Financial results

Strong license growth

April–June 2015 (second quarter)

  • License revenue amounted to SKr 181 million (Q2 '14: SKr 134 million), an increase of 25 percent currency adjusted. 
  • Maintenance revenue was SKr 287 million (Q2 '14: SKr 256 million), an improvement of 3 percent currency adjusted.
  • Consulting revenue amounted to SKr 396 million (Q2 '14: SKr 354 million), an increase of 5 percent currency adjusted. 
  • Net revenue totaled SKr 867 million (Q2 '14: SKr 745 million), an improvement of 8 percent currency adjusted.
  • Adjusted EBITDA was SKr 96 million (Q2 '14: SKr 85 million). EBIT amounted to SKr 64 million (Q2 '14: SKr 70 million).
  • Cash flow after investments was SKr -8 million (Q2 '14: SKr 30 million).
  • Earnings per share after full dilution amounted to SKr 1.83 (Q2 '14: SKr 1.91). 

January–June 2015 (six months)

  • License revenue amounted to SKr 296 million (YTD '14: SKr 241 million), an increase of 12 percent currency adjusted.
  • Maintenance revenue was SKr 578 million (YTD '14: SKr 505 million), an improvement of 4 percent currency adjusted.
  • Consulting revenue amounted to SKr 770 million (YTD '14: SKr 689 million), an increase of 4 percent currency adjusted.
  • Net revenue totaled SKr 1,649 million (YTD '14: SKr 1,439 million), an improvement of 5 percent currency adjusted.
  • Adjusted EBITDA was SKr 159 million (YTD '14: SKr 135 million). EBIT amounted to SKr 115 million (YTD '14: SKr 95 million).
  • Cash flow after investments was SKr 64 million (YTD '14: SKr 163 million).
  • Earnings per share after full dilution amounted to SKr 3.33 (YTD '14: SKr 2.50). 

Outlook

For 2015, IFS expects good growth in both license revenue and EBIT.

2015 Q2 INTERIM REPORT

Strong license growth

License revenue saw strong growth in quarter two, 25 percent currency adjusted. This growth is attributable to good performance in our target market that includes offshore, EPCI, infrastructure, service management, process and industrial manufacturing. IFS not only provides an advanced solution for these businesses but is also able to demonstrate notable success in delivering global projects at lower cost and risk. This combination in capabilities is the main factor contributing to our attractiveness for demanding global customers. The expected pick up in license revenue growth in quarter two means our year-to-date growth now stands at 12 percent currency adjusted.

During May we announced the release of Applications 9 at our World User Conference in Boston. This new version has further increased the appeal of our product in the market and created additional interest within our customer base in upgrading its systems to this new release. We also announced that we had now passed the milestone of having one million IFS Applications users. This is significant as this expanding population is increasing its investment in our product, which has also contributed to the growth in license sales. 

Our retention of customers remains high. The growth in maintenance and support revenue, 3 percent currency adjusted, was lower than previous quarters but the same quarter last year benefitted from a one-off recognition in previously unrecognized revenue. The underlying growth was 6 percent, with a margin of 73 percent. The increase in our consulting margin to 25 percent (Q2 '14: 19) is in part the result of the heavy investment made in recent years in developing our partner ecosystem. Our activity with partners continues to increase in momentum and especially our partner-based cloud offering. 

Adjusted EBITDA in the quarter improved to SKr 96 million (85) whereas EBIT decreased to SKr 64 million (70), reflecting higher amortization and currency-related losses. In addition, a major impact on overall earnings in quarter two was the temporary increase of SKr 50 million in sales and marketing expenses following the release of Applications 9 and the World User Conference in Boston. Spikes in sales and marketing expenses could be expected from time to time in connection with major events and releases. Our underlying operating expenses continue to be in good shape, with an increase of 2 percent in quarter two, adjusted for the aforementioned temporary spike in sales and marketing expenses and currency. 

We continue to pursue an active agenda for mergers and acquisitions to add further breadth to our offering and to add value to our business. This can be seen in our recent acquisition of VisionWaves, which was announced after the close of the second quarter. The acquisition of VisionWaves adds a strategic complimentary product that provides operational intelligence, one of the fastest-growing sectors for enterprise applications. VisionWaves, which has been sold previously as a partner product, is expected to further improve the perception of IFS by both industry analysts and global system integrators.

For 2015, industry analyst firms such as Gartner remain cautious and expect the ERP market’s development to be slightly below the past year’s, with a growth in software revenue in the 7 percent range.

We continue to expect good growth in both license revenue and EBIT in 2015.

Alastair Sorbie
President & CEO

2015 Q2 Presentation

IFS published its interim report January–June 2015 on Tuesday, July 21. In connection with this, Alastair Sorbie, president and CEO, and Paul Smith, CFO, held a telephone conference during which they presented and discussed the report.

Webcast

Financial overview