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Additional	Information
Market:	AIM
Sector:	Software
Epic:	STF
News:	Latest news
Web Site:	smartFOCUS Group
Other Articles:	29-06-201028-06-201028-06-2010

smartFOCUS’ shift to Software as a Service pays dividends

smartFOCUS Group (AIM:STF) reported solid results for the 12 month period ended 31 December 2009 (FY 2009) as it continued to shift its revenue model towards ‘Software as a Service’, more commonly referred to as ‘SaaS’.

The company provides marketing software to a wide range of blue chip companies – including Rank (LSE:RANK), Carnival Group (LSE:CCL) and Easyjet (LSE:EZJ) - which help improve customer responsiveness and retention, hence a number of smartFOCUS’s clients operate in sectors where effective communication with their customers is a key corporate objective (retailers, finance, media, gambling, leisure, tourism..).

Revenues in FY 2009 climbed 15% to £11.9 million (FY 2008: £10.4 million), with 66% of total revenues now generated from SaaS contracts (2008: 50%).  The strong demand for SaaS software helped smartFOCUS swing to a full year pre-tax profit of £0.5 million from a loss of £1.2 million in 2008.  Diluted earnings per share (EPS) also improved significantly from a loss of 1.87 pence in 2008 to earnings of 0.28 pence in 2009.  Net cash at year end also improved, to £2.4 million (2008: £1.5 million).

“During 2010, smartFOCUS expects to capitalise on this position with further new products and releases while, at the same time, extending our distribution channels internationally. This progress together with good cash and an excellent team positions the Company well for continuing success,” stated smartFOCUS’ CEO Chris Underhill. “Since the year end, we have continued to trade in line with our expectations and the Board views the outlook for this year with confidence.”

smartFOCUS went on to note that investment in the marketing software sector was being driven by a number of long term trends, including increased online competition, increased consumer sensitivity to invasive marketing and pressure on marketing budgets for increased return on investment (ROI). 

“Organisations focused on improving marketing ROI are moving to consolidate data from across all marketing, sales and service channels to create a single customer view, against which customer relationship activity can be better co-ordinated and optimised. Uniquely, compared to its competitors, [smartFOCUS] can deliver this solution either directly or via its partner community.”

By moving to SaaS, the small cap software company has been able to boost its recurring revenue stream, improve visibility, while also cutting the sales cycle.

smartFOCUS currently generates 78% of its total revenues from Europe (87% in 2008), where it said it had experienced “positive” trading, and witnessed continued demand for its email campaign products, but also benefited from several existing customers adding new tools.

Strong growth was reported outside of Europe where revenues doubled in 2009 to £2.6 million, driven by several new clients, including the Dallas Morning News, Washington Post and Sydney Morning Herald.

Since year end, smartFOCUS has announced a number of new contract wins, including one with Lastminute.com to provide its Intelligent Marketing product which tracks online activity and behaviour, including across social networks like Facebook and Twitter.

Shares in the company have responded well to progress, rising from a 52 week low of 3 pence to 12 pence today.

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