GetBusy plc (AIM: GETB), a leading developer of document management and productivity software products, provides an update on trading in advance of this morning’s AGM.
The new financial year has started well, with double digit revenue growth and a small Adjusted Profit* being generated in the first four months of the year (the “Period”). On a constant currency basis, recurring revenue and total revenue grew by 20% and 15% respectively in the Period. Recurring revenue represented 90% of the Group’s total revenue in the Period.
· For SmartVault, recurring revenue growth of 32% has been driven by a 36% increase in the value of new business, reflecting both strong market demand for cloud productivity products and improved sales and marketing execution. In March, we also launched our new VirtualVault product in limited private beta, aimed at the monetisation of SmartVault’s one million portal users by providing them with a personal secure digital vault for health, financial and asset-related documentation.
· For Virtual Cabinet, recurring revenue growth of 13% reflects the benefit of strong growth in 2019 and further improvements in revenue per user. Total revenue growth, as expected, was lower at 6% due to the reduction in non-recurring revenue as we continue the deliberate transition to a pure subscription revenue model.
· For GetBusy, marketing, channel development, sales and customer success teams are now in place for the GetBusy application and there has been encouraging progress with new and prospective customers. While revenue remains immaterial to the Group as a whole, paying user numbers have increased over 30% since early March and we continue to iterate and test the value proposition.
The health and wellbeing of our staff remains our highest priority, and we are pleased that the team continues to be healthy. Operationally, the transition to remote working has gone smoothly, with our wide use of cloud-based tools being a key enabler.
The immediate impact on our customers has been mixed. Accountants and bookkeepers, which comprise about 60% of our revenue base, have a diversity of clients and so their financial health will be reliant on the constituents of their specific client base. We have no material direct exposure to the retail, leisure or transport industries. That said, there is an increased risk of customers churning or reducing licensed user numbers as they cut staffing levels, albeit we have yet to see significant examples of this. We have, however, seen some clear stretching of payment terms by customers in the UK, and some customers have asked to switch from our annual subscription plans to monthly-paid plans as their own cashflow has been challenged since the global lockdowns. Importantly, no single customer accounts for more than 1% of our recurring revenue, which helps mitigate risk.
The landscape for new business has been more complex. Trade shows have been cancelled or postponed throughout the first half of the year, which impacts lead generation particularly in the UK. We are diverting some of the spend previously earmarked for trade shows to online lead generation.
For SmartVault, demand from new customers has remained solid, albeit with monthly variations. The extension of US tax filing deadlines by 3 months from April until July may alter some of the usual seasonal buying behaviour for the US accounting market, although it is too early to determine the precise impact.
For Virtual Cabinet, conversion of new customer leads, which often require an on-site installation, has slowed considerably since early March and as a result we have furloughed a small number of customer-facing staff who are unable currently to access client sites. However, we have seen reasonable levels of upsell to the existing customer base; for example, increasing the number of portal or mobile app licenses as more staff move to remote working.
Working capital position
Notwithstanding the Group’s strong start to the year, the Board has modelled a number of downside scenarios on revenue to ensure that there is sufficient working capital within the business going forward. The scenarios modelled include known additional cash receipts such as c. £0.7m of UK research and development tax credits, c. £0.4m from the US Paycheck Protection Program forgivable loan scheme, together with the benefit of payroll tax reductions under the Boosting Cashflow for Employers program in Australia and the support for furloughed staff under the Coronavirus Job Retention Scheme in the UK. These receipts have been modelled together with forecast capital expenditures, overheads and a broad range of stretching of trade receivables from customers. As a result of this comprehensive scenario planning, the Board is confident that the Group’s balance sheet is sufficiently resilient to withstand the current crisis.
The changes to people’s working lives over the last couple of months accelerate trends towards fully digitised, paperless work practices that our document management products enable. The surge in remote working requires a new software toolset for many organisations and each of our products is a component of that toolset.
In the medium to longer term, therefore, we expect this situation to be a catalyst for significant growth in the market and we aim to capitalise on this growth. We remain confident that revenue and Adjusted Loss* for 2020 will be in line with market expectations of £13.8m and £(0.6)m respectively.