It was a pretty good first half for Unit4 overall but performance was patchy at the country level with the UK one of the areas where there was no revenue growth.
It sounds like the mid market vendor (best known for its Agresso ERP and Coda financial products) surprised itself with its SaaS and subscription revenues, which it described as being stronger than expected, and grew 53% (but from a low base we assume). This is quite something as Unit4 does not have a well-formed cloud strategy as yet but is a sign that the market is hungry for alternatives ways of buying software
Total revenue was up 13% to Eur 225.9m and within this license revenue grew 22% to Eur 36.3m. At 12% growth, services revenue lagged however, no doubt impacted by the increase in subscription sales. Much of the increase in SaaS revenue will have come from FinancialForce.com, which is built on the Saleforce.com Force platform. The monthly revenue run rate in June 2011 grew almost 300 % year on year.
Although known as a mid market company Unit4 wants to loosen this attachment and capture larger deals with larger customers (see Unit4 chipping away at SAP) and had some positive news to announce in the form of a batch of large contracts in Norway (Oslo Commune at Eur 2.5m and a major construction company at Eur 1.5m), the UK (Magnox at Eur 2.5m), the Netherlands (financial services contract worth over Eur 1m) and Poland.
While several markets exceeded expectations in terms of revenue growth the UK was flat which the company said was due to the securing of a number of large contracts in the first half of 2010 that resulted in “a challenging comparison base”. Flat UK performance for the first half of 2011 echoes many other vendors’ experience.
It still struggles with limited recognition in the market, but Unit4 is on its way up, and its lower cost proposition (in terms of license costs and post implementation cost of change, compared to tier one vendors) is certainly helping it win contracts in the current economic climate.