The cyclic nature of Sopheon’s business was apparent once again in its H113 results, with flat licence sales. Although overall results were in line with public expectations, management admitted they fell short of internal hopes. Revenue was up from £6.2m to £6.6m for the six months to June 30 2013 but so were costs with the result that PBT was at breakeven (vs. £0.1m this time last year), with operating profit barely clinging to the black at £153,000 (vs. £232,000). Although revenue from maintenance and services grew, licence sales made no progress yoy and have dropped to 29% of total revenue (vs. 32%).
2011 was a poor year, but licence sales picked up in 2012 (see here). Lower levels were anticipated for 2013 as the product lifecycle management software and services company concentrated on customer implementations, taking on new resource to service customers. Sopheon looks like it is being constrained by its size and is able to manage increases in licence sales or implementations but struggles to handle both together. The situation is not helped by the characteristics of the PLM sector which is highly sensitive to customer product lifecycles and swings in the broader economy that cause organisations to spend less and drop maintenance contracts. Sopheon can carry on in its current state but as specialist provider it will be vulnerable to acquisition, particularly by ERP or CAD/CAM providers for whom PLM is a complementary asset.