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Tikit Group, the provider of software and services to accountancy and law firms, has revealed that revenues in the six months to 30th June 2011 have remained at a similar level to the same period in 2010. We can only assume that if we take out the impact of its Carpe Diem and PensEra acquisitions in November last year that, organically, revenues declined. However, profits are “significantly ahead of the prior year” and the Group has remained cash generative.
Profit margins has been positively impacted due to an increasing proportion of Tikit-owned software revenues compared with third-party software revenues – a trend which we commented on in March (see Tikit looks to cloud in support of outsourcing business). However, it appears that might be predominantly a result of decreasing revenues from third-party revenues as opposed to increasing revenues from proprietary software. Tikit comments that it has experienced delay by some clients to commit to major projects involving third-party software, but continues to experience “good” levels of interest for its own software and managed services.
Tikit must now concentrate on increasing revenues. It appears much hope is being pinned on the ability of its new cloud-based solution ‘Tikit Legal Office’ to drive growth. Tikit launched the new offering at the end of February. However, we haven't seen any evidence yet of Tikit’s customers signing up to it. Tikit is right to have developed a cloud offering, particularly for its SME client base, but it looks like its customers - which will be dealing with a lot of sensitive client information - may not quite be ready to start the journey to the cloud.
