The first set of results since its AIM listing in August 2011 (see here) do not make uniformly good reading for Escher, who provides point-of-sale software to the postal industry. Development and consulting services costs rose, causing revenue to dip. However, it is in a transitional period as it positions itself for long term growth and the news that since the year-end the company has signed its biggest ever deal – $50 over 15 years with the United States Postal Service, see here- is an indicator that it is making progress.
Growth costs and Escher has been investing to win new contracts and build out its capabilities (e.g. adding near field communications). It had previously indicated that these activities would impact its full-year results but the impact has not been too severe. Revenue for the year ending December 31 2011 dropped marginally to $13.9m (from $14m.) Within this total, there was an rise 11% in software development and consulting services costs due to provisioning of services to a new customer and increased service provisioning for existing customers. There was also a 14% decrease in licence and maintenance revenue, attributed to amortising time based licenses and the structure of the contracts signed in 2011. The end result was adjusted net earnings of $2.3m (vs $1.5m). When exceptional items are included the company made a loss of $828k vs a profit of $1.47m in the previous year. The results are not bad overall for a company at the start of a period of transition but it cannot afford to let costs run away.