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Today’s Q1 IMS from SDL emphasised the need for the additional investment in sales and marketing and research and development announced when the company released its end of year results (see SDL fights back with additional investment) as Q1 missed management expectations.
There was little change in the overall pattern of operations compared to the end of year. The technology segment was flat yoy and “slightly behind” management expectations. What was surprising was that campaign management, along with analytics and social intelligence which are growth areas in the wider market, were behind expectations while content management and machine translation were ahead. Underperforming in analytics and social intelligence is an indication of the work needed to bring the technology segment up to scratch but we know CEO Mark Lancaster is on the case. Language services revenue was “marginally ahead” - aided by new contracts with Edwards Lifesciences, Rolls Royce and Premier Farnell - but profitability remains a problem due to pricing pressure and investment in the transition to automated translation.
The work has started at SDL but most is still to come, including uniting the portfolio in order to deliver on the ‘customer experience management solutions’ tag line. H2 will be a crucial time for the business as this is when Lancaster believes the investment in sales and marketing will start to show up in the form of bookings.
