28th Jul 2022 10:49
(Alliance News) - Aveva Group PLC shares continued their recent downtrend on Thursday, as revenue declined in first quarter.
Shares in the industrial software firm were down 6.2% to 2,185.00 pence each in London on Thursday morning. In the last twelve months, the stock has shed 44%.
In the three months ended June 30, revenue declined by a mid-single digit rate on a constant currency basis, compared to the same period in 2021. Aveva said that this fall was due to a decline in perpetual licenses, which have upfront revenue recognition.
However, the company reported that revenue was flat on a reported currency basis, supported by the strengthening of the US dollar.
In the year to June 30, annualised recurring revenue was up 11% year-on-year and Aveva said it expects this growth to "accelerate" during its current financial year. As previously reported, the company aims for recurring revenue to account for 80% of income by financial year 2026.
Aveva explained that ARR growth was driven by an increase in the value of its subscription and cloud contracts. It added that a list price increase, implemented in April, will take effect on more contracts as the year progresses.
Looking ahead, Aveva expects full year ARR growth of around 15%. "Aveva's end markets are strong, particularly energy, and the sales pipeline is solid for the remainder of the financial year," the company said.
However, it warned that constant currency costs will increase during its current financial year, particularly in the first half, due to incremental investments and inflation.
Back in June, Aveva said revenue growth was expected to be lower in financial year 2023 than in 2022 on an organic constant currency basis, and its adjusted earnings before interest and tax margin was expected to narrow, before resuming growth in 2024. In the year to March 31, the company reported revenue of GBP1.19 billion, a pretax loss of GBP18.6 million, and Ebit of GBP365.1 million.
Aveva is 59% owned by France's Schneider Electric SE, which also issued a trading update on Thursday. Schneider shares were up 3.7% to EUR131.18 in Paris on Thursday morning.
By Sophie Rose; [email protected]
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