K3 seeing 'encouraging progress' with growth plan despite revenue drop
The retail focussed software company has posted its interim results for the six months to 31 May 2022 in its latest trading update
K3 business technologies says it has made progress in driving recurring revenues in the business despite revenues taking a hit in the first half of the financial year.
The retail focussed software company has posted its interim results for the six months to 31 May 2022 in its latest trading update.
Figures show revenue from continuing operations was £19.9m, down from £20.9m from the same period in 2021.
And recurring revenue from strategic products such as SaaS and maintenance and support income accounted for £1.3m of total revenue, compared to £1.4m during the same period last year.
However, gross margin increased to approximately 60 per cent (2021: 58 per cent), reflecting improved gross margin in both K3 products and third-party solutions.
Adjusted EBITDA from continuing activities also increased to £1.0m (2021: £0.9m), which included a reduction of capitalised development cost of £0.3m.
K3 says the results were in line with management expectations against a backdrop of increasing macroeconomic uncertainties.
Marco Vergani, CEO of K3 Business Technology Group, said: "Third-party Solutions performed well and remains a significant cash generator. We are investing in products and delivery resource to support growth.
"The second half of the financial year is typically stronger than the first, with substantial cash inflows due from software licence and support and maintenance contract renewals. While there are increasing macroeconomic uncertainties, we remain confident of our long-term strategic direction and will continue to focus on growth, cash and costs."
In September last year, Pinnacle Computing acquired K3s former Sage business for £1.68m. K3 also sold off its Starcom MSP arm to Node4 last February for £13.3m.
As part of its plans to grow, the business is particularly focused on the development and growth of strategic products for the fashion and apparel markets and related large retail brands.
Vergani says K3 has made "encouraging progress", adding its new strategic growth plan identified opportunities across all core activities.
"We are now executing against this plan, which will drive recurring revenues," he said.
The business says it has identified "substantial" opportunity in three "critical" areas.
These include sustainability (especially supply chain traceability), omni-channel and 'unified inventory' (to create an integrated digital and physical shopping experience) and business insights (to extract actionable intelligence from data collected).
K3 is also integrating its fashion ERP solutions, K3|fashion and K3|pebblestone, which are based on Microsoft Dynamics, with K3|imagine and K3|ViJi, a strategic new software suite acquired in January 2022.
"This integration programme adds further power to our solutions and market positioning and enables us to offer customers a simple and highly effective route to digital transformation in critical areas of their businesses, driving their sustainability agenda and providing a strong return on investment," Vergani said.
In January 2022, Microsoft named K3 as one of its key independent software vendors within the Microsoft retail cloud platform.
Vergani added: "This provides additional endorsement of our capabilities, and we are deepening our existing collaboration with Microsoft to generate demand and opportunities, as well as expanding our Channel Partner Network."