Update and full year financial statements
Financial information in this press release is unaudited
Fiscal year 2018 (period Oct. 1, 2017 – Sept. 30, 2018).
Total revenue of € 16.892k (2017: € 18.855k)
SaaS and hosting revenue of € 9.420k (2017: € 9.980k)
EBITDA of € 1.737k; 10,3% (2017: € 1.575k; 8,3%)
EBIT of € 508k (2017: € - 2.128k)
Net result of € 184k (2017: € - 2.533k)
TIE Kinetix (hereinafter “TIE”), the leading provider of cloud-managed Business Integration, E-Commerce, Demand Generation, and Business Analytics services today released the results for full fiscal year 2018 (Oct 1, 2017 – Sept 30, 2018) as follows:
Business Line performance
In 2018 our focus was to establish and build a strong sales focused organization in all our markets. Significant investments were made in marketing and in sales. Additional new sales staff were hired, more partner conferences were attended and additional investments were made in advertisement. Using our most favored applications (internally called the ‘killer apps’) we have been trying to penetrate markets in which we see potential to roll out our suite of products called “FLOW”.
Our approach to the Business-to-Government market in the Benelux was quite successful. Dutch cities and government bodies are choosing for our FLOW platform and we expect to connect over 30.000 users of FLOW in the Benelux alone. Other European markets (France, Germany) may be expected to follow in the near future.
The performance of our Google offerings (Analytics, Adwords-for-Channel) in 2018 was disappointing and as both products came in below plan in 2018. For Analytics this is due to Google’s pricing and positioning strategy that Google subsequently changed and has led to some improvement in the second half of 2018. Building a market for our solution called ‘Google-Adwords-for-Channel’ proved challenging. While our existing clients are happy with the product and prolong their usage for more campaigns it turned out that scaling this product to a larger customer base requires a different approach. We have changed our go to market strategy as a result.
For 2019 we intend to consolidate our investments in marketing and sales. We will further build on the pipeline accumulated in 2018 and we are re-aligning our sales teams to generate more enterprise level sales. At the same time we will launch a major upgrade program in our US customer base and prepare our customers to move to our worldwide FLOW SaaS offering. The FLOW offering will bring new sources of revenues from existing clients by combining connectivity with suppliers and connectivity with sales channel partners on one platform. To our customers this brings the unique possibility of combining supply side information with sales and marketing information. This will enable users to optimize their supply chain by generating more revenues with lower costs.
The company reports full year revenue of € 16.892k (2017: € 18.855k), including an adverse currency effect of € 520k (caused by the weakening dollar). Full year 2018 EBITDA amounted to € 1.737k or 10,3% (2017: € 1.576k or 8,2%), including an adverse currency effect of € 104k.
As in 2017, also in 2018 the company discontinued certain non-core businesses, unrelated to FLOW. These are EU projects, the hosting of portals in Germany and with TMobile. The 2018 revenue of these discontinued businesses was € 1,7 million (2017: € 3,3 million). For FY 2019 the company anticipates a further decline of these businesses to around € 0,3 million. This effect restricts overall top line growth in FY 2019.
In 2018, FLOW revenue (consisting of applications in Integration, Demand Generation and Analytics) amounted to € 15.498k (2017: € 16.471k) included FLOW SaaS revenue of € 8.152k (4% increase versus € 7.831k in 2017). Since our FLOW proposition requires less consultancy efforts to onboard customers our consultancy/support revenue declined to € 6.928k (2017: € 8.052k). FLOW is principally run in a SaaS model. Only rarely certain FLOW modules are sold as a license. FLOW license revenue declined to € 415k (2017: € 575k).
The company constantly takes measures to align costs with the changing product mix. The purpose is to counter any adverse effects of lower volumes of consultancy work and maintain healthy overall company performance. As a consequence thereof staff performance is monitored closely and changes are made if and when necessary. However, caution should be taken as there are limits as to minimum staff levels required to safeguard product maintenance, customer support and sufficiently skilled project staff. The company intends to consolidate further investments in FLOW sales and marketing staff in FY 2019 as it builds on existing sales and marketing efforts.
In 2018 the Order Intake in FLOW applications from existing and new customers amounted to € 11,2 million (2017: € 12,5 million) a decrease of 10% compared to FY 2017. This decrease is largely caused by the effect of a very large order in 2017 (with customer Parker Hannifin in excess of $ 1 million) with no equivalent large order in 2018. Total order intake is split between FLOW and Non FLOW as follows:
Jan Sundelin (CEO) said: “For 2018 we decided to step up our investments in marketing and sales. We hired additional sales staff and invested in additional marketing programs. All in all I am satisfied with the outcome. The additional investments have laid a foundation for the future as we have seen our sales funnel grow in 2018. Even with these additional investments our EBITDA is on track with 10% and we came in on plan. As planned, also in 2018, our non-FLOW business declined from € 3,3 mln (2017) to € 1,7 mln (2018). Our FLOW SaaS growth cannot compensate for this and as a consequence our top line revenue came in below 2017 level. For 2019 we plan to consolidate our investments and focus on running an efficient and lean product suite company with healthy margins.”
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