-imagine software to enable and support change. Social, mobile, analytics, and cloud are the four megatrends impacting most business. Our recent Agresso Milestone 4 software launch signifies a new era of ERP built for people-centric businesses, innovating with new social and mobile technologies, analytics and cloud. We’re in a strong position to capitalize on these trends based on the most change-friendly software on the market and we’re excited about the future.”
The full announcement is available on the UNIT4 Investor News site.