Company Announcements

30 May 2022

i-nexus Global plc

("i-nexus", the "Company" or the "Group")

Interim Results

i-nexus Global plc (AIM: INX), a leading provider of cloud-based Strategy Execution software solutions designed for the Global 5000, today provides its unaudited results for the 6 months ended 31 March 2022.

Financial Highlights

·    New Monthly Recurring Revenue (MRR) improved at £23k (H1 2021: £8k)

·    Net Retention** of existing accounts for FY 2022 improved at 94% (FY 2021: 73%)

·    Group Revenue £1.54m (H1 2021: £2.01m)

o  Recurring revenue £1.42m (H1 2021: £1.81m)

o  Services revenue £0.12m (H1 2021: £0.20m)

o  This reduction in Recurring revenue reflects the exceptional level of churn experienced in FY21

·    Gross margin relatively stable at 77% (H1 2021: 81%)

·    Adjusted EBITDA loss* of £0.14m (H1 2021: £0.12m)

·    Loss before tax £0.34m (H1 2021: £0.43m)

·    Cash balance at 31 March 2022 improved at £0.69m (Cash and cash equivalents at 30 September 2021: £0.58m)

* Earnings before depreciation, amortisation, impairment, profit/loss on disposal of assets, share based payments and non-underlying items

** Net Retention is the % that closing MRR of existing accounts represents of the opening MRR of existing accounts

Operational Highlights and Outlook

·    The two key leading indicators above show an upward trend and have been at the center of our focus over the last 9 months following the worst impact of the pandemic

·    Sales momentum continued through the period, securing 5 contract wins and 2 upsells within existing accounts, with a combined FY22 MRR of £23k, a 10% gross increase on our opening position of £235k

·    The number of renewing customers increased significantly, contributing to a Net Retention rate of 94%, a considerable improvement on the prior year

·    Average deal size is increasing and we now have clear predictable conversion rates of leads into deals

·    On track to deliver double digit net MRR growth in FY22

·    Continued investment in our solution including new features designed to enhance the user experience

Simon Crowther, Chief Executive, of i-nexus Global plc, commented: "We are delighted to report that the increase in win rate experienced in Q4 has continued into the current year, reflecting the transformation we have effected within our sales and marketing approaches, combined with the increased industry recognition of the quality of our enterprise grade offering.

"The changes brought by the pandemic have highlighted the need for scalable, robust, digital strategy execution tools and the market for our software is growing. We will continue to invest in the capabilities of our offering, broadening the scope of our solutions while ensuring we consistently deliver high levels of customer satisfaction. The growth in our customer base and the steady increase in recurring revenues, means we look to the future with confidence."

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About i-nexus Global plc

i-nexus Global plc ("i-nexus") helps organisations achieve their goals. Whether executing a strategy, driving operational excellence and continuous performance improvement, or coordinating portfolios and programs to transform results, i-nexus strategy execution software underpins success.

Today, we support organisations in managing over 200,000 strategic programmes around the world.

i-nexus transforms how organisations plan, execute, and track goals. We inspire the confidence to leave behind the spreadsheets, presentations and reports those organisations rely on, replacing it with a cloud-based, collaborative solution.

BUSINESS REVIEW

Overview

We are pleased to report on a period of encouraging trading, building on the investments made in our product offering and our sales and marketing approaches in the year to 30 September 2021.  The sales successes in the period, the significant reduction in non-renewing existing accounts and the well verified opportunities in our sales pipeline, leaves us optimistic that we are on track to achieve double digit net MRR growth in the year.

Our aim over the last 12 months has been to re-build sales momentum in the business, and we believe results up to the date of this report provide evidence of our success in this regard. We are delivering a consistent volume of well verified sales leads each month.  We have invested in our product, in response to customer feedback, in areas such as ease of use. This has been particularly useful in the sales process, allowing multiple trial implementations within the process, resulting in a much deeper engagement from prospects. While sales conversion and contracting in particular is still lengthy, both continue to progress.

Trading

We secured 5 new customers in the period (H1 FY21: 1) which along with the existing account upsells delivered a combined £23k MRR as noted above and a further 4 new customers are contracted at the time of the issue of this report, delivering a further combined value of £17k MRR. Each of these wins services limited business areas or teams within the customer and so each presents considerable expansion opportunities. On that theme, we expanded the use of our software within 3 existing accounts (H1 FY21: 1) including within one new account within the first few months of use of the platform.  We continue to have several live trial implementations at multiple enterprises across the US, UK and Europe and an ongoing paid Pilot with a major technology company.

Fundamental to these successes has been our increased understanding of where we sit within the competitive market landscape. We are now clearer on our differentiators and confident our platform is the best in class to support enterprise level strategy execution - a view confirmed to us by our prospects.

We continue to be careful with our investment in the business and are conscious of the increased need to be prudent in the face of rising costs. Many of our contracts allow for an annual fee increase after the initial term and we will seek to strengthen such options as we progress this year.

Market opportunity

All businesses set goals, plan how to deliver them and track performance. The challenge is if they can do this at pace, with insight and high levels of visibility across their complex operating environment. In most cases the answer to this is no and this is where i-nexus' software delivers considerable value.

Our software category - Strategy Execution Management (SEM) - continues to evolve and gain momentum as companies accelerate digitising mission-critical processes in this post pandemic world. Faced with market uncertainty, this "new normal" future requires companies to increase responsiveness by dynamically managing their strategic plan; something that we believe simply cannot be achieved in spreadsheets and other conventional productivity tools.

The growing importance of the SEM market has been acknowledged by leading analysts including Gartner Research, with SEM now considered an integral part of the new Strategy Portfolio Management (SPM) software category.

We are seeing an increased sophistication in our market, with prospects frequently now coming to us with very well thought through capability requirements, having pre-evaluated i-nexus against the competition on a matrix of criteria.  We continue to see that i-nexus has two clear advantages in strategy execution against SPM vendors: powerful strategic planning and performance management capabilities that complement portfolio management features. Plus, i-nexus' customers benefit from insight gained from over fifteen years of market experience in strategy execution.

People

We have a talented, committed team at i-nexus, all pulling in the same direction and now delivering results. The Board would like to once again thank them all for their commitment.

We announced in May that our longstanding CFO, Alyson Levett will be stepping down from the Board in August to pursue a portfolio career. In the near term, Ms. Levett will remain available to i-nexus in an advisory role to ensure an orderly hand over. The Board are incredibly grateful for the tireless work and huge personal commitment that Alyson has put into ensuring the financial stability of i-nexus. She leaves the business on a sound financial footing, and we wish her all the very best in her future endeavours.  We are delighted to have found an exceptional CFO to take up the role, Drew Whibley, joining us from his role as Group Finance Manager at LSE listed software business Aptitude Software Group plc. We look forward to working with him, as we look to continue the positive progress we have been making in recent months.

Strategic Focus for H2

Our strategy is focused on four main programmes of work:

·    winning more logos;

·    keeping our customers through increased end user satisfaction and helping our sponsors demonstrate value to their executives;

·    hiring the right people as we grow;

·    a focus on how to continue to evolve the capabilities of our platform, a market product study has begun to explore this.

We believe through continued focus on these areas, we will drive the success of the business.

Current Trading and Outlook

Following the sales successes in the period and those at the start of H2, the Company's committed Monthly Recurring Revenue rate will increase to £245k and we remain on track to deliver our target of double digit MRR growth in the year. We are managing the impacts of cost inflation on the business and have clear visibility of our cash runway.

The changes brought by the pandemic have highlighted the need for scalable, robust, digital strategy execution tools and the market for our software is growing. We will continue to invest in the capabilities of our offering, broadening the scope of our solutions while ensuring we consistently deliver high levels of customer satisfaction. The growth in our customer base and growth in MRR, means we look to the future with confidence.

FINANCIAL REVIEW

Reported revenue

As identified above there are 2 positive forward looking metrics that leave the Board optimistic about the Company's future potential:

·    New MRR from deals closed in the period

·    Net Retention rate

Adverse exchange rate movements and other non-trade related adjustments have led to a reduction in MRR of some £8k (H1 21: £2k). However more recent events and trading performance mean the impact of these in H2 22 is expected to be less adverse.

Double-digit net MRR growth is expected in FY22 which compares very favourably to FY21 where the equivalent value was a net reduction in MRR of approximately 23%. 

Total recognised revenue for FY22 is however expected to be below FY21 as this net reduction in MRR in FY21 has an adverse impact on this Financial Year's recognisable revenue.

Total recognised revenue decreased to £1.54m (H1 21: £2.01m) which reflects the exceptional level of churn experienced in FY21. As a result, revenue from recurring contracted software subscriptions reduced by 22% to £1.42m (H1 21: £1.81m). Revenue from professional services reduced by 40% to £0.12m (H1 21: £0.20m).

The Group signed five new customers (H1 21: one) under a recurring contract paid annually in advance during the period and a further four in early H2 which were delayed in contracting from H1.  Due to our subscription revenue model, the majority of revenue from these contracts will be recognised in future periods. The timing of the new customer orders and existing client change orders resulted in lower levels of WIP for the service team to deliver in the period, however an increase in both towards the end of the H1 will contribute to better revenue results in H2.

Gross margin

Gross margin in the period remained relatively stable at 77% (H1 21: 81%). Reported gross margin is the blended gross margin over both recurring software subscriptions and professional services.

Overheads

Overheads (defined as the aggregate of staff costs and other operating expenses but excluding those costs included in cost of sales) reduced in the period by £0.59m to £1.42m (H1 21: £2.01m) reflecting the full impact of the cost control initiatives undertaken last year. As we see our new business and change orders increasing, we have started a select number of investments in additional resource needed for operational delivery.

The Group's underlying cost base averaged approximately £0.27m per month for H1. This level should have delivered net break-even EBITDA, but the timing of new deals and the low services WIP led to lower recognised revenue than Budgeted and meant we made a modest adjusted EBITDA loss of £0.14m (H1 21: £0.12m).

Capitalised development costs amounted to £0.08m in the period (H1 21: £0.20m). We expect to see an increase in this in H2 as we look to add more new features. 

The Group's Operating loss has reduced as a result of last year's cost control exercise to £0.23m (H1 21: £0.36m).

Cash flow

Cash and cash equivalents closed at £0.69m (H1 21: £0.81m). This result reflects a strong renewal performance, good cost control and a good new deal and change order billing performance especially towards the end of H1 and is in line with management expectations.

Borrowings at 31 March 2022 were £0.05m (31 March 2021: £0.24m) reflecting the full repayment of the Boost debt. The remaining balance is an HSBC BBLS loan of which £0.01m is payable within one year.

Convertible debt liability stood at £1.84m at 31 March 2022 (31 March 2021: £1.35m) excluding accrued interest of £0.14m (31 March 2021: £0.06m).

The Group will continue to apply treasury and foreign currency exposure management policies to minimise both the cost of finance and our exposure to foreign currency exchange rate fluctuations.

i-nexus Global plc

Group Statement of Comprehensive Income

Group Statement of Financial Position

Group Statement of Cash Flows