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Following its positive update earlier this month (see here), multi-channel retail and manufacturing software player, Sanderson has indeed hit the numbers for the year. Although revenue was down 2% to £26.4m, operating profits shot up 23% to £2.09m, giving Sanderson a margin of 7.9% vs. 6.3% last time. Earlier this month, Sanderson also refinanced its operations (see Sanderson refinances), so it is now in more sound financial footing.
By operating vertical, manufacturing performed well, with revenue up 5% to £6.15m, although this gain was offset by a 4.2% fall in its largest market retail to £20.3m. Sanderson is clearly feeling the strain from its high street customers. It secured 22 new customers vs. 24 the previous year, and a number of large orders were also deferred post year end.
Sanderson is showing a slow but improving picture on its path to deliver more recurring revenue from services around its software. Services now account for 52% of total revenues vs. 51% in FY10. Sanderson’s chairman Christopher Winn said that he expects new offerings in green IT, SaaS and cloud to drive further growth in 2012. The latter two should also help Sanderson deliver more recurring revenue, but as with other ISVs moving to the cloud, this transition is ultimately deflationary. So Sanderson will need to tread this path carefully.
