Rosslyn Data Technologies plc (AIM: RDT), a leading global big data technology company, is pleased to announce an update on trading, ahead of interim results to be announced in mid-January.
As reported in the 2019 full year results in September, the Group had a slower start to sales in the first few months of the financial year. Professional service revenues for the half have also been impacted due to some clients opting to defer contracted projects to a later period. In addition, we decided not to renew client contracts with a high element of resale revenue which were unsustainable due to low levels of gross margin.
However, we have signed a new spend analytics client in the transport sector, which manufactures rolling stock and infrastructure for the rail network. The contract is worth £410,000 over a three-year term with the first revenues being recognised in the second half of our financial year.
The Group is pleased to note the Langdon business acquired in late September is proceeding satisfactorily, with the majority of clients having been retained. A product development plan has now been produced to manage client upgrades catering for Brexit in January 2020, and for the new HMRC Customs Declaration Service (CDS) due to go live in September 2020.
The Group expects the Langdon retained annual recurring revenue (ARR) to be in excess of £400,000 and this could increase as clients are renewed, new clients are won, and product prices are revised upwards.
With further contract wins expected in the coming months and a tight control on costs we expect the full year result to be in line with market expectations.
Rosslyn Chief Executive Officer, Roger Bullen said;
“We continue to focus our attention on building out our client base with sustainable ARR, ensuring that gross margins are in line with our expectations. I am delighted that we continue to win significant contracts with major industry leaders with the RAPid platform demonstrating our domain expertise and knowledge.
The Langdon acquisition, although not delivering significant profitability in the first 9 – 12 months, has an extremely loyal customer base with low churn rates and provides a significant cross-selling opportunity. We expect the ARR achieved from Langdon to increase in the next half year as we face Brexit and the new customs declaration system upgrade.”