Actual Experience plc (LON: ACT), the analytics-as-a-service company, has today announced its unaudited consolidated interim results for the six months ended 31 March 2019.
● Deepening of our engagement with our Channel Partners and two further ‘land and expand’ customer deployments secured
● Increased automation and scalability of our Analytics-as-a-Service (“AaaS”), to support our Channel Partners
● Revenue increased to £953,025 (31 March 2018: £264,348), reflecting growth in Channel Partner revenue
● Operating loss reduced to £3,458,087 (31 March 2018: loss of £3,825,738), in line with management expectations
● Loss per share of 7.37p (31 March 2018: loss per share of 7.75p)
● Cash and cash equivalents at 31 March 2019 of £8,166,466 (30 September 2018: £10,776,516)
Post period end
● First successful evaluation of ‘built in’ Channel Partner achieved, a key strategic milestone
Dave Page, CEO of Actual Experience plc, said:
“The success of the two large scale deployments announced last year has been the catalyst for deepening our engagement with these Channel Partners in the new financial year. The new pipeline of opportunities generated as a result of this change in engagement is starting to reach the point in the sales cycle where deals can be closed, with the first two having been secured in the first half of the year. In addition, long term pipeline development will be boosted as a result of successful evaluation by our Channel Partner of the built-into-hardware, announced earlier this month reaches the deployment phase. This is a landmark development for Actual Experience, representing the first successful achievement of another key strategic milestone on the pathway to the generation of recurring revenue at scale with minimal set-up costs. With a significant market opportunity, growing Channel Partner traction and increasingly scalable offering, the Board looks to the future with confidence.”
We are pleased to report on a promising first half of the year. As anticipated, the initial customer deployments announced last year have acted as a catalyst for more active Channel Partner engagement in the current financial year. We are seeing evidence that the considerable efforts we have invested in building our Channel Partner relationships are now delivering tangible results.
The first half of the year saw the signing of the first two customer deployments from within a significantly enlarged and quality pipeline of opportunities for the Group. We expect to see the number and rate of deployments increase gradually throughout the remainder of the year and beyond, bringing another year of increased revenue and continually building our level of Annual Recurring Revenue (“ARR”) for the years to come.
Over the period, ARR increased to £1.8m from £1.6m at the end of September 2018, largely as a result of contributions from the second large scale deployment.
Our AaaS improves the quality of the digital journeys that make up the $25 trillion global digital economy. As the number of transactions that take place digitally increase, the need for consistency and quality to support the global digital economy will only increase.
The use of our analytics enables, business leaders for the first time, to see when their customers or employees are struggling with poor digital quality and identify the areas impacting their digital experience. Our unique proposition, supporting businesses in improving the user experience of their digital products and services through the use of our AaaS, gives our analytics far-reaching applicability, with the potential to benefit the entire global digital economy.
Our Channel Partners provide us with an efficient and effective means of targeting our significant global opportunity. Our focus entering the year was to harness the momentum within our Channel Partners, convert it into a solid sales pipeline and secure new customer deals. We are pleased with the progress achieved, with two new customer deployments recently announced. As the profile of our business increases, through our successful customer deployments, we anticipate growing interest from additional Channel Partners, with similar customer bases and reach our existing partners.
We remain focussed on being increasingly built into the solutions, products and services of our Channel Partners. This built-in model means that we will be automatically sold as an intrinsic part of the products and services consumed by our Channel Partners’ customers, rather than sold individually to each customer on every occasion. This is a central feature of our strategy to extend and enhance our relationships with our Channel Partners and while, in building these foundations, we have a longer lead time than a simple reseller model, we are now seeing this activity come to fruition. Once we are fully built-in, the challenge of per-customer sales is removed and we will move into more fluid deal flow and revenue generation. We were delighted to be in a position to announce the successful evaluation of the first built-into-hardware model with Vodafone, post period end, as detailed within the Channel Partner section of this report.
As in the prior year, we have been working on reducing the skills required by our Channel Partners, ensuring that our product is simple to deploy and use and that our Channel Partners and their customers can readily access the power and full capabilities of our analytic solutions. This will result in a significant reduction in the time and effort required from our Channel Partners to deploy our analytics for their customers and, as the skill levels required reduce, we can effectively target mid-tier and SME customers. The simplification of the product lifecycle is key to our expanding into the addressable market for our technology and, equally, it is the aim of our Channel Partners that digital quality management becomes available to as many of their customers as possible.
An example of the simplification of our analytics in the first half of the year was the development of an additional reporting tool, “Automated Triage”, identifying within minutes the cause of any digital quality issue. This action would previously have required lengthy manual analysis of the data by many experienced support engineers, sometimes without a successful conclusion. We have also continued our investment into our technology’s scalability within our datacentres. Our efforts will continue in this vein in the second half of the year.
Sales & Marketing
As the number and scale of deployments increase, we are developing a more integrated sales process with our Channel Partners, ensuring that we make the most of the opportunity that these initial successes have given us. Our engagement with the two Channel Partners involved with the previously announced large scale deployments has been transformed, including the allocation of dedicated internal resources at one and the formulation of their own internal sales forecasts for our product at the other.
To support our Channel Partners, our sales and marketing teams are focusing on ensuring that they have the tools they need to effectively bring our proposition to their customers. We have provided web-based training for our partners and we have increased our digital marketing activities to support our marketing within our Channel Partners.
As described above, we have seen a transformation of the engagement within the two Channel Partners involved in the two successful large scale customer deployments last year. Our Channel Partners are now regularly adding to the sales pipeline with well qualified opportunities and supporting us in the customer sales journey.
As a result, we secured two further significant new customer deployments in the first half of the year. While small initially, the rollouts are expected to reach full-scale within the typical timescale of 18-24 months. As with previously announced deployments, the Channel Partners’ customers are blue chip organisations. The first is a leading global software-as-a-service company, for whom our analytics are being deployed to analyse the human experience of their SaaS from numerous cities, globally. The second is a major government department, for whom their analytics are being deployed to analyse the quality of distribution of core digital services to key government sites.
As we have stated previously, with regard to large enterprise customers of our Channel Partners, each such engagement has the potential to generate annual revenues in the order of $500,000 per annum, once fully deployed. We have a growing pipeline of similar opportunities and look forward to announcing further customer deployments in due course.
First successful evaluation of ‘built in’ with Vodafone
Following the period end, we were delighted to announce that we had been successfully evaluated by Vodafone to be ‘built in’ to Universal Customer Premises Equipment (uCPE). This equipment is typically deployed to customer sites by a service provider. This is a landmark development for Actual Experience, representing the successful achievement of another key strategic milestone on the pathway to the generation of recurring revenue at scale with minimal set-up costs.
Actual Experience’s digital quality analytics will be built in to the uCPE. Each uCPE will be ready to be activated if Vodafone’s enterprise customer chooses to utilise the analytics service. It is anticipated this will both significantly reduce the sales cycle for customer engagement and increase the speed of deployment. Being ‘built in’ to means that our software would be shipped as a standard service component to all uCPE customer sites, which entirely removes the need for the current deployment phase of our service.
Additional Channel Partners
Our raised profile following our initial successful customer deployments has precipitated an increase in the level of inbound enquiries from additional potential Channel Partners. We will consider increasing our number of Channel Partners should we believe these organisations have the customer base and offerings for whom our analytics are most appropriate. Each new partner has the potential to significantly increase our addressable market opportunity.
The underlying strategic progress we have made as a business across so many fronts bodes extremely well for future growth.
The success of the two large scale deployments announced last year has been the catalyst in our engagement with these Channel Partners in the new financial year. The new pipeline of opportunities generated as a result of this change in engagement is starting to reach the point in the sales cycle whereby deals can be closed, with the first two having been secured in the first half of the year. In addition, long term pipeline development will be boosted as the built-into-hardware model reaches the deployment phase. With a significant market opportunity, growing Channel Partner traction and increasingly scalable offering, the Board looks to the future with confidence.