A trading update from Instem today indicates that profitability for the year ending December 2013 will be “below market forecasts”. The company, which provides software to the pharmaceutical sector, says contractual discussions regarding a single perpetual licence with one large potential client remained ongoing at year-end. Shares were down 6.5% at c8am this morning.
There is a bit of a pattern emerging here. Looking back to FY12, there was also a dash to the finish line to close deals before the year-end, which the company in this case managed to do. Even still, growth eluded it (Instem fails to grow in FY12). One positive trend to note is that SaaS sales in FY13 were “encouraging”. While pretty small at this point, increasing SaaS sales in the coming years could help to protect Instem from the impact of single perpetual licence sales.
During FY13, Instem has looked to broaden its market coverage through strategic acquisitions. In May, it acquired market minnow, Logos Technologies, which provides e-source data capture and site automation software for early phase clinical studies (see Instem bolts on Logos Technologies). Later in November, Instem acquired Suffolk-based Perceptive Instruments, which operates in the image analysis and data management market and takes Instem into the in vitro R&D marketplace (see Instem gets Perceptive). Both acquisitions should enable Instem to bid for broader and larger contracts. Full results for FY13 will be delivered to the market in March.