21st Mar 2016 11:30
LONDON (Alliance News) - Software provider K3 Business Technology Group PLC on Monday said its pretax profit grew significantly in the first half of its financial year thanks to a positive shift in its revenue mix.
K3 said its pretax profit for the six months to the end of December rose 27% year-on-year to GBP2.3 million from GBP1.8 million, while revenue rose only 1.0% to GBP42.3 million from GBP41.7 million.
The growth in profit was driven by recurring revenue margin improving to 70% from 64% in the half, plus higher-margin, own-intellectual-property revenue growing its contribution to sales. K3 also said retail sales proved strong in the half, as did cloud hosting revenue.
K3 intends on continuing to push towards deriving sales from its own IP content and said channel partner sales have also increased well, leaving it confident on the full-year outlook.
"Looking forward, we remain confident about the potential to exploit our own IP and expect to see continuing progress in our growth strategy together with rising channel partner sales and hosting," said Chairman Lars-Olof Norell.
"As we have previously noted, cloud-based subscription models are becoming increasingly important to us as customers move towards consumption-based licensing. This means that whilst income from contracts is recognised over longer periods rather than upfront, the lifetime value has the potential to be significantly higher," he added.
Shares in K3 were down 1.6% to 347.00 pence Monday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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