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It’s been a while since Salesforce made a major acquisition, so it is rectifying that with the huge $6.5bn purchase of MuleSoft.  The cash and stock deal, which is expected to close in July 2018, is the largest Salesforce has undertaken. It will form the basis of a new Salesforce service – Salesforce Integration Cloud.

MuleSoft, who IPO’d in 2017, provides a cloud based API integration platform. It can discover and connect APIs with the aim of streamlining the flow of data by connecting applications and data sources, across clouds and on-premise environments. Salesforce wants to use it to “drive deep and intelligent customer experiences throughout a personalized 1:1 journey”.

Data integration capabilities of this type are in demand. Boomi, who provides similar capabilities to MuleSoft was snapped up by Dell. Other specialists in the market include SnapLogic and Jitterbit while Apple offers Lattice.io. From the IaaS sector, Dimension Data has an offering; Microsoft and Oracle represent a batch of software and cloud platform suppliers with similar capabilities.

12-year old MuleSoft is similar to Salesforce in that it is an in-demand, fast growing, cloud pure play. Its 1200 customer base includes Barclays, Unilever and Coca-Cola. Although it is growing - Q4 sales were up 60% to $89m - it is making heavy losses ($25.5m in Q4 compared to $12.8m in the year ago quarter) but without the scale of someone like Salesforce to bear them.

It looks like a good fit with Salesforce, who will be able to extend its range of services (important in reaching its next growth target of $20bn from its current $10bn position - see More of the successful same from Salesforce in FY18). MuleSoft’s data integration capabilities will also complement Saleforce’s extensive investments in AI/machine learning which are showcased under Einstein (see the HotViews archive here).

Softcat’s first half revenue grew 25% yoy to £472m, as the value added reseller (VAR) saw strong customer demand for its security, data storage and compute solutions.

Gross profit was up 22% to £75m and operating profit rose 15% to £24m. Whilst customer numbers grew 6%, gross profit per customer was up 15% indicating Softcat is doing a good job of upselling additional products and services to its existing client base.

The company remains debt free with a cash balance of £43.3m, impressive considering the opening of a “modest” new office on the south coast in October and an expansion of its Manchester premises.

Q218 now represents Softcat’s 49^th quarter of successive growth, and the primary aim of new chief executive Graeme Watt (who takes up the role in April) will be to continue that momentum after Martin Hellawell ends his 11 year tenure to become non-executive chairman.

H1 saw double digit revenue growth across all of Softcat’s business lines and customer segments. Turnover from hardware sales grew 30% yoy to £165m, software 24% to £240m and services 16% to £68m during the six month period. But demand for cyber security products and services from public sector and corporate clients was particularly strong (subscribers to SecureConnectViews can read our Cyber Security Market Trends & Forecasts 2017-2020 report to find out why we think that is).

The company also noted significant interest in its data storage and compute solutions to support analytics and business intelligence provision, partly driven by the need to audit, classify, process and store information in preparation for the EU’s forthcoming General Data Protection Regulation (see GDPR: Opportunities and Recommendations for UK SITS Suppliers).

We expect that trend to continue during the rest of 2018 despite the May deadline for GDPR compliance, and like Softcat management are confident that the VAR’s planned move into the Irish market and increased headcount will help fuel further expansion during the year.

The number of groups investing in tech companies in UK and Ireland rose to a record high in 2017, according to latest data published by Ascendant Corporate Finance. There were over 700 active investment groups funding UK/Irish tech deals last year, about one-third more than in 2016. Crowdfunding sites, which really didn't register on the UK investment radar till 2014, now represent 12% by number, although funding levels were relatively small. As usual, corporate investors were the biggest segment, involved in just over 20% of the deals.

Subscribers to the TechMarketView Foundation Service can read our regular quarterly summaries of venture funding in the UK software and IT services sector in IndustryViews Venture Capital, or just search on ‘funding' in the UKHotViews archive.

And don't forget, if you are not a subscription service client but would like to get full, searchable access to our entire UKHotViews archive (and more!), just sign up for our new UKHotViews Premium service. It's ridiculously good value for anyone with skin in the UK tech game looking for TechMarketView's incisive commentary on companies and trends in the sector.

Resolving stood out at our recent Great British Scaleup programme event as a fast-growing SME with a genuinely unique offering and inspirational founder.

When CEO & founder James Walker’s boiler broke down in 2012 and he was faced with the challenge of claiming compensation from British Gas, he was inspired to found Resolving. Two years later, the Resolver product was launched offering users a fast, simple and fair way to get their issues resolved by connecting consumers and businesses (for more on how they do this or to lodge your own complaint see here).

In 2015, Resolver became the first brand to co-brand with consumer champions MoneySavingExpert – a true endorsement - and it has continued to go from strength to strength. The SME has grown to become the UK’s second largest consumer orientated website and Resolver is now recommended by a broad range of regulators, ombudsmen, charities and government bodies in the UK. It has resolved over £750m of issues over the last three years, all without a marketing budget.

Key to Resolving’s success is its strong, principled ethos, which is reflected in its ambitious mission statement: “Championing better outcomes for everyone.” The site has no advertising, yet the service is free to consumers and the business vehemently protects its independence ensuring that it has no incentive to increase the number of complaints going through the system. (In fact, businesses that use Resolver find the number of spurious claims decline dramatically, reducing complaints raised by as much as 44%). It’s built a brand that is trusted by both consumers and businesses as a result.

All of this would be admirable purely as a not for profit initiative, but Resolving does make money from its four commercial services. Indeed, revenues have grown six-fold over the last year and are on track to quadruple next FY as the SME expands its services in the UK and embarks on a ‘land grab’ mission in international markets, starting with the US. Little wonder then that Resolving has already attracted the attention of financial backers, raising £3m of Series A financing in 2016 from Draper Esprit and Touchstone Innovations (see Resolver has no complaints about fundraising) and a further £6m from the same sources in a Series B round that closed yesterday.

We believe Resolving has the potential to be a true Great British Scaleup, building an independent resolution service internationally, and we look forward to following its progress as it scales in the months and years ahead. 

Hewlett Packard Enterprise yesterday announced several offerings aimed at helping organisations to start adopting Artificial Intelligence (AI).

HPE Digital Prescriptive Maintenance– which can automate problem prevention in industrial equipment – is the first in a series of “AI-optimised” industry solutions delivered by the firm’s Pointnext business. There is huge potential for AI-enabled asset maintenance to significantly reduce costs and improve service levels (in utilities firms, for example). While those improvements will vary by organisation, for some the changes could be transformational.

In addition, Pointnext has launched AI Transformation Workshops, whereby its expert consultants will help customers get started with AI. And also announced yesterday was HPE’s powerful Apollo 6500 Gen10, a next-generation High Performance Computing (HPC) system that can enable AI deployments.

The offerings above are examples of a much broader move by HPE to deepen its position in higher growth markets (or markets with potential to be so). While there was incredible media noise around the company's various spin-offs (HP Enterprise Services merging with CSC to form DXC, and Software being sold to Micro Focus, all following the division of HP into HP Inc and HPE), HPE's acquisitions and product developments have gone on more quietly but show great potential. Take for example its acquisition of Cloud Technology Partners, which boosted its capability (largely in the US to begin with) around cloud migration. As a result, HPE is now working with Virgin Money to help create proof of concept for an analytics and big data platform among other things.

We have started to see progress in HPE’s quarterly performance, with improvements in execution, cost take-out, and some up-lift from the market all contributory factors (see HPE closes first quarter under new CEO). Furthermore, the company's developments in Hybrid IT and the Intelligent Edge (both organic and inorganic) should in theory provide fuel for further growth going forward.

I'm still wondering whether the weak link in what otherwise sounds like a useful survey tool is that the video captured on Birmingham-based startup Voxpopme's platform has to be manually transcribed if you want to get full value from its video analytics software. Voxpopme claims to be able to translate over 80 languages so it sounds like bases are covered – I assume by transcribers in low-cost regions.

Founded in 2013, Voxpopme undertook a number of seed funding rounds, and in November 2017 Mercia Fund Management took a stake through one of its third-party manged funds. Mercia has now promoted Voxpopme to its direct investment 'emerging stars' portfolio (i.e. on the Mercia Technologies plc balance sheet), investing a further £1m for a 12.3% stake in the business.

Mercia is on a bit of a video kick of late, with investments in Gorilla in the room (no, seriously) and Luminous. Its punt on Voxpopme is interesting given the recent stake taken by international research giant, Ipsos, in London-based, AIM-listed video analytics startup Big Sofa Technologies (also, seriously), which valued the company at £15m.

Smile, everyone, you're on camera – and every facial twitch is being analysed!

It's been over three years since its last funding round (see Crowdsourced OpenSignal sources another $4m) and this time it's doubled up. Octopus Ventures has led an $8m Series B funding round in London-based, crowdsourced mobile signal mapping startup OpenSignal. Previous backers Qualcomm Ventures, O’Reilly AlphaTech Ventures and Passion Capital also participated. According to PitchBook, OpenSignal's A round valued the company at some $15.5m post-money.

OpenSignal's network of data collectors (i.e. us if we've downloaded the app) now extends to over 100m smartphones in over 200 countries around the world. According to TechCrunch, OpenSignal also integrates with certain third-party apps, extending its reach of sensors. The article also notes that OpenSignal has since dumped its weather-tracking app.

What's not clear to me is how OpenSignal makes money. Its website refers to 'business solutions' that allude to tools to prevent revenue leakage to competitors, so I assume it charges mobile operators for more detailed data and analysis than is provided free. That sounds like a finite market to me, so I'm not sure what will fuel OpenSignal's growth once a majority of the mobile operators have signed up. Obviously Octopus is, though!

Troubled Imaginatik, the innovation software platform and consultancy company (it says it helps businesses remain innovative) who kicked off a strategic review in February that included exploring the potential for a sale, has confirmed it has received several approaches. Talks are progressing with “certain parties” and while a sale is not guaranteed, the outcome of the process is expected by the end of May.

Due to the nature of the business, there is a lag between sales and revenue and with 2017 revenue of just £3.9m, that situation is difficult to deal with. Despite new customer sign-ups, performance was disappointing in 2017 and so far in 2018 with revenue struggling and Imaginatik still in the red (see here).

As for potential buyers, IT services suppliers offering innovation services and innovation labs (and their variants) must be in the frame as the platform and the consultancy staff could be valuable tuck-in assets. Imaginatik has a fairly new partnership with an unnamed global IT and Services supplier that has started to generate business so this could be one of the ”certain parties” involved in talks.

Sanne Group the Jersey-based outsourced fund administrator, grew revenue in 2017 by 77% to £113.2m (£63.8m in 2016), with organic growth of 14%. Underlying operating profit increased by 76% to £38.8m (2016: £22.0m).

Acquisitions have been a big part of Sanne’s development since its IPO in 2015 as it looks to build scale and expand its geographic footprint. 2017 saw efforts to integrate the acquisitions made the previous year such as the £50m purchase of New York-based FLSV Fund Administration Services LLC (FAS). New acquisitions were made in both Mauritius and Luxembourg, broadening its capabilities and geographic footprint.

It looks like acquisitions will continue to support growth with the announcement that current CFO Spencer Daley will be taking up a new role of Head of M&A and Strategy, with a remit for maximising both organic and inorganic opportunities. James Ireland will succeed Daley as CFO joining in June from Investec plc.

The Group won some £21m worth of new business in 2017 (£13.8m in 2016) and boasts of a strong pipeline within its core alternatives business (Debt, Real Estate, Private Equity and Hedge) and its corporate and treasury business lines for 2018.

Sanne now employs more than 1,200 people across 15 locations and its strong performance is being helped by an increasing drive, by asset managers and institutions, to outsource their corporate and fund administration activities. They are looking to external providers like Sanne to offer support around new regulation, cross-border investment and the growing expectation of independent oversight.

As expected, Sopheon the AIM-listed enterprise innovation management provider, reported full year revenues for 2017 of over $28m, up from $23m in 2016 (Sopheon's shares rocket on strong finish to 2017). EBITDA also increased to $8m up from $5.6m in 2016.

Sopheon experienced a very strong second half to 2017 with some big deals signed in the final quarter reflected in its share price, now up some 80% since the beginning of January.  

Sopheon’s offer is built around its traditional Accolade platform, and its newer ‘out-of-the-box’ Accolade Express for quicker time to value, both of which are proving popular with clients reflected in the signing of Fifty-nine license transactions last year (49 in 2016), 13 with new customers. Sopheon now serves over 200 customers with over 60,000 users in 50 countries.

A growing preference for its SaaS offering is strengthening its recurring revenue base and this along with the strong sales activity towards the end of 2017 has resulted in visible revenue for 2018 now at $19.3m as compared to $14.5m last year.

Sopheon is a business that has been making good progress for some time and is set up nicely for 2018, reflected in its decision to pay its maiden dividend.

Full year results (year ended 31 December 2017) show education software and services supplier Tribal Group has returned to statutory profit for the first time since 2013.

Revenue for the year fell 6% to £84.9m (2016: £90.3m). The bulk of this decline is a result of its Early Years inspection contract with Ofsted concluding in March 2017 (see Tribal’s improving fortunes). Revenue relating to continuing operations increased by 6.5% to £81.9m (2016: £76.9m). Recurring revenue increased by 5% to £37.5m (2016: £35.5m).

Adjusted operating profit was up by 82% to £8.5m (2016: £4.7m), with adjusted operating margin improving to 10.1% (2016: 5.2%). Adjusted profit before tax was £8.4m (2016: £4.2m) and statutory profit before tax reached £2.6m from a loss of £1.2m for the previous year.

The improvement in profitability is a result of a major cost efficiencies programme, which delivered £9m annualised savings in 2016 and a further £3m in 2017. Overall workforce reduced by 22% to 850 during the year, although a large proportion of this relates to staff transferred back to Ofsted at contract end.

Tribal secured significant new UK university contracts for its student information system (SIS) during the year, including University of Sheffield, Glasgow Caledonian University, University of South Wales and Heriot-Watt University. It also finalised a AUD$27.5m four-year extension to its Callista SIS contract with 11 universities in Australia, which includes migration to Tribal Edge, its next generation, cloud-based SIS. Its Quality Assurance Solutions (QAS) also secured significant wins in the Middle East.

Tribal will be pleased with the progress it has made over the year. Revenues are expected to be broadly flat in 2018, but profitability should improve as a result of its ongoing efficiencies programme. Much rests on the success of Tribal Edge—it has secured some early adopter commitments and the Callista extension and recent Microsoft partnership should help it gain traction. There is more work to be done, but Tribal is heading in the right direction.

Many start-ups see bursts in growth due to increasing demand from customers, and as a result require cloud solutions to help them scale up in order to meet the needs of the business.

It is essential to identify the solution to help your business grow – successfully accelerating the growth of a start-up is a challenge, requiring flexibility to adapt to larger workloads without compromising performance or losing revenue. If companies scale up too quickly they become locked in ‘cloud traps’ by committing too much too soon.

We’ve seen great success in supporting start-ups, particularly Poq Commerce. When Poq first launched it was a cloud-native e-commerce provider supporting small London-based fashion designers. Soon the company attracted large retailers such as House of Fraser with around 60 stores in the UK.  Last year the company registered 1,000 per cent revenue growth and is this year set to do the same.

With access to Cogeco Peer 1’s services and Microsoft Azure’s powerful interface, the company can scale up, monitor and analyse performance easily and cost effectively. That said, there are still numerous scale-ups finding it hard to match a cloud technology solution with the growth of their business.

This is where we can bring our expertise to the Great British Scaleup Programme.

Cogeco Peer 1 provide advice on best-fit platforms and the importance of on-demand scalability so there is no limit to growth, ensuring the business is always on top of demand.

Applicants to the Great British Scale-Up programme are able to take advantage of an in-depth IT infrastructure review with Solution Engineers from Cogeco Peer 1.

For more details or to speak to one of our specialist engineers today, please click here.

We were already geared up to hear good news from Parity Group. We were given a glimpse of what to expect in the company’s final results – due after Easter – in it trading update in December (see  Parity above parity!): double-digit growth in ‘underlying’ operating profit due to continued momentum in Parity Consultancy Services (PCS)… and a recovery in contractor volumes in the core resourcing business.

But good news has come ahead of time. As it seems the current financial year has got off to a stellar start. In Parity Professionals, we hear of the award of a recruitment managed services contract with Primark Stores, to provide all their contract and interim IT staff – the contract is worth in the region of £20-25m over three years. And in PCS, the news of contract extensions at the MoD, British American Tobacco, and the Skills Funding Agency – those extensions represent a total opportunity of £5.3m in the year.

There are a few things to take from this news. Firstly, Parity is proving itself with existing clients and winning additional business as a result. Secondly, it is expanding its private sector footprint (the business has been weighted towards the public sector). And thirdly, it is making solid steps to reposition as a “consultancy supported by a solid recruitment business” (as is CEO Alan Rommel’s desire). In the last financial year, we reckon PCS would have represented c£8-9m of Parity’s total revenues – the latest wins indicate the potential for more strong growth in that part of the business in the current financial year.

It was another record year for venture capital funding of UK and Irish technology companies in 2017, according to the latest data from corporate finance firm, Ascendant. During 2017, £5.3b was invested in 809 deals of more than £0.5m by 712 investment groups at an average deal size of £6.6m, up from £4.3m in 2016.

The latest edition of IndustryViews Venture Capital includes nearly 30 pages summarising significant venture funding in UK tech companies during the quarter, along with summary stats for 2017. Foundation Service subscribers only!

Contact info@techmarketview.com for further information.

A not surprisingly “very pleased” Accenture chairman and CEO Pierre Nanterme announced another impressive set of numbers for the second quarter and first half of 2018 - the three and six months to end February. Constant currency revenues were up by 10% yoy for both Q2 and H1 to $9.6bn and $19.1bn respectively. Bookings for the first six months of this fiscal year hit a record high of over $20bn and “the new” (cloud, digital and security services) continued to enjoy double-digit growth. These now account for 55% of overall revenues.

The only minor blot on the Q2 landscape was a 30bps yoy reduction in operating margin to 13.4%. This was driven by a combination of both higher acquisition costs and lower contract profitably on some renewals in the health and public service sector. Accenture expects, however, that margin will be back in line with 2017 levels by the end of this financial year.

Good levels of growth were achieved in all its major industry vertical, service and geographic dimensions. Of note, however, were the double-digit surges in demand within the communications, media & technology sector, application services (particularly applications development) and its Growth Markets region (Asia Pacific, Latin America, Africa, the Middle East and Turkey). The latter now accounts for nearly a fifth of total revenues.

Driven by strong performances in Germany, Italy, France and Spain, Accenture’s first half revenues in Europe increased by 10% yoy. Although no specific details of the UK picture were declared, it is reasonable to infer that growth here was at the mid-single digit level. This is, however, still significantly ahead of its larger rivals, many of which have recently reported sharp revenue declines in the UK (see here for the latest results from Capgemini, Sopra Steriaand CGI).

You would need to go back the better part of four years to see Accenture produce anything other than above market growth. There is nothing about its current business trajectory that suggests this history will be repeating itself anytime soon.

The lack of provenance for luxury goods is a problem that Everledger, a blockchain-based start-up aims to resolve. Dealing with diamonds or high value items is risky with paper-based certification. Placing these certificates on a blockchain to prevent fraud may save insurers billions annually.

Led by Founder and CEO Leanne Kemp the London-based start-up closed $10.4m in Series A funding round. Toronto-based investment banking firm GMP Securities co-ordinated the round with lead investor, the Canadian arm of Fidelity Investments. Participants in the round included Vickers Ventures Partners Graphene Venture Capital, and existing investors FPV, Fenbushi, Bloomberg Beta and Rakuten.

Everledger started off tracking diamonds and currently has the provenance of over 2 million diamonds cryptographically-certified on the blockchain. This business has since expanded into the world of coloured gemstones, jewellery, fine wine and art. Using blockchain, the company provides a full history of an asset’s authenticity, existence and ownership.

Everledger currently has a team of 40 across five countries looking to grow to around 100 employees over the next two years as it expands into India and China.

Hive Learning (Captured Software Ltd) has raised £3.5m in a funding round led by existing backers Blenheim Chalcot.

Blenheim Chalcot has built more than 40 businesses across a variety of sectors, including education and learning ventures Arch, Avado and Code Kingdoms. It’s probably best known for its relationship with Agilisys, but it also founded ClearScore, which has recently been acquired by Experian in a £275m deal (see Experian acquires Fintech startup Clearscore).

Hive was founded in 2012 by rugby union player, Rugby World Cup winning coach and Team GB Director of Sport at London 2012, Sir Clive Woodward. It produces a collaborative learning application aimed at enterprises. The system allows teams to access and develop learning resources, collaborate across shared content, and analyse learning impact.

The business has built an impressive client list including Sky, Jaguar Land Rover, Barclays, Sainsbury’s, Deloitte, Halma, WorldPay, The Football Association and the International Olympic Committee. In November 2017 it acquired EditorEye Intelligence to add new learning content and to power Hive’s new AI engine, which will help it provide more sophisticated curation of content. The business brought with it another set of impressive clients, including Santander, Centrica, Aviva, Amazon, Citigroup, NBC and Universal.

The funds secured in this investment round will be used to develop Hive’s AI capabilities, enhance its sales and marketing teams, and expand internationally.

It's great to see entrepreneurs with ambition – and 'organizing the world’s knowledge' is up there with the best. Such is the mission statement of London-headquartered (and Alexandria rooted) startup, Knowledge Officer, which aims to curate a 'personalised learning path' to help you along your career choice, including 'engaging quizzes' to assess your learning progress and help you fill any gaps.

Launched in 2017, Knowledge Officer has raised €675k in a funding round led by Kuwaiti investor Abdullah Ahmed Al Shaheen with participation from Ian Hurlock-Jones, previously CTO at Big Fish Games.

The first personalised learning path Knowledge Officer has launched is for company founders, with 'growth manager' and 'product manager' streams 'coming soon'. I tried to test out the founder path on Knowledge Officer's website but it steered me to download its app, and I gave up at that point.

It's not stated how Knowledge Officer does its curation or the credentials of its young founders as career mentors. Knowledge Officer is building a freemium business model, but it's not clear what's free and what's premium.

It's an odd one, this, but I suppose everyone's got to have a dream.