28th Apr 2015 09:17
LONDON (Alliance News) - Synety Group PLC on Tuesday said its annualised recurring revenue grew in the first quarter as the group continued its strategy of pursuing customers, but said it will scale back those efforts in an attempt to preserve profitability amid a difficult market.
The cloud-based software company said its annualised recurring revenue in the first quarter to the end of March was GBP3.6 million, up from GBP3 million at the end of the fourth quarter of 2014 and up from GBP1.3 million a year earlier.
The group recurring revenue per user was up to GBP31.03 from GBP30.48 in the fourth quarter of 2014 and GBP25.04 in the first quarter of 2014, while its average new users per month increased to 403 from 419 in the fourth quarter and 396 a year earlier. The group's total number of end users was 8,995 at the close of the quarter, up from 7,705 the quarter before and 3,866 a year earlier.
But the company said its aggressive customer acquisition strategy, which has driven the rise in users over the past year, is to be scaled back as part of an effort to focus on preserving and generating cash. The measures it will put in place will be to cut marketing to new partners until its reaches profitability, along with a higher emphasis on existing customers and on larger customers.
It also intends to place more focus on consultation and onboarding charges and said it will work to reduce its overheads, with some expansion plans to be delayed in order to reduce spending and contribute to its moving closer to break-even.
As a result of the changes, Synety said it will no longer publish quarterly updates and will instead provide details on its performance via its interim and full-year results reports.
"By listening to the market and some of our key investors and taking these actions now, we are in the process of resetting Synety's rheostat to what we consider is a reasonable compromise between growth and short-term profitability," said Simon Cleaver, Synety's executive chairman.
"Indeed these changes have already had a positive impact on our underlying cash burn. I also believe that as we are simply deferring most of our expansion plans until they can be internally funded, this approach is not expected to damage Synety's long term growth prospects," Cleaver added.
Synety had posted a pretax loss of GBP5.5 million for 2014, widened from GBP3.7 million in 2013.
Synety shares were trading flat at 94.00 pence on Tuesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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