Actual Experience PLC (LON:ACT) Chief Executive Officer Dave Page caught up with DirectorsTalk for an exclusive interview to discuss their preliminary results, increasing revenues, market opportunity and what investors should look out for in the months ahead.
Q1: You’ve just released your preliminary results for the year ended 30th September 2018, can you run us through the highlights?
A1: I think the main thing to take away from the messages that we’re trying to give there are proper production revenue is starting to appear in our revenue line for the very first time which has pushed the revenues up relatively significantly. Still small revenues overall but the revenues have started to move up because we’ve got the first couple of our quartet of partners into proper production with some large deployments for the very first time. That’s obviously really satisfying and points to some further progress that we expect from those partners as this year goes on.
Q2: As you say, revenues were 3 times as much as the previous year, this is due to the invoicing of a large-scale deployment. How confident are you of increasing revenues through 2019?
A2: Very confident. I think that the challenge for us has always been getting to the first large-scale customer deployment and we’ve now hit that, April was the first announced, June second one announced in another partner in 2018.
In a very important way, they’re catalytic events in those partners because it provides a reference for those partners, it proves that the technology works, that the processes work, that the customers are getting value out of our analytics. It really is a piece of validation internally and you really have to get partners there in order for them to go further and faster and of course, that’s what we’re now seeing.
We’re seeing the engagement going up, levels of engagements, commitments, resources, dedicated individuals in these organisations now dedicated to our product with targets for revenue. One particular partner has internal revenue forecasts for our product and that transformation could only have come about because of those what I call ‘catalytic deployment’ but they are coming about now.
So, with a great deal of confidence, I’m looking into this financial year for us and seeing that level of engagement and commitment inside those two partners particularly turning into more deals, more deal flow and those deals turning into revenue as the year goes on.
Q3: Just looking at the market opportunity, just how big is it?
A3: It really remains the same as we’ve thought for some time now. These partners of ours have enormous numbers of customers, they have a large base of enterprise customers, hundreds each of these large enterprise customers which is where our current deployments are being targeted. Particularly, the likes of Verizon or Vodafone have a lot of smaller scale customers as well which as time goes by, we will penetrate, over the years we’ll penetrate deeper into those customer bases.
We’re starting to talk about more opening, I guess now that our confidence is building, that these partners are worth we think $10 million per annum to us, each of them. Not immediately of course, it’ll take a little while, 3-5 years we’re saying, to get any of these partners to approach maturity with our product. At that point, we’re saying that they’re likely to be worth $10 million per annum to us each, or more than $10 million per annum to us.
Of course, as we get momentum through this year, our attention will start to focus on finding more partners around the world and we think there’s hundreds of those at this sort of scale where our technology can be built into the partners’ products and services and solutions. That should give everybody a feel with how the market opportunity here really is. If we execute well, it’s a colossal market opportunity.
Q4: Can you just expand on how you’ll tap into this market? Obviously, you’ve got these big companies at the top but how will you tap into their customers?
A4: I think for anyone interested in investing in the company, there is a real significant difference between the way we’re going about deployment of our technology versus a lot of other companies. The key here is, we use the phrase ‘built-in’ and that is fundamentally important to understand how we penetrate these enormous potential markets that exist around the world for digital quality in businesses.
There are tens of millions of businesses, enterprises, smaller businesses around the world, they all rely on digital so the question then becomes how do we get ‘built-in’ to all of them. The only way to do that plausibly is to be built-in to the products and services of partners that can get to and already address those markets.
That’s in fact what is happening, when our product gets deployed, the customers aren’t explicitly buying our product, they’re buying the solution or a product or a service from our partners, we’re inside that solution or product or service. It’s a bit like a turbo charger in a car, when you buy a car you might be more attracted to a turbo-charged car, but you don’t actually just buy the turbo charger, we are the turbo charger making the car better in the market.
That’s the benefit that our partners get is a more attraction proposition that they can take to market but the point is, we’re inside so that gives us a root to a much much deeper penetration of the customer bases of these organisations. If Vodafone or Verizon or Accenture were reselling our product then that would allow us a far smaller penetration into the customer bases than if we were inside every single product and service of these organisations.
Q5: Finally, what can investors expect to see from Actual Experience over the coming months?
A5: Well, we should start to convert the momentum particularly inside the two partners that I referenced earlier on and that should start to produce some deal flow and then at an increasing rate of deal flow as the year goes on. There’ll be different sorts of deals coming through, potentially there will be one or two large deals coming through like the ones that we have announced already, the two we announced last year. There should also be other deal flow coming through which is just as exciting to us which is equally large enterprises, don’t always start with deployment at full scales, most of them will start at smaller scale and then grow the deployment of our technology over 12-24 months.
So, they’ll be a mix of one or two of these larger deals coming through and then increasing flow of these initial deployments into large enterprises but coming through and building a base of deployment that will grow over time. This will cause our business to accelerate in a compounding fashion as more and more deals come through and then those deals grow in their own right as time goes on.