K3 recovery continues with revenue and profit increases

Gross profit soars 14.3 per cent as firm completes streamlining process

Software reseller K3 is continuing its recovery, with the firm's revenue and gross profit both increasing in H1.

For the six months ending 31 May, K3 saw revenue increase 2.6 per cent to £41.4m, while gross profit "recovered significantly", climbing 14.3 per cent to £21.6m.

K3 has placed a greater emphasis on developing its own intellectual property as part of its refocusing, which CEO Adalsteinn Valdimarsson said is paying off.

"These results are very encouraging, with the group returning to underlying profitability," he said. "They reflect the benefits of our restructuring to create a more streamlined and integrated business, as well as the refocused growth strategy.

"Increasing revenues from software products that we have developed in-house remains a core part of the group's growth strategy, and we remain positive about sales prospects both for our existing products and our newer offering, Imagine, which we formally launched in the first half.

"The second half is our stronger earnings period, reflecting the volume of software licence and support renewals in the final quarter of the financial year. It has started very encouragingly, with a healthy pipeline in place, and this, together with expected high renewals, gives us confidence that the group will make further progress over the remainder of the year."

K3's own IP contributed £9m to total revenue in H1, down £100,000 on the same period last year. However, the gross profit contribution of the IP was up £1m to £6.8m.

The firm also launched a new cloud-native product in the six-month period, named Imagine, which it plans to sell through channel partners.

In terms of its traditional business, K3 also increased its services and recurring revenues, with these two units both contributing £14m.