Once again, IDOX appears reluctant to reveal its organic revenue performance. Considering its acquisitive behaviour over the last couple of years, it really would be good to understand what’s happening under the surface. It appears that the core public sector software business – which now accounts for 66% of the total revenues compared to 77% a year ago - continues to struggle due to the tough market conditions. It delivered top line revenue growth of 8%. Excluding acquisitions, it appears that revenues declined (unless, like IDOX you want to exclude revenues from a ‘one-off’ major contract in Scotland in 2010... in which case there was a “marginal” increase). Going forwards, IDOX highlights that uncertainty in the public sector has passed but that top line revenues will be marginally impacted from the move away from pure licence based sales to managed services contracts.
Importantly, the last year or so has all been about transforming the business and reducing the reliance on the public sector business. Through its acquisitions (for example of McLaren – see IDOX takes on a challenge with McLaren purchase), the Group has diversified both operationally and geographically. It has also increased the visibility of its revenues through a shift to managed services (recurring revenues now account for 66% of the total, up from 62%). IDOX appears to be handling the acquisitions well, has reorganised around divisions to reflect the expanded business, and is ensuring that its development activities are “streamlined” so that each activity has broad applicability across the divisions. However, with only one year of revenues in most of its international businesses, it’s hard to tell how well IDOX is managing its transition from a purely UK business to one spanning the globe.