There was a lot to like about Allocate Software’s H1 results to (November 30 2013), with improving revenue achieved in what is traditionally the slowest half of the year and a better situation than the year ago period (see here). Total revenue was up 7% (all organic) to £17.3m and within that there was double digit recurring revenue growth of 11% and a 14% lift in subscriptions. Adjusted EBITDA rose by 17% to £0.7m.
Demand for HealthRoster is still the driving force and as previously noted (see here) Allocate is gaining new business (4 new customers including 3 new NHS Trusts) and maintaining renewals (10 term licence renewals that maintained its 100% renewal rate). As a result, revenue from healthcare was up a positive 13% to £14.4m. There is more to come - expect news of a significant multi-year cloud-based new business deal with a UK teaching hospital in the next few weeks. This is a strategic win which could the door for similar deals. There were some weaker products – no new business for PatientFlow for example despite interest. CEO Ian Bowles puts this down to differences in how Allocate approaches the market, which is based on prediction and proactive management rather than historical reporting and requires modification to processes and how medics work. Interestingly, Bowles says the medics are positive about the product despite the changes needed so we’ll keep an eye on how this plays out.
What stands out most is the cloud strategy. Although revenue is low (£3.3m subscription revenue) it is growing well and Allocate is using its knowledge of how customers are using its products (within the bounds of client permissions of course) to provide new cloud services - without having to build new software. This will really start to leverage the cloud platform and open new areas of business.