AVEVA shares were down 0.3% to 2,222p in early morning trading on Wednesday after the company swung to an operating loss of £6.5 million in FY 2022 against an operating profit of £36.6 million in FY 2021.
AVEVA mentioned its loss was primarily on the back of the amortisation of intangible assets of £226.1 million related to its acquisition of OSLsoft, an international real-time industrial operational data software and services group, from expenses of £95.7 million the last year.
The firm announced a revenue climb of 44% to £1.1 billion compared to £820.4 million, and confirmed a “deferred revenue haircut” of £50.3 million linked to its OSlsoft acquisition.
OSLsoft’s main product is its PI System, a data-management software which reportedly enables customers to curate, analyse and share real-time industrial sensor-based data across business systems throughout company operations.
The company highlighted an annualised recurring revenue growth of 10.2% to £768.7 million against £697.8 million, alongside an adjusted EBIT climb of 7.7% to £365.1 million compared to £354.7 million year-on-year.
AVEVA noted that its integration of OSLsoft had progressed in line with management expectations, with strong advancement made in product integration which is set to drive substantial longer-term synergies.
Outlook FY 2023
The firm commented that its outlook anticipated an annualised recurring revenue growth in FY 2023 to a rate between 15% to 20% per year, underpinned by its business model transition to subscription, improving end market conditions, synergies related to the OSLsoft PI system integration and rising prices.
AVEVA said it would continue to conduct business with non-sanctioned companies linked to Russia where there is no legal basis to terminate its contracts, and confirmed it had ceased new business in the country. Russian operations accounted for an estimated 2% of the group’s business in FY 2022.
The firm noted that wage inflation would affect its margins, and would be offset through price increases eventually, after an initial hit to company margins as a result of salary hikes coming at the start of the year, with price increases taking effect later on after contracts had been renewed and new business had been signed to the company.
AVEVA mentioned its revenue growth was expected at a lower level in FY 2023 on an organic constant currency basis, and its adjusted EBIT margin was projected to reduce before resuming growth in FY 2023.
“AVEVA delivered a solid set of results in FY22 as the business recovered following disruption caused by the Covid pandemic,” said AVEVA CEO Peter Herweck.
“During the year we made good progress with the integration of OSIsoft and have recently launched integrated products that will drive further revenue synergies.”
“I am excited about the opportunities ahead of us as AVEVA enables the connection and digitalisation of the industrial world. We are focused on accelerating growth in Annualised Recurring Revenue and expect AVEVA’s growth rate on this metric to significantly improve.”
AVEVA reported a basic loss per share of 20.8p from an EPS of 11.4p, however the group increased its dividend 4.3% to 24.5p against 23.5p the year before.