Management process automation software provider ActiveOps (LON: AOM) is investing in sales and development to boost future growth and that will lead to a higher loss this year.
AIM-quoted ActiveOps provides software that helps to improve the efficiency and consistency of back office operations of organisations. The financial sector is the major market. This is an international business with Europe generating the majority of revenues. North America, though, has the strongest growth prospects.
In the year to March 2022, revenues improved from £20.4m to £22.9m, while the underlying loss increased from £400,000 to £900,000. Net cash is £13.8m. Spending on development continues to increase.
Revenue growth
Annual recurring revenues (ARR) are £20.1m. Net revenues retention was 102% as existing clients spend more. This is a lower percentage than the previous years because of unusually high customer churn. The top 40 accounts grew ARR by 19%.
This year, revenues are expected to improve to £24.6m, but the loss could rise to £2.5m. ActiveOps could be near to breakeven in terms of operating cash flow, though, because of the SaaS-based revenues.
The strength of the US dollar could provide an additional uplift to revenues. In the first quarter, three new clients have been gained in North America and Asia.
Active Ops is not immune to the general fall in technology share prices. The share price fell a further 4.1% to 71p. Last March’s flotation price was 168p. Once ActiveOps passes breakeven, then profit should grow faster than revenues. The annual recurring revenues should provide a floor to the short-term share price.
