Trading Update and Notice of Interim Results
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF UK MARKET ABUSE REGULATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT THIS INSIDE INFORMATION IS CONSIDERED TO BE WITHIN THE PUBLIC DOMAIN.
12 August 2021
("Checkit" or the "Group")
Trading update and Notice of Interim Results
Checkit plc (AIM: CKT) announces an unaudited trading update for the six months to 31 July 2021:
Three months to (Q1)
Three months to (Q2)
Six months to (HY)
30 Apr 2020*
30 July 2020*
Total Checkit Connect
Checkit Connect US (Tutela LLC)**:
Total Checkit BEMS (Non-recurring)
* Prior year revenue has been normalised to illustrate sales that would have been included in the Group's financial results had Tutela LLC, which was acquired on 4 February 2021, been fully owned by the Group throughout both periods. Excluding the acquisition of Tutela LLC, prior year Group revenue was £6.4m
** Checkit Connect US is introduced as a new reporting unit and is shown in GBP on a statutory reported basis at an average rate of 1.39 USD/GBP (2020: 1.25 USD/GBP)
Overall Group revenue grew by 13% and recurring revenue by 31% compared to the prior year on a normalised* basis.
Annual recurring revenue (ARR) saw an increase of £0.9m (+16%) in the half year to close at a run rate of £6.6m, predominantly driven by new subscription contracts going live with customers.
This segment is the growth engine of the Group and receives all the investment in new product development.
Reported recurring revenue growth continues to reflect the benefits of year-on-year ARR growth realised in the quarter.
Increased spending on the Group's sales, marketing and product has reinforced Checkit's value proposition, particularly in the Healthcare and Food Retail industries, where Checkit is seeing early signs of success in terms of pipeline growth and new customer bookings as COVID-19 restrictions ease.
The decline in non-recurring revenue compared to the first half of FY21 is primarily driven by timing and the on-going repositioning towards a subscription-based pricing model adopted across the Group during FY21.
Checkit US (Tutela LLC)
Checkit US has been introduced for FY22 reporting purposes and reflects the performance of the newly created US based business unit incorporating the acquisition in Q1 of Tutela LLC. It should be regarded as a subsegment of Checkit Connect.
While US revenue declined slightly by 2% in the first half, this included 13% growth in recurring revenue, which was driven by new subscriptions.
The US market is starting to scale up by recording net new business success in the Healthcare sector and through on-going pricing conversions of existing customers into a subscription-based model. The Food Retail and reviving Hospitality sectors are also a focus for new business.
Checkit BEMS (building energy management systems)
The focus of this business segment will increasingly be on smart building technology through the Checkit Connect platform and when its transformation is complete, it is expected that this business unit will be merged with Checkit Connect.
Checkit BEMS sales grew by 19% compared to the prior year. This was due to a one-off significant project delivered in Q1. Its revenues are expected to decline in the second half as a result of being more selective in pricing contracts. The Board considers that its traditional projects and maintenance business (which has historically generated low margins) has peaked as a percentage of revenue.
Cash as at 31 July 2021 was £8.5m (31 January 2021: £11.5m).
Notice of Interim Results
The Group expects to issue its interim results on Thursday 16 September 2021.
Checkit plc +44 (0) 1223 643313
Kit Kyte (Chief Executive Officer)
Singer Capital Markets (Nominated Adviser & Broker) +44 (0) 20 7496 3000
Shaun Dobson / Rachel Hayes / George Tzimas
Forward looking statements
This announcement contains forward looking statements with respect to the business, strategy and plans of Checkit plc and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about Checkit or management's beliefs and expectations, are forward looking statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Checkit's actual future results may differ materially from the results expressed or implied in these forward-looking statements as a result of a variety of factors among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. The forward-looking statements contained in this announcement are made as of the date hereof, and Checkit undertakes no obligation to update any of its forward-looking statements.