2017 Full Year Audited Results

20 March 2018

GetBusy plc ("GetBusy" or the "Company" or the "Group")

2017 Full Year Audited Results

GetBusy reports high 23% recurring revenue growth

GetBusy plc (AIM: GETB), a leading document management software business, is pleased to announce its audited results for the year-ending 31 December 2017.

	2017	2016	Change
	£'000	£'000	£'000	%
Total revenue	9,294	7,762	1,532	20%
Recurring revenue	7,960	6,470	1,490	23%
% revenues recurring	86%	83%
Adjusted EBITDA*	(1,209)	(1,728)	519	30%
Cash	2,814	-	2,814	n/a

 

·     Strong 23% growth in recurring revenue, which now represents 86% of total

 

·     Operating leverage^** of 63% in 2017

 

·     £2.8m of cash at 31 December 2017

 

·     11% increase to over 57,000 paying users of the Group's Virtual Cabinet and SmartVault products

* Adjusted EBITDA is EBITDA before IPO and demerger costs, share option costs and net capitalised development costs.

** Operating leverage is calculated as the increase in Adjusted EBITDA before development and corporate costs, as disclosed in note 4, divided by the increase in total revenue.

Daniel Rabie, CEO of GetBusy, comments:

"I am delighted with the performance of the Group during 2017.  We've built momentum across the business: we grew our recurring revenue by 23%, exercised disciplined cost control, successfully completed the demerger and IPO and closed the year with £2.8m of cash. 

"Customers love our products because they make them more productive, efficient and compliant and we have a customer-focussed culture.  In 2018 we expect those strong fundamentals to contribute to continued growth in high quality subscription revenues from our existing products. 

"In addition to this success, I am very pleased with the progress on our new GetBusy application and excited about the value it will bring to our customers."

The Annual Report and Accounts will be sent to shareholders in due course, and in any event not later than 27 April 2018, and will be made available today on the Group's website www.getbusy.com/about/investors 

The Company also announces that the Annual General Meeting of the Company ("AGM") will be held on Tuesday 22 May at 11am British Summer Time at the offices of Grant Thornton UK LLP, 30 Finsbury Square, London, EC2P 2YU. 

Enquiries:

GetBusy plc

Daniel Rabie (Chief Executive Officer)                                  +44 (0) 845 166 1165

Paul Haworth (Chief Financial Officer)                                  +44 (0) 7979 703904

[email protected]

Grant Thornton UK LLP (Nomad)

Philip Secrett / Jamie Barklem                                                  020 7383 5100

Stockdale Securities Limited (Broker)

Andy Crossley / Richard Johnson / Fiona Conroy              020 7601 6100

About GetBusy

GetBusy is an established, successful, award-winning Document Management software business, with operations in UK, USA, Australia and New Zealand, providing over 57,000 customers with a highly secure form of digital document distribution with the flexibility to suit any business or industry. It has found particular success in the accountancy, legal and financial services verticals. Over 864,000 users are registered to share information through GetBusy's online client portals.

The Group has three core product offerings:

·     Virtual Cabinet is Document Management software focused on the medium size to enterprise size markets. It is used by 27 of the 100 largest accounting firms in the UK and 11 of the top 20 accounting firms in Australia and New Zealand;

·     SmartVault is an award-winning Document Management software targeting the professional small and medium enterprise market, and is long established in the USA;

·     GetBusy (in development) is a new product which will help customers create stronger relationships with less effort, help users become more organised and productive, and reduce their administrative burden.

The Group has an international reach, rapidly growing existing products, a proven business model, and strong momentum moving into the future.

Further information on the Group is available at www.getbusy.com.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.

 

 

Chairman's Statement

2017 was a memorable year for GetBusy.  In August, we completed the demerger of the document management business from Reckon Limited, the fully underwritten rights issue and the admission to trading on AIM.  And amidst this backdrop of considerable change for the business and its employees, we still managed to deliver a very solid maiden set of results.

The fundamental challenges of secure document management and information chaos, which our products help to solve, remain prevalent across a range of vertical markets.  The demonstrable cost savings enabled by our products provide a convincing business case for our customers.  Legislative changes, such as the General Data Protection Regulations ("GDPR") in the EU, are important catalysts for businesses, professional services firms, academic institutes, retailers and many other organisations to examine their document management practices and select tools that improve efficiency and compliance.

Both of our document management products, Virtual Cabinet and SmartVault, have delivered excellent revenue growth across each of our territories.  In particular, we have seen very strong performances in the US and Australia.  We have built significant momentum in a year of change.

Our development teams have also been working hard on our new solution, GetBusy, which will help SMEs with productivity and communication.  Iterative development is ongoing and we are encouraged by the engagement of early users with the process.

I would like to thank all of our shareholders for their support.  The rights issue was fully subscribed.  The demerger and admission to AIM allows us to pursue an independent strategy for developing new global offerings that build on our great existing customer base plus enables the creation of our own personality consistent with the innovative nature of the new GetBusy product in development.

We have a Board with an excellent mix of skillsets and experience.  Our management team, led by Daniel Rabie, is dynamic and motivated to deliver on our strategy.  Each of our people is committed to living the culture and values we're embedding and to help our customers to be more productive.

In the coming year we expect continued growth in high quality subscription revenues from Virtual Cabinet and SmartVault in the UK, US, Australia and New Zealand.  We will continue to invest in developing the GetBusy product as well as making improvements to our existing products. 

I look forward to meeting you at the AGM in May.

CEO's Review

A big thank you to our shareholders: those that came over from Reckon, those that joined us at the IPO and those that have joined us since.  I am very grateful for your support and I look forward to working with the Board, the management team and all of our people to deliver sustained shareholder value well into the future.

A solid performance in our maiden year

I am delighted with the performance of the team this year who have all risen to the challenges we have put before them. We successfully completed the demerger from Reckon together with the rights issue and the admission to AIM, but most importantly we have delivered a solid performance in our maiden year, with pleasing growth across the business. Our growing high-quality subscription revenue puts the Company in an excellent position to leverage off its market position and continue our growth plans in 2018.

 

High quality organic revenue growth from proven products

Revenue grew by 20% across the Group to £9.3m (2016: £7.8m).  Pleasingly, our recurring revenue grew by 23% to £8.0m (2016: £6.5m) and now represents 86% of Group revenue (2016: 83%); increasing our proportion of recurring subscription revenues is an important part of our strategy to create a sustainably growing business. 

Revenue in Australia and New Zealand grew by 98% to £1.3m (2016: £0.7m) and revenue in the United States grew by 30% to £2.9m (2016: £2.2m).  Revenue in the UK, which is a significantly more mature market, grew by 4% to £5.1m (2016: £4.9m).  In December 2017, our monthly recurring revenue ("MRR") was £0.7m, equivalent to annualised recurring revenue of £8.8m.  MRR growth from December 2016 to December 2017 was 25%.

Our Virtual Cabinet and SmartVault products have continued to acquire new customers and users.  During 2017 our paying customer base increased by 11% to 57,000 (2016: 51,000).  The number of users accessing our portal products rose by 40% to 864,000.   Existing customers and users provide us with an excellent platform, a cost-effective channel and supportive advocates to launch our new GetBusy product. 

Our largest market in 2017 continued to be accountants and bookkeepers, to which 51% of Virtual Cabinet revenue and 75% of SmartVault revenue was attributable.  We serve 27 of the Top 100 accounting firms in the UK and 11 of the Top 20 in Australia and New Zealand.  We have also increased our presence in other high-value vertical markets including law firms, independent financial advisers, insurance, estate agents, retailers, leisure firms and academia. 

The need to manage digital data and hard copy documents is a significant challenge for businesses using traditional digital storage and retrieval methods in standard computer operating systems.  These systems are typically cumbersome, slow, unsecure and lack a standardised systematic approach to file storage and naming conventions. The Group's software seeks to address the potential information chaos caused by these issues by optimising the capture, management, preservation and delivery for each individual document in the business.

This issue is a very real problem and forms a cost to businesses who are not addressing it. Wasted time dealing with information issues can cost organisations about US$19,732 per information worker per year according to IDC, amounting to a 21.3% loss in an organisation's total productivity.  

The Group is positioned to access this international market as its SmartVault and Virtual Cabinet software products are suitable for businesses ranging in size from SMEs to large global enterprise organisations. Furthermore, there is strong global demand and little country-specific optimisation needed, as evidenced by Virtual Cabinet's successful international expansion from the United Kingdom into the Australian and New Zealand markets.  

These trends are favourable to the Group and its product suite and are expected to continue to drive new revenue growth and market expansion for the foreseeable future.

Cost control and targeted development investment

2017 has been a year of continued investment in our sales and marketing operations and in the development of new and existing products.  It's also been a year in which we have absorbed the additional corporate costs of being a standalone listed group.  Notwithstanding these additional costs and investments, our Adjusted EBITDA loss has reduced by 30% to £1.2m (2016: £1.7m).

During the year we spent £2.6m developing our products.  We moved the Virtual Cabinet cloud portal to Amazon Web Services, which has resulted in a more reliable and secure service for our customers and is more scalable.  We have embedded Multi-Factor Authentication within the SmartVault product to further enhance its security and have improved its digital signature capabilities following our integration with a new partner, DocuSign.

Our next generation product, GetBusy, will seek to combine document management with key additional communication functionality that businesses require, but which is currently spread across multiple systems, including messaging, quotes, invoices, tasks capture and more.  

The development of the GetBusy product has three core objectives, to:  

·     create stronger customer relationships for users with less effort;

·     help users become more organised and productive; and

·     reduce administrative burden.  

Once developed, GetBusy is expected to be able to leverage the Group's existing customer base and global infrastructure in place.  GetBusy addresses a real market need and is expected to continue to achieve growth in the Group's core markets of SMEs and large enterprises.

Awesome people

Our people are at the heart of everything we do.  Against a backdrop of significant change, I couldn't be more proud of the team who have delivered robust business performance with significant high-quality revenue growth and exciting progress on developing new products. GetBusy's dynamic customer focused culture enables us to be innovative, agile and continuously moving forward.

I want expressly to say thank you to each and every one of our people.  Our success is carried on your shoulders.

Outlook

Our key vertical markets remain strong.  International changes to the data regulatory environment increase general awareness of the business case for sophisticated document management systems.  In 2018 we expect those strong fundamentals to contribute to continued growth in high quality subscription revenues from our existing products, particularly in the United States and Australia.  I am proud of GetBusy's progress towards building a customer-centric application with a scalable and reliable architecture framework.

 

Financial review

Income statement

Group revenue increased by 20% in 2017 to £9.3m (2016: £7.8m).  The proportion of our revenue from our four key territories shifted in the year, reflecting the relative maturity of the UK market compared to the faster growing US and Australian markets.  The UK now accounts for 55% of revenue (2016: 63%), while the US has grown from 28% to 31% and Australia and New Zealand has leapt from 9% to 14% following continued strong growth after the move into that market in 2015.

In 2017, we decided to early adopt IFRS15, the new accounting standard for revenue recognition.  This standard significantly changes the timing of the recognition of some of our revenue streams and unfortunately leads to an increasing disconnect between the timing of revenue recognition and the time of the associated cashflows.  We have provided a complete explanation of these changes and the way in which we recognise revenue under IFRS15 in notes 2 and 5.  The revenue impact of early adoption in 2017 was minimal - only £54k - but our deferred revenue increased by £1,019k.

Gross margin in 2017 was 92.9% (2016: 92.2%), with the small increase due principally to product mix.

Development costs of £2.6m comprise staff and related costs, the costs of development tools and software and specialist consultancy costs.  The 6% reduction in development costs in 2017 is attributable to a reduction in headcount in the United States in order to better control costs in that business and to improve the balance of skillsets across the Group. 

Our preferred internal method of accounting for development costs is to expense 100% of the costs incurred in order to drive our focus on cashflow.  Therefore our Adjusted EBITDA metric assumes all development costs are expensed, with the capitalisation and amortisation of certain costs required by IFRS recorded below the Adjusted EBITDA line on our Income Statement.  £311k of development costs were capitalised during 2017 and related to various enhancements to our Virtual Cabinet and SmartVault products.  We have capitalised no costs related to the GetBusy product because we cannot demonstrate with sufficient certainty the commercial viability of the product.

Sales, general and admin costs of £7.2m have remained at 78% of revenue.  This is despite the additional burden of corporate costs that we now incur as a standalone listed company, including adviser and Board expenses, which totalled £0.9m in 2017 (2016: £0.3m).  Overall our Adjusted EBITDA loss of £1.2m is £0.5m lower than 2016 - an improvement of 30%.

£0.9m of non-recurring costs were incurred during 2017, mainly during the demerger and IPO process and the subsequent establishment and reorganisation of the leadership team.  Non-cash share option costs of £105k were incurred following the grant of LTIP options to senior management.  Our statutory operating loss for the year was £2.1m, £0.2m higher than 2016 which included neither IPO and demerger costs nor share option costs.

The tax charge in the year of £0.2m relates mainly to deferred tax movements in respect of development costs in the UK, rather than current tax.  Our loss after tax for the year was £2.3m (2016: £1.7m). This gives rise to basic and diluted loss per share of 4.75p (2016: 3.52p); as the group is currently loss-making the impact of potentially dilutive options is disregarded in the diluted loss per share calculation.

Balance sheet

Intangible assets of £0.3m comprise mainly development costs capitalised in the year together with certain protected intellectual property.  Trade and other receivables increased by 41% during the year to £1.6m, due to both an increase in revenue and deposits paid for the rental of new office premises in Sydney.  The Group finished 2017 with cash of £2.8m.

Trade and other payables increased by 81% during 2017, mainly due to higher levels of accrued expenditure at the corporate level towards the end of the year.  Deferred revenue, as recorded under IFRS15, increased by 8% in the year to a total of £4.4m, of which £4.0m is expected to unwind during 2018.  Deferred revenue at 31 December 2017 is £1.0m higher than it would have been under the pre-IFRS15 rules.

The biggest change to the shape of the balance sheet during 2017 is within the Equity section.  Movements in share capital and share premium reflect the creation of our holding company, GetBusy plc, and the raising of funds on AIM in August 2017.  The change to the Demerger Reserve reflects the net contribution of quasi-equity funding from Reckon Limited prior to the demerger.

Cashflow

Net cash used in operations of £0.7m was markedly better than the Adjusted EBITDA loss of £(1.2)m due to a combination of trade working capital improvements during the course of the year and increase in accrued expenditure at the corporate level.  Capital expenditure related to Property, Plant and Equipment was £0.2m. 

Net funding prior to the de-merger was £0.7m and the IPO raised £3.0m of cash.

Cash at 31 December 2017 was £2.8m.  While we do not have any committed lines of credit in place, we maintain close relationships with our corporate bankers and other commercial banks.