Half-year Report

BLUE PRISM GROUP PLC

‘BLUE PRISM’ OR ‘THE GROUP’

INTERM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2021

JASON KINGDON, CHAIRMAN & CEO, COMMENTED: 

"Bookings grew 35% in the first half, with constant currency revenues increasing by 24%. We continue to attain strong retention metrics and new bookings for our Blue Prism Cloud (BPC) SaaS platform grew 65% year on year and accounted for 22% of new bookings for the period. Whilst remaining disciplined on spending and re-confirming our aim to be cash break-even by the end of the full financial period, we have significantly invested in R&D, enabling a record number of product releases to enhance scale and usability of the core product. With over 2,000 customers, we want to remain at the forefront of developing next generation intelligent automation, so we are reviewing our go-to-market model and the product and service formats to ensure we meet the needs for strategic transformation demanded in the C-suite. Our global customer base remains robust."

* Adjusted EBITDA loss is EBITDA loss adjusted to exclude contingent share-based payments and exceptional expenses

**Cash in 1H20 includes cash on deposit classified as short-term investments.

See financial information below for details of the 1H20 restatement

HIGHLIGHTS

§ Bookings of £98m, growing 35% compared to 1H20 (39% at constant currency).

§ Continued to strengthen long-term relationships with enterprise customers, with significant in-built opportunities for continued scaling:

- 98% gross revenue retention; 115% net revenue retention.

- Top 50 customers spending an average of $1.5m per annum.

§ Increased investment in product and R&D:

- Release of Version 7 in May.

- Plan to double Product function headcount by calendar year end.

§ Technology & partner ecosystem continued to grow.

§ Certified as a "Great Place to Work".

§ The Group continues to plan to achieve exit run-rate underlying cash breakeven within the 2021 financial year and continues to expect financial performance to be in the ranges outlined at the May trading update.

CONTACT DETAILS

For further information please contact:

Blue Prism Group plc

Tom Hull, Head of Investor Relations +44 (0)77 3670 7407

Investec Bank plc +44 (0)20 7597 5970

Carlton Nelson

Ben Griffiths

BofA Securities +44 (0)20 7628 1000

James Robertson

Oliver Elias

Brunswick +44 (0)20 7404 5959

Caroline Daniel

FINANCIAL CALENDAR

Full year results 20 January 2022

ANALYST PRESENTATION

Jason Kingdon (Chairman and CEO) and Ijoma Maluza (CFO) will host a Zoom call presenting these results and hosting a Q&A at 3pm GMT/10am ET/7am PT today. A link to register can be found below.

https://events.blueprism.com/half-year-results

The Zoom link will be open from 2.55pm BST/9.55am ET

A replay will be available from investors.blueprism.com after the call.

If you have problems accessing Zoom then please contact [email protected] for a dial in - please note participants who dial in will be in listen in mode only and will be unable to ask questions.

FORWARD LOOKING STATEMENTS

This announcement may contain statements that are, or may be deemed to be, forward-looking statements (including such words as "believe", "expect", "estimate", "intend", "anticipate" and words of similar meaning). These forward-looking statements are neither historical facts nor guarantees of future performance. Such statements are based on the Board's current expectations and belief and, by their nature, are subject to a number of known and unknown risks, uncertainties and assumptions which may cause the actual results, events, prospects and developments of the Group's business to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Except as required by applicable law or regulation, the Group undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2021

FINANCIAL PERFORMANCE

The Group delivered £98m (1H20: £73m) of total bookings (Total Contract Value of all New Licence, Renewals, Support & Maintenance, and Services) from new and existing customers, driving revenue growth in 1H21 and future periods. The total value of new bookings from new customers and upsells was £58m (1H20: £53m). Remaining performance obligations (RPO), which represents future revenues under contract but not yet recognised as revenue, were £311m (including a foreign currency headwind of £11m from the end of FY20).

Group revenue of £80.4m increased 24% (at constant currency) and the ARR (annual recurring revenue) generated at the end of April was £162m on a reported basis (FY20: £153.6m). Absent of currency impacts, additions to ARR were in line with 2H20, a stable performance when noting that the Group historically wins the majority of new business in the second half of the financial year.

The adjusted EBITDA loss for the period of £(8.0)m improved by 76% compared to 1H20, on a constant currency basis. This improvement was as a result of revenue growth combined with financial discipline across the business and reduced spending on areas like travel during the continued measures relating to the COVID-19 pandemic and phasing of costs. This was offset partly by an increase of 46% in Product and R&D.

The reported operating loss was £(20.9)m (1H20: £(53.8)m restated). The difference between reported operating loss and EBITDA loss is driven by contingent share-based payments and exceptionals.

CUSTOMERS

The Group closed the period ended 30 April 2021 with over 2,000 customers, representing a significant opportunity for the Group. The largest customers increasingly provide a blueprint for other customers to scale and the Group's continued track record in upselling underpins this opportunity further.

In the first half of 2021 Blue Prism upsold into over 20% of the customer base, driving a net retention rate of 115%, an increase on the 1H20 rate of 110% and in line with 2H20. During the period, the Group delivered healthy levels of upselling across its largest customers, with over 50% of its top 50 customers by revenue upselling. The Group's top 50 customers accounted for around 34% of enterprise ARR, with an average spend of $1.5m a year.

The gross retention rate for the year was 98%, with very low levels of revenue churn. The high levels of revenue retention and customer commitments demonstrated provide the Group confidence in the margin potential.

PRODUCT

At the end of 2019 the Group prioritised investments in Product and R&D to preserve and expand on its product differentiators. In 1H21 spending in these areas increased to £14.2m, around 18% of revenues (1H20: £9.7m restated). £9.0m of the R&D cost base is classified as operating expenses, with the remaining £5.2m classified as 'direct employee cost of delivery' in the cost of sales.

MARKETPLACE

In May 2021 Gartner found Blue Prism to have moved-up to 3rd place in their global market share analysis for the robotic process automation rankings (Gartner Market Share Analysis: Robotic Process Automation, Worldwide). This ranks Blue Prism with circa 10% of the total RPA market. IDC also published their Semi-annual Software Tracker, 2H 2020, which showed Blue Prism as the second fastest growing vendor in 2020, by revenue.

AGM VOTE AND POTENTIAL SECONDARY LISTING IN THE US

Following the voting results of the Group's 2021 AGM the Board committed to consult with shareholders. The recently appointed Board members Maurizio Carli, Rachel Mooney and Murray Rode conducted an extensive series of conversations with investors during April 2021 in response. The Board would like to thank shareholders for their engagement in the process so far and is actively working on the appropriate course of action. A full response will be provided within six months from the AGM date at the latest.

The Board previously announced that it was exploring the potential for a secondary listing in the US, and it appointed legal and financial advisors to support the potential secondary listing including accounting and compliance processes and legal documentation. The Board are pleased that this preparatory work has been substantially progressed, however the Board is reviewing the timing of any potential secondary listing in the context of current market conditions and the Group's own market development. A further update will be provided in due course.

OUTLOOK

The outlook remains unchanged from the trading update statement. Based on H1 reported ARR of £162m, the Board believes FY21 revenue is likely to be towards the lower end of the £170-180m previously guided range. As previously stated FX is estimated to have negatively impacted the original guidance by ~£2m. The Group continues to expect an EBITDA loss for the year of c.£25m.

TRADING

REVENUES

Recognised revenues for the period increased by 21% to £80.4m (1H20: £66.6m restated) and 24% on a constant currency basis, with recurring, subscription-based, licence revenue accounting for 98% (1H20: 97%).

Other revenues accounted for 2% of total revenues, with professional services and training revenues of £1.5m (1H20: £1.7m) and sponsorship and other revenue of £0.1m (1H20: £nil).

ARR, which is the annualised exit run rate of monthly recurring revenue at the last month of the reporting period, was £162m (1H20: £139.2m). Growth in ARR was impacted by the strengthening of GBP and on a constant currency basis would have been 22%.

Recognised revenues by geography were as follows:

Blue Prism Cloud accounted for £7.1m of revenues in the period, compared to £5.5m in the first half of 2020. Blue Prism Cloud bookings increased by 65% in the half and contributed around 22% of the new bookings (excluding renewals) achieved by the Group.

LOSS FROM OPERATIONS

The Group recorded an operating loss for the period of £(20.9)m (1H20: £(53.8)m restated). The reduction in the loss was driven by revenue growth alongside a reduction in the cost base due to cost management and lower travel costs as a result of restrictions due to the COVID-19 pandemic. Offsetting some of these cost reductions were investments in Product and R&D. Operating expenditure (before contingent share-based payments and exceptional costs) is categorised as follows:

CASH FLOW

Net cash at the period end was £126.5m (1H20: £140.8m). The Group continues to plan to reach exit run-rate cash break-even at the end of the second half of the 2021 financial year.

Cash used in operations for the year was £(8.1)m (1H20: £(32.1)m). The improvement in operating cashflow was primarily driven by improving adjusted EBITDA loss £(8.0)m (1H20: £(32.8)m restated).

OTHER COMPREHENSIVE INCOME

During the period the translation of the overseas subsidiaries from their local currency into the Group's reporting currency resulted in other comprehensive income of £4.2m (1H20: loss of £(2.9)m).

STATEMENT OF FINANCIAL POSITION

Deferred revenue was higher than the prior year at £96.7m (1H20: £89.5m restated) in line with the growth of the business.

Trade and other receivables were £46.2m (1H20: £47.8m restated).

In addition, costs to obtain contract assets of £30.4m (1H20: £27.7m) have been recognised in line with the capitalisation of commission under IFRS 15.

PRINCIPAL RISKS & UNCERTAINTIES

In day to day operations the Group faces risks and uncertainties. The Board aim to mitigate and manage these risks by regularly reviewing and assessing these risks and identifying suitable strategies to minimise the risks. The risks and mitigation strategies will be described in more detail in the Annual Report and Accounts and a list of the key risks is presented below:

- Growth strategies and management

- Macroeconomic and political conditions

- Software reliability and performance

- Security breaches

- Market and technological changes

- Talent management

- Pandemic management

- Intellectual property

GLOSSARY OF METRICS REFERENCED

Annual recurring revenue: Exit run rate of recurring revenue at the last month of the reporting period, annualised

Bookings: The total contract value (TCV) contracted during the period, including new business and renewals.

Remaining performance obligations: The total of invoiced but not yet recognised revenues (deferred revenues) and revenue contracted but not yet invoiced (off-balance sheet deferred revenue). Indicates the outstanding commitments made by customers to the Group, including commitments made prior to 1H21 and demonstrates the minimum future contracted revenue.

Gross retention rate: ARR at the beginning of the period less ARR losses from lost customers divided by ARR at the beginning of the year, annualised

Net retention rate: Measures the net growth in MRR from customers at the beginning of the reporting period

Ijoma Maluza, CFO

Jason Kingdon, Chairman & CEO

Blue Prism Group plc

Consolidated statement of profit or loss and other comprehensive income

Total comprehensive loss for the period has been derived from continuing operations.

Blue Prism Group plc

Consolidated statement of financial position

Blue Prism Group plc

Consolidated statement of cash flows

Blue Prism Group plc

Consolidated statement of changes in equity

for the six months ended 30 April 2021

Blue Prism Group plc

Consolidated statement of changes in equity

for the six months ended 30 April 2020

Blue Prism Group plc

Consolidated statement of changes in equity

for the six months ended 31 October 2020

Basis of preparation

Blue Prism Group plc is a public limited company incorporated in the United Kingdom, listed on the Alternative Investment Market ('AIM') of the London Stock Exchange. Blue Prism Group plc and its subsidiaries ('the Group') have as their registered office and principal place of business 2 Cinnamon Park, Crab Lane, Warrington, WA2 0XP, United Kingdom.

The principal accounting policies adopted in the preparation of the interim financial statements are set out below. The Group's full accounting policies are contained in the Annual Report. The policies have been consistently applied to all the periods presented, unless otherwise stated.

These interim financial statements are for the six months ended 30 April 2021. They have been prepared on a going concern basis and in accordance with IAS 34, Interim Financial Reporting in accordance with International Financial Reporting Standards ('IFRS') in conformity with the requirements of the Companies Act 2006. They do not include all of the information required for full annual financial statements and should be read in conjunction with Blue Prism Group Plc's audited financial statements for the year ended 31 October 2020.

The financial information for the year ended 31 October 2020 set out in this interim report does not constitute

statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 October 2020 have been filed with the Registrar of Companies and can be found on the Group's website. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498(2) or Section 498(3) of the Companies Act 2006.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies.

The Group's interim financial statements have been prepared on an accruals basis and under the historical cost convention with the exception of financial instruments, assets and liabilities acquired through a business combination, and share based payments. Financial instruments have been recorded initially on a fair value basis and then at amortised cost. Share-based payments and assets and liabilities acquired through a business combination have been measured at fair value.

All figures presented are rounded to the nearest £m to 1 decimal place, unless stated otherwise.

Going Concern

The Directors have a reasonable expectation that there are no material uncertainties that cast significant doubt about the Group's ability to continue in operation and meet its liabilities as they fall due for the foreseeable future, being a period of at least 12 months from the date of approval of the interim financial statements. The possible continuing and future impact of COVID-19 on the Group has been considered in the preparation of the interim financial statements.

The Directors have reviewed the forecasts for the Group for the period to 31 October 2022 and have a reasonable expectation that there are no material uncertainties that cast significant doubt about the Group's ability to continue in operational existence for at least 12 months from the date of signing these interim financial statements. Accordingly, they continue to adopt the going concern basis in preparing the interim financial statements.

Estimates and judgements

The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates, judgements and assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The critical accounting judgements and the major sources of estimation uncertainty were the same as those described in the last annual financial statements for the year ended 31 October 2020. Details of the estimates and judgements are included on page 78 of the 2020 Annual Report.

Changes to accounting policies

As disclosed in the annual report and accounts for the year ended 31 October 2020, the Group revised its revenue recognition policy. Further details of the Group's revenue recognition policy are included below. As such, results for the period ended 30 April 2020 have been restated to retrospectively apply the updated revenue recognition policy. The impact is to reduce revenue in the period ended 30 April 2020 from £68.5m as previously reported to £66.6m as restated.

There is no impact on cashflows, customer commitments or the Group's obligations as a result of this restatement.

The Group also revised its accounting policy for the delivery of revenue performance obligations and the treatment of deferred consideration. Further details can be found in the Group's annual report and accounts for the year ended 31 October 2020. The total impact of these changes on the period ended 30 April 2020 is shown on the table below.

Quantitative impact of restatements on interim financial statements (Unaudited)

Exceptional items

Exceptional items comprised professional fees of £1.7m associated with exploring a potential secondary US listing (HY20: £nil) and exceptional deferred consideration remuneration of £2.7m (HY20: £10.7m) payable to former shareholders of the Thoughtonomy group in the period.

Revenue recognition

Licence and support revenue

Software licence revenue represents fees earned from the licence of our software to customers. Licences of our product are delivered by providing our customers with a licence key that enables them to install and use the software in their on-premise IT infrastructures.

The Group identifies two performance obligations implicit in the sale of a software licence:

- firstly, the right to the licence and upgrades to the licence over the licence term, and

- secondly, the right to access support during the licence term.

All revenue from licence sales is recognised evenly over the contract term.

Software support revenue represents fees earned from providing customers with support services at standard and premium rates. These benefits are received and continued over the contract term. Revenues from support services are recognised on a straight-line basis over the contract term.

Revenue from SaaS cloud offerings where the Group's performance obligation is the grant of a right to continuously access a cloud offering for a certain term is recognised based on time elapsed and thus rateably over the term.

No revenue is recognised in respect of licences that are provided free of charge.

Professional services and training

Professional services and training revenue are typically recognised over time. Where the Group stands ready to provide the service (such as access to learning content), revenue is recognised based on time elapsed and thus rateably over the service period. Consumption-based services, for example separately identifiable professional services, are recognised over time as the services are utilised, typically following the percentage-of-completion method or rateably.

Sponsorship and other revenue

Revenue is recognised from Blue Prism World events. This mainly relates to sponsorship revenue received from various partners and external organisations participating in the events. Revenue is recognised at the time of the event taking place.

Costs of obtaining customer contracts

The Group incurs certain costs to obtain customer contracts in the form of commissions paid to sales employees. The commission costs of obtaining any contract with a customer are recognised as an asset on the statement of financial position. They are then subsequently amortised over the period during which the related revenue is recognised, with the cost reflected in cost of sales. Other directly attributable costs are expensed as incurred.

Share based payments

Where equity settled share options or awards are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received.

Where employers' social security is liable on the exercise of a share option or award, an estimate of the amount due is accrued over the expected exercise period. The accrual is then reviewed and amended at each subsequent statement of financial position date in line with IFRS 2.

Amortisation of intangible assets

Intangible assets with finite lives are amortised on a straight line basis over their useful life.

The estimated useful life of intangible assets is:

- 5 years for technology assets acquired in the business combination with Thoughtonomy

- 10 years for customer relationships acquired in the business combination with Thoughtonomy

The Group has one operating segment being the licensing of Robotic Process Automation (RPA) software used to automate routine, rules-based back office processes.

Assets, liabilities and profit/loss are not analysed by geography as the business performance measure utilised by the chief operating decision maker, the Executive Board, is the Group profit/loss.

Revenue for each of the geographical areas is as follows:

The Group derives revenue from three sources, over time and at a point in time, in the following major categories:

The Group has restated revenue for the period ended 30 April 2020 as discussed in Note 1. There is no impact on cash flows, trade receivables, or the company's contractual commitments as a result of this restatement.

There are no customers who generate 10% or more of the Group's revenues (HY20: no customers).

Contingent consideration of £2.7m (HY20: £10.7m) payable to shareholders of Thoughtonomy who have continued with the Group as employees has been expensed as exceptional costs.

Average monthly number of employees (including Directors) during the period:

As the inclusion of potential ordinary shares would be anti-dilutive and decrease the loss per share, they are not included in the calculation of diluted loss per share.