Upbeat Proactis gets its head in the clouds

The Wetherby-based company, which designs and licenses software for businesses and organisations to cut the cost of procurement, is now offering a cloud based subscription business model to complement its traditional perpetual licence business model.

Cloud computing provides companies with secure software, data management, emails and storage so they don’t have to deal with lots of different contracts.

Proactis said 10 of the 28 new deals agreed in the last year were cloud-based subscriptions.

In a trading update Proactis said revenues have advanced significantly and the company expects to report revenues of around £7.5m for the year to July 31.

The group’s shares rose seven per cent to close up 1.5p at 22.5p.

The growth in revenues has delivered an improvement in profitability with the company expecting underlying earnings of £1.0m, up from £200,000 last year.

It also expects to be “marginally profitable” before tax after a £600,000 loss last year.

Analyst Andrew Darley at FinnCap said profitability has been affected by reduced margins through an increased proportion of channel sales.

As a consequence underlying earnings are expected to be £1m, down from expectations of £1.3m. He said that pre-tax profits will be £100,000, below expectations of £400,000.

“Nevertheless, Proactis has delivered substantial growth in revenue and EBITDA, increased visibility, and very good cash performance in a challenging environment,” he said.

The group said cash generation has been “very encouraging” with the company generating £600,000 of cash during the year leaving it with £2.7m in cash.

Chief executive Rod Jones said: “The number of new name deals is encouraging in the current climate which remains tough.

“Our progression toward a blended business model is going well and strong revenue growth, increasing visibility on forward revenues, improving profitability and strong cash flow generation are all extremely encouraging indicators of the good work that the group is doing.”

Mr Darley, at FinnCap, said: “Proactis has reported full-year revenue in line with expectations of £7.5m, with 10 cloud-based deals signed out of a total of 28 new name deals. Deal size has improved and the level of contracted recurring revenue has increased to £5.1m.”

Proactis’s software is used by 350 organisations around the world from the commercial, public and not-for-profit sectors.

Proactis made a pre-tax profit of £132,000 in the six months to January 31 against a £204,000 loss in 2011.