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IS Solutions back to growth

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IS Solutions
, the AIM-listed company who provides managed services and web focused software in the analytics and optimisation, and web and enterprise content management areas, was able to deliver a return to top line growth in H1 2012. But is still feeling the effects of the government spending cuts that impacted FY11 results and drove it to modify its business (see IS Solutions reduces turnover, as planned).   

Revenue grew 11.5% to £4.52m, generating profit before tax that was up 8.7% to £337,000 in the six months to June 30 2012. Delving into the numbers shows some variance in performance across the segments as the company changes the business mix, and a cautious view of the rest of the year informs decision-making. Managed services, which forms the bulk of the business (69%), only saw 4% growth because it was impacted by lack of renewals from government departments. Managed services, particularly outside the government sector, is an area IS is keen to focus on. It is seekinfg the shelter of recurring revenue to help shield it from market dips but it needs to compensate for the lost government business first. Revenue from Projects was up 12.8% but the gross margin was down by 1% as, based on fears over the economic situation, it chose to use contractors for some work rather than recruit. Management also noted that for the business overall, sales cycles are lengthening so it remains cautious for the rest of the year. Product sales are the most variable aspect of the business but this segment did return to growth, following sales that had halved in 2011. Analytics is a growth area so it should be seeing consistent improvement in this area at least. 


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