Following an impressive end to last year with profits ahead of expectations (see Tribal Group: technology key to services growth), Tribal Group has had a more muted start to 2013. Although it said trading since 1st January has been ‘in line with expectations’, the order book actually dropped £10m to £158m by the end of April. This is against an increasing international focus on higher growth markets like Asia Pacific and the Middle East.
Last year, the star of the show was Tribal’s Solutions division (revenue was up 23%), which provides an online school self-evaluation management tool, lesson observation resources, and recruitment services for schools, higher education and government. However so far in 2013, Solutions has only performed ‘satisfactorily’ due to a quiet domestic UK market, although it is apparently gaining momentum in Asia Pacific and also the US and Middle East.
The Systems business meanwhile is making ‘good progress’, albeit against a 6% decline last year, and 9% decline in the UK. Tribal said the pipeline in the UK remains resilient, and internationally it has a broader spread of potential new customers for its student management systems, including discussions with two universities in North America, and one in the Middle East.
Tribal's increasing focus on higher growth markets like APAC and ME is sensible, since its domestic UK market remains at best subdued. But Tribal remains heavily reliant on the UK market for most of its revenue. It therefore needs to be careful how it manages the transition to a more balanced geographic revenue mix.