Sopheon positive on transition to SaaS-focussed model

Enterprise software company Sopheon updated the market on its outlook on Thursday, as its recent acquisition of Solverboard accelerated our software-as-a-service (SaaS) strategy.

The AIM-traded firm, which was holding its annual general meeting, said Solverboard's “multi-tenant” SaaS product was used by both “individual innovators” and “product professionals”, and was sold using an online, product-led model.

It said it expected to further develop Solverboard's product sales-led distribution capabilities and introduce additional Sopheon products to be sold through the Solverboard channel by the end of the year.

In parallel with its strategic progress, Sopheon said it was continuing to deliver growth in its core business.

Since the start of the year, it had closed six new customer wins, compared to 10 in the whole of 2021.

All six were SaaS, while annual recurring revenue had risen to $21.7m from $19m a year ago, and gross retention holding above 98% on a year-to-date basis.

The board said those metrics demonstrated “continued success” with the company’s transition towards a more recurring revenue model, in turn improving its multi-year visibility and predictability.

A lower share of one-off revenue contributions from perpetual and consulting sales year-to-date meant that full-year visibility for recognisable 2022 revenue was currently at $28m, a similar level a year ago.

Confidence in the firm’s full-year performance was being sustained by a sales pipeline that included several major extensions with existing customers, alongside a growing list of new prospects, the directors explained.

Net cash at the end of May stood at $25m, compared to $23m year-on-year, which Sopheon said underlined its “cash-generative nature” and ability to execute.

“Sopheon's shift towards a pure-play SaaS model and associated annual recurring revenue growth is moving forward as planned, supported by delivery of two key acquisitions in ROI Blueprints and most recently Solverboard,” said chairman Andy Michuda.

“We see growing commercial traction on both sides of the Atlantic, responding to our broader product offering and our more assertive marketing investment, and we remain focused on exploring other additive merger and acquisition opportunities.”

At 1151 BST, shares in Sopheon were down 1.21% at 550p.

Reporting by Josh White at Sharecast.com.