Performance can be good but variable at UNIT4 (see here) but with 11% revenue growth at group level (to €110.7m) including a 25% increase in license revenue, Q3 12 is one of the periods that stands out. With a 70% rise in license revenue, UK performance was particularly notable.
Most of that 70% increase came off the back of four large local government contracts (including Bristol City Council), which were competitive wins against tier 1 providers. Three of the four wins came via partners, thus showing the value of the Agilisys partnership in particular. Darren Hunt, customer development manager at UNIT4, says Q4 is shaping up to be a good quarter for public sector sales too, within central government as well as UNIT4’s traditionally strong area of local government, and shared services helping to fill the pipeline. The government push to bring in smaller suppliers is working well for UNIT4, who says partners who would not have taken it into bids are now doing so – and to good effect. In the UK, the education and commercial markets were on target.
Subscription revenues are climbing across the business as a whole, with FinancialForce.com still forging ahead and almost doubling its revenue yoy. However, increased workload and hosting costs have taken the gross margin down from 92.9% to 92.5%. EDITDA is growing though – it was up 6% to €20.5m (vs €19.4), representing an EBITDA margin of 18.5%. If FinancialForce.com is excluded, the EBITDA increased by more than 10%. The Polish problem is close to completion (see the link in paragraph one) with no additional material exposure above the c€1m costs for layers and auditing. The outlook is looking good for UNIT4.