Actual Experience Plc share price, company news, analysis and interviews

Actual Experience plc (LON:ACT) Chief Executive Officer Dave Page caught up with DirectorsTalk for an exclusive interview to discuss their new partner, commercial progress and the sales cycle, the pricing model and the how the sales funnel is progressing.

Q1: Actual Experience have made a couple of announcements over the last 10 days, it seems like your most recent announcement, dated the 7th of December was a new partner. Dave, can you tell us anything about them?

A1: Well, we’re a little bit limited about what we can say at the moment.

In the announcement, we talked about an American very large global computer system manufacturer, they’re going to be familiar to you, they’re going to be familiar to everybody, they’re a household name. They make computing equipment for consumers, for businesses, for telecom operators, and they operate in most countries on the planet.

So, what we are hoping is that we can reveal the name when the offerings that we’re working on together, come to market.

Q2: Is there a different focus with this new partner?

A2: No, not really, not really at all. People might be aware that over the summer period, starting in August, we signed an amendment to our contract with Verizon, which allow Verizon to resell some what we call new human experience management offerings at that point. In October, we announced similar agreements with Accenture and a new agreement with a new partner, Oracle at that time. All of these are the same types of offerings and this new partner of ours is, indeed, it’s exactly the same type of offering again.

In fact, it may be worth mentioning what this new offering is because it’s very relevant and timely right now and what we’re targeting is business leaders of mostly very large global organizations who, like most leaders and most businesses, have experienced a fairly dramatic change in the working practices for their staff and their digital business in January, which has really been brought about by the COVID experiment itself.

Now, a lot of these changes are going to be enduring, but one of the major challenges that these businesses have, or the business leaders have is they don’t really understand what impact that’s had on the business and it was a very dramatic change. There’s a lot more time spent working digitally, people are working at home as we all know, but what effect has that had on the business, the top level business metrics, what effect has it had on employees?

So, our business impact assessment, which is common to all of our partners is a way in a period of one month of assessing all the employees and all the applications they use and revealing across about half a dozen top level business metrics, like operational efficiency, revenue, staff wellbeing, inequality, carbon footprint impact, and one or two other things revealing the sort of impact that this big change has had on those businesses. Now that’s what we’re doing with our new partner and that’s what we’re doing with, in fact, all of our partners.

Now there is one partner, in fact, one existing partner that didn’t need an amendment to their contract and they have also been selling these new offerings as well.

So, it really is, this business impact assessment idea is now common across both the existing set of partners and Oracle and this other new partner.

Q3: Your previous announcement, dated the 26th of November, seemed to provide some commentary on the commercial progress with partners since the contracts were signed. Can you just talk us through that, perhaps starting with the sales cycle?

A3: That’s quite important, one of the reasons why we shifted to a professional service-led go-to market was to try and shorten the sales cycles for delivering the value that our analytics can deliver. People may remember that over the last few years, been working with our partners on delivering the value of our analytics into their customers through very, very large deals by being incorporated into very, very large, typically outsourced or out-tasked deals. Now the sales cycles in those deals, they were inherently very long, 18 months/two years is certainly not uncommon.

So, the challenge there was really to try and find a way of delivering the value quicker and delivering more business value to business leaders by unlocking the offering from those big deals, creating a standalone professional services offering that doesn’t require training for the customer to engage. This is something that’s delivered as a project very, very quickly. So that was, if you like the theory going back a year or so ago when we started to work on these new offerings with our existing partners then.

We were very keen to see what sort of impact when these new offerings were being put in front of our partners, customers, which really started at the back end of July, start of August this year. What has happened to the sales cycles and one of the reasons why we wanted to talk about this in this recent announcement was because a really big customer, who are generally more difficult to deal with than the smaller customers just because they’re big and complex, and this one is no different. Even with a big and complex customer, the sales cycle here has been that they became aware for the first time of these offerings at the back end of July, start of August, went through the initial testing, and then requested proposals for full-scale deployment, in this case, all 10,000 employees in the United Kingdom through to the paperwork & receiving the purchase order, which happened in middle of October so fairly recently. So, that was approximately a three-month sales cycle, even for a big and complex customer and in fact, now we’re already in the early stages of the deployment of those 10,000 customers.

Really, what we’re trying to say is yes, we are starting to see some evidence, there’s one or two smaller deals as well, but this was a more significant deal in the sense it was a big, complicated customer. So, we’re trying to get people to feel that yes, in fact, the sales cycles really have collapsed.

There are other reasons as well, the offering is compelling right now at this time, but it was because business leaders generally do need insight and planning data and understanding of what’s happened to their business so there’s an element of urgency there as well.

Q4: Now the announcement also gave us some clues about pricing, can you expand on that? Can you give us any idea of how you price up a contract?

A4: This is quite a difficult area because all the deals through our partners inevitably have a deal-based pricing construct to them with a fair amount of variability per customer, for all sorts of reasons, people familiar with the industry will understand that.

We didn’t want to give a deal price for this deal that we’ve just been talking about, but we did want to give some clues as to how the pricing works and we’re trying to pitch this offering, which has a seat-based pricing model. So, in the deployment we’ve just been talking about where there are 10,000 employees that are going to have the digital business analysed for every single one of them, we have a seat-based pricing model, which is basically a seat as an employee so it’s a nice, simple pricing construct.

We’re really charging what we like to talk about two to three cups of coffee per employee per month, or the equivalent cost of say, Starbucks Americano, two to three of those per employee per month should give people roughly an idea of how much these deals are being implemented for, even giving deal-based pricing constructs.

Q5: Finally, the announcement talks about the sales funnel, how’s that going?

A5: Well, we’re really rather impressed with it so far because going back to the point I made earlier on that, in fact, the sales engagements really only started right at the start of August or backend of July was the very first ones perhaps so we’ve had August, September, October, three months run.

What we can say is the funnel is being built by all of Actual Experience’s partners, which is good. Funnel-build is dominated by Verizon because actually they are trying to scale up at larger scale in terms of how they’re taking our offering to market so it’s no real surprise that a significant amount of the funnel has been developed by Verizon over the past three months. In fact, the reality is a lot of that funnel has been developed over the last four to six weeks so it’s something that seems to be accelerating nicely at the moment.

One way of analysing it is coming back to the seat-based per employee pricing model is to look at the number of employees that exist in the companies that are sat in the funnel right now. That has gone up significantly, as I said, over the last four to six weeks and is a little over four million employees or four million seats of addressable opportunity sat in the pipeline now.

We want to make it very clear, it’s never going to be the case that our partners will penetrate 100% of those customers or 100% of those seats but what we can see emerging is that is a very significant addressable market with over four million seats, addressable already in the final build, which has made up from many tens of customers.

It’s very reassuring for us to see the number of seats that can be addressed by these offerings and hence, people can sense our excitement here about the potential revenue opportunity that’s coming through in the funnel and the shorter sales cycles that we’re seeing, combined I think give us a lot of hope for the future here now.

Actual Experience plc (LON:ACT) Chief Executive Officer Dave Page caught up with DirectorsTalk for an exclusive interview to discuss being featured in a Verizon / Boston Consulting white paper, the challenges facing the IT space and the opportunities for company going forward.

Q1: The announcement that you put out yesterday, is this one of the announcements that you alluded to in your recent interims?

A1: Yes, that’s exactly right. So, we’re expecting to make a few announcements and this just happens to be the first one but in many ways it’s quite good that this one has come out before the others because it’s important and it’s really setting the scene in many ways for the immediate future of this company.

Q2: Can you elaborate on that for us then?

A2: We’re all familiar with the way that COVID-19 has caused pretty much global lockdown for workforces around the world that are at home, the knowledge workers in particularly if your business is that sort of business, you’re going to be working from home. Really, that has forced businesses to adopt digital technologies to allow collaboration and working to take place given that almost the entire organisation is actually working remotely now.

So, I’m thinking of things like, stuff we’re all familiar with, like Zoom, WebEx, Skype and so on, those sorts of collaboration platforms are peripheral and people are working from home using those. Most businesses have been surprised, in fact I’ve been quite surprised how some businesses have been that the technology has just worked. More than that, I think a lot of businesses have also seen not only that the technology has worked but there has been major benefits to productivity, expense, reductions and wellbeing benefits for the staff as well, a lot of whom want to stay at home now they’ve had a taste of it.

So, really, there’s no going back now or that’s at least what we’re hearing through our channels working with the end customers and generally, what we’re hearing from the big enterprises, the global enterprises, is that there’s a 70/30 split, 70 will be working remotely and occupancy in the offices is going to be about 30%. When you stand back from all of that, and if that is really truly representative of the future then this really does represent an absolutely massive change in strategy for every IT department on the planet.

Q3: So, what exactly is the IT challenge going forward?

A3: I suppose at the centre of it, if you think about what IT departments we’re perhaps doing at the start of this year, for these large enterprises they were looking after or managing staff’s IT environment in let’s say 100 or 200 corporate offices and maybe a couple of corporate data centres. Actually, currently, with everyone locked down you’ve still got those offices and data centres but you’ve now also got a large number of public cloud offerings like Zoom and WebEx and so on that the company’s using. So, applications are moving out of the data centres into the cloud very very quickly and also staff are moving out of the offices or have moved out of the corporate offices into and they’re in thousands or ten’s of thousands of homes.

So, the thing that IT is trying to manage right now has shifted from 100 corporate offices and a couple of data centres to that plus tens of thousands of homes and a number of cloud data centres as well. So, again, from that and looking at the implications of that, what was working at the start of the year, the strategy, the tools, the processes, and the practises they used, they don’t work for tens of thousands of homes and in the cloud environment. They haven’t got visibility, the tools were developed to be used on their own private infrastructure, not on this very fragmented, dispersed environment that they‘ve got now for their staff and their applications where they don’t have visibility, they don’t own the infrastructure.

So, they’ve actually got to fundamentally no, given that there’s no going back, they’ve actually got to rethink their IT strategy going forward.

Q4: So, this is where the Verizon / Boston Consulting Group paper comes in?

A4: Yes, spot on. So, really what Verizon did very well with Boston Consulting is get ahead of the curve and quite early, back in April, start talking about in the first white paper in the series – this is the second white paper in the series that we’re involved in  – setting the scene. So, saying ‘look the world has changed’, really articulating the story that you and I have just been through.

The second paper, and our involvement in it, is more to do with the fact that the conclusion is you do need new tools, you do need new processes. In actual fact, when you think about the sheer scale of the office environment, tens of thousands of home offices in the cloud environment and the lack of visibility, IT departments are going to need a lot more automation assistance, a lot more analytics, a lot more insight and they need tools like ours in order to bring that insight to this new IT environment.

Actual Experience are the only Verizon partner that they actually called out and named in this paper which I think is quite important and also, this puts us in the centre of this strategy that Verizon and Boston Consulting are calling out. It creates an opportunity for us to be part of that strategy in an environment that is extremely rapidly changing for IT departments.

Q5: Have you seen any commercial traction yet for this homeworking capability?

A5: Yes, it’s early days. It’s really only been the last few weeks where our partners have been taking this kind of offering, this focus on homeworking, to their customers but we’ve already seen initial deployments, feedback has been good and actually generally, people are asking for proposals to expand this type of capability out much more broadly across the homeworker base.

Of course, Verizon themselves are using this internally, at a relatively small scale at the moment, on some of their homeworkers and we’re hoping to expand that deployment too.

Q6: So, I take it Actual Experience are busy?

A6: Yes, we are. There’s a real opportunity here, it’s got pretty intense on the front of the business which I think it has for a number of businesses but yes, we are busy. I think there is an opportunity here, there is a sea change in what’s going on in the IT world across the whole planet right now so definitely an opportunity for us. What’s more is our partners have recognised that opportunity and hence, the white paper.

Actual Experience plc (LON:ACT) Chief Executive Officer Dave Page caught up with DirectorsTalk for an exclusive interview to discuss their interim results, new partners, the Vodafone update and what to expect in the future.

Q1: Dave, you announced your interim results on Monday and Vodafone news on Friday. If we start with the interims first, can you tell us what the key takeaways were?

A1: We’re managing cash well, the burn is coming down as the revenue increases and we expect that to continue and we have a strong balance sheet which means we’ve got a long runway ahead of us, all of which is good.

Revenue will increase as more deals come through, these will mostly be
land and expand type deals like the ones we recently announced coming through
from our two most active partners.

Finally, just to note, we’re really just starting to tap into our partners’ customer base and the scale that they have. In terms of expectations, don’t expect any dramatic growth of ARR, I think we’ll experience some slow growth as one or two of these deals start to come through and then the deal rate will increase over time and the ARR will accelerate over time as well.

Q2: In the interims, there seem to be talk about new partners in there?

A2: Yes, as you know, Actual Experience is focussed on making our current partners successful but of course, if we’re approached, it makes sense and they’re looking for the right sorts of things then of course, we’ll explore that potential with them.

We’re finding that a lot of these approaches are really coming through noise in the industry as one or two partners now are hearing about what we’re doing with our existing partners and so they’re coming towards us.

Q3: As I mentioned, Vodafone news out on Friday, what can you tell us about that?

A3: We talked about being built into products before, hardware and software products, as a key part of our strategy with the partners and as your listeners may well remember, fundamentally our strategy is being built into products and services of our partners like Intel or Arm, to be built in, to be inside.

The things we can be built inside of are for instance, large-scale
outsource deals, these tend to generate a lot of revenue and they tend to go to
large-scale quickly and we’ve announced one of those last year. We’re built
into smaller scape services as well, they tend to roll-out over time, kind of
land and expand and we’ve announced a couple of those land and expand type
deals very recently.

This Vodafone news is the first public evidence, if you like, of the
final part of our partner strategy falling into place which is the being built
into hardware products. We’ve been evaluated successfully by Vodafone across
all of their chosen uCPE platforms and for listeners who are familiar with this
telco term, uCPE means universal
customer premises equipment. Basically, it’s a server, it’s deployed at all
customer sites by telco’s and it enables the telco to deliver a flexible range
of services.

This is important to us as it enables us to tap into much more of our partners’ customer base, all the way down to smaller and smaller customers and of course, increases the revenue potential that we might have with our partners. A mature partner will probably use all three of these building types built into solutions, built into services and built into hardware.

Q4: Looking forward, what do you see now for Actual Experience plc?

A4: All the components of our strategy are coming together now so obviously we’re pleased with that. The simple focus right now, as people probably imagine, is focussed on increasing our ARR through our existing partners so very much a sales focus.

Again, it’s not a dramatic ARR growth in the short term but if we
execute well, there will be compounding exponential growth as more big deal
solutions come in, more land and expand come in and obviously start expanding and
also if the hardware deployment model starts to factor in as well.

Actual Experience PLC (LON:ACT) Chief Executive Officer Dave Page caught up with DirectorsTalk for an exclusive interview to discuss the two new significant customer deployments and what this means for the future of the company.

Q1: Good news today with the announcement of two new customers, can you tell us anything about the customers?

A1: Of course, I can’t tell you a great deal because of the nature of the contracts we have with our partners.

What is worth bearing in mind for everybody is these customers are like all the customers that our partners target our technology to, they’re all big blue-chips and you would easily know their names, they’re typically what you would think of as blue-chip, large enterprise customers.

This particular case, there’s a couple of them; one in one partner and one in another partner, one is a Software as a Service provider which is a household name and the other is a government department, again everybody would have heard of a) the government and b) the government department.

So, they’re very very significant, large enterprise customer deployments which is where our technology is targeted and that’s really most of what people can take away from this today.

Q2: Now, you’ve called these ‘land and expand’ deals, can you explain for us what that actually means?

A2: So, partner customers, they might deploy at full-scale immediately, we think those sorts of deployments will be fewer and further between but equally they might start small and grow and they can either grow very quickly or grow very slowly or in fact of course some of them might not grow at all.

The point is coming back to the fact that they’re all big, large scale opportunities, we’re uncertain whether they’ll go full-scale immediately or slowly.

What you should bear in mind I guess is that the scale of all of these customers means that each of them has the potential to deliver revenue to Actual Experience of about $500,000 per annum, once they’re up to whatever full-scale is in that organisation, about $500,000 to us. Some are going to be bigger than that average, some of them are going to be smaller than that average but that’s probably the way to think about these deals and the whole idea of ‘land and expand’.

Q3: How did these customers come about?

A3: They came about because of what we’re thinking of as the new focus of the new two partners involved.

So, if we backtrack a little bit and go back to the major announcements back in April and June last year, about a year ago, those deployments were catalytic, they bought a lot of validation to the partners that our technology can be deployed at extremely large scale inside extremely large organisations. They understand, of course, that the customers of the partners have been happy with what our analytics has been providing which is ultimately the most important thing.

What that has done is really, as summertime leading to autumn time, those two partners started to deliver more commitment, more resource, more focus and as a result of that, we saw the early starting of pipeline generation, first names appearing in this new pipeline around Christmas time or just before Christmas time.

The sales cycle, such that it is, brings us up into the March/April period where those early pieces of pipeline are coming to what a salesperson would think of as closable opportunities as in the salesman could legitimately say ‘ok, let’s have the order now’. That was the March/April time, the first couple from that new pipeline were coming in that closable window around March/April.

These two deployments are really as a result of all of that, they’re the first two, one in each partner actually, but the first two of these new wave of pipeline which have come through closed and gone into deployment.

Q4: So, what does this say about the future of Actual Experience?

A4: I think the most significant thing is that the machinery of these two partners is starting to work for us, they’re producing pipeline, they’re producing closable opportunities and this should now start to gather pace and consistency. We should shift now from, I guess, a deal now and again to a deal every quarter, a deal every month and so on so that acceleration should start to come through which is obviously very exciting.

I think the other thing to bear in mind I think for everybody today, one of the important things to remember, the partners that we have are common with a lot of other vendors that deal with these major partners but there is a difference between most of how those vendors are dealt with and how we are dealt with.

So, most of those vendors are sold or resold for example, that might be CRM, Customer Resource Management, so the sales force of these partners would say to the customers ‘do you have a need for CRM?’. The point is that these are standalone product in a portfolio of products that our partners would deliver to those customers and of course, they’d try and sell them.

That’s very different to where we’re moving to and developing and where these deals sit because these deals are actually part of the products and services of our partner organisation so we’re not sold independently, we’re sold as part of a product that’s sold to all the customers of our partners.

So, there’s a systematic scalability to this as once you’re built in then you can genuinely access the whole customer base of these partners and I think that’s a very distinctive difference. It’s also one of the reasons why it’s taken, perhaps, a little bit longer for us to get to this revenue generation point with our partners. You do have to put the extra effort and the extra miles to get built in, once you’re there, the scaling over the medium and long-term is very exciting indeed.