Headline H1 results for translation and web content management vendor SDL were more than comfortable, up on H1 last year and on market expectations. Growth was primarily organic once again.
Revenue for the year was up 18% to £111.5m, with only 4% of the gain from acquisitions. Profit before tax and amortization of intangible assets was £18.7m, a 14% improvement
Language services remains the largest part of the operation and its revenue was up 12% yoy, contributing £66m to the group. Revenue from the content management technologies section was up an impressive 24%, to £26m, and contributed 23% to group revenues, with only 1% due to acquisitions. Growth in this area is something we are keen to see because the need for businesses to effectively manage their content - internal and external facing - is only going to become more critical. Language technologies revenue increased by 33% to £19.4m (18% of group revenues), and this is where the acquisition impact was felt most, with 22% coming from acquisitions. It will be interesting to monitor the revenue from this division given SDL’s comment that it is starting to see scale in bookings from its SaaS stream in this business division.
Buoyed by this set of interims SDL said it is confident that H2 will deliver further profitable growth despite general levels of economic uncertainty. During H2 it expects northern European economies to continue the slow recovery they showed in H1 but see more uncertainty in southern Europe. Modest growth is expected in the North America and Asian economies.
SDL’s high level overview of how the different geographies performed during H1 indicates muted growth overall. The strongest demand was from North America, the European market was mixed. Asia was stable and Japan was consistent although growth was muted due to the disasters in the country. Overall, the Asia pipeline was described as holding up well. However, given this overview we feel it might not take much for SDL’s performance to slip backwards, and growth is something it has struggled with (see Organic growth returns for SDL).