itim Group plc (LON: ITIM), a SaaS based technology company that enables store-based retailers to optimise their businesses to improve financial performance, has announced its audited results for the year ended 31st December 2021.
Financial Highlights
| · | Group revenues increased by 14% to £13.5 million (2020: £11.8 million) |
| · | Annual recurring revenue (“ARR”) is £11.1m (2020: £9.6 million) |
| · | Group Adjusted EBITDA* increased by 47% to £2.2 million (2020: £1.5 million) |
| · | Adjusted EBITDA* margin increased by 17% up 4 percentage points (“PPT”) (2020: 13%) |
| · | Adjusted Earnings per share** 3.75 pence (2020: 4.10 pence) |
| · | Closing cash balances were £6.2 million at 31 December 2021, up from £2.1 million at 31 December 2020 |
Operational Highlights
| · | Completed successful IPO in June 2021 raising £8m before expenses |
| · | Broader product offering to provide a range of services to more than 50 major retailers including John Lewis, Sainsbury’s, JD Sports, WH Smith and Majestic Wine amongst many others |
| · | New retail advisory committee established including Justin King and Lee Williams, as well as a number of other high-profile advisors including Beth Butterwick, CEO of Jigsaw, Simon Forster, former CEO at Selfridges |
| · | Launch of Chameleon 360 is an Omni-channel store-centric solution that combines full Omni-channel capabilities at POS, with in-store mobile apps, consumer apps, fully integrated with ecommerce platforms |
| · | Significant new customer wins in the fashion, electronics and pharmaceutical retail sectors |
* EBITDA has been adjusted to exclude share-based payment charges, exceptional items, along with depreciation, amortisation, interest and tax from the measure of profit.
** The profit measure has been adjusted to exclude exceptional items and share option charge
Ali Athar, CEO of itim Group plc, said: “We are very pleased with our performance in 2021. This was not only our first year as a public company but also a transformational year for itim, in which we have delivered strong growth and strategic progress. The opportunities that continue to present themselves provide us with great confidence that there is considerable demand for our products.
“Trading so far this year has started well, we have seen new customer wins and extensions of existing contracts as well as the creation of our new retail advisory committee, with what we believe are some of the most successful leaders in retail. I look forward to the remainder of 2022 with optimism and will updating the market on progress in due course.”
CHAIRMAN’S STATEMENT
Against what has been a challenging backdrop for everyone, I am pleased to be in a position to update shareholders on a momentous year for itim, characterised by achievement and growth.
Despite the impact of the pandemic on the ability of bricks and mortar retail stores to trade for long periods of time during the year, the Group delivered on its strategy in continuing to grow operational profits while investing in strengthening its platform offering, which led to the Group being quoted on AIM, a market of the London Stock Exchange in June 2021, raising £8m of new investment in the process.
Moreover, our Optimisation platform continues to expand geographically with further international, new customer wins in the USA along with wins in Brazil, Argentina and Uruguay.
Financial results
Overall, we believe the benefits of the Group’s high-quality SaaS business model can be seen in the robust financial performance in the year. The Group’s high levels of recurring revenue (approx. 77% of revenues), low customer churn and continuing transition to an ARR model has led to increased revenue visibility and better-quality earnings which delivered double-digit revenue growth of 14% to £13.5m (FY20: £11.8m). Careful management of the cost base, in line with the Group’s revenue profile, alongside continued investment in the product resulted in an increase in adjusted EBITDA for the year of 47% to £2.2m (FY20: £1.5m) and an increased adjusted EBITDA margin of 17% (FY20: 13%).
People
Despite disruption to normal office operations during Covid-19, we have continued to deliver product innovation and high levels of service to our customers with our colleagues working remotely. Whilst we are a technology-driven company, we are also a people-led business. Our culture of innovation is driven from personal interaction across the Group and with customers. Remote working had the potential to present a unique set of challenges. However, across the organisation, our people tackled each day with enthusiasm, diligence and a positive outlook. It has been an impressive response and underlines why our team continues to be our most valuable asset. I would like to personally thank them all.
Outlook
We enter 2022 in a solid financial position, delivering greater subscription revenues and good levels of interest in both existing and new client activity. The Board is excited about the growth opportunities presented by both The Retail Suite and Profimetrics platforms, the performance of which is being underpinned by new marketing initiatives for both products and the ongoing strengthening of the associated delivery teams.
However, we are continually seeing increases in salary levels across the technology sector and labour shortages but looking to overcome this with selective overseas outsourcing. There is no doubt with the headcount increases planned in 2022 it will put short-term pressure on profits as expected.
But with a strong cash position, no debt and a well-proven business model we are well positioned to continue to thrive in 2022.
In conclusion, 2021 has been a landmark year for the Group and I would like to extend my appreciation to everyone in the Company, our partners and our customers. Our ongoing growth in such a challenging environment, a pipeline of market-leading innovations and the delivery of a successful IPO are significant achievements. Without exception, everyone in the business has contributed to this success and ensured that we are an agile, fast-growing organisation, with customers that see us as integral to their futures and a robust balance sheet. Importantly, we now have the vision, technologies and capabilities we need to achieve our long-term, global ambitions for growth.
Michael Jackson
Chairman
11th May 2022
CHIEF EXECUTIVE’S REVIEW
The year to 31st December 2021 was one of excellent progress for itim. We delivered on our strategic goals for the year, becoming a public company in June 2021 and delivering a pipeline of innovative products onto our platform that create further value for our customers whilst dealing with the challenges of the pandemic as we come to terms with the new ways of conducting business remotely.
All this was achieved whilst delivering a strong set of results for the year that met market expectations and positive sales momentum as we move into 2022.
Market opportunity
We believe the Covid-19 pandemic has accelerated market forces that were already changing the retail market forever, and itim is ideally placed to leverage these trends and ensure its customers adapt and thrive in this environment. At its core, it is our view that the retail sector is restructuring around consumer commerce, where consumer expectations dictate the business model. The volume and pace with which consumers are moving online requires a radical response from traditional retailers, who must adapt the relationship between their physical and digital business models, enhance their digital capabilities and reinvent their value proposition for this digital-first world. At the same time, there are growing trends that are seeing consumers looking to test products before purchasing online; demanding a seamless process for returns; seeking a wider choice of delivery options and asking for increased levels of face-to-face contact for customer service.
Whilst the term omni-channel retail has been around for some years, it is really only now being understood as a fully-integrated approach to commerce, providing shoppers with a unified experience across all channels or touchpoints. This encompasses traditional stores, e-commerce and mobile apps.
We believe that retailers with stores who embrace this integrated, end-to-end omni-channel retail model can offer greater consumer choice, enhanced service standards, and levels of convenience that outstrip their online-only competitors.
In the post-pandemic landscape, traditional retailers have the opportunity to not only compete effectively with pure play online retailers in this new digital world but leverage significant advantages to win market share. In order to realise this potential they need to leverage technology systems that efficiently deliver cross-channel experiences for consumers; whilst continuing to differentiate from online-only offerings through more diverse delivery options and a more personalised service.
In essence, omni-channel retailing provides a seamless, personalised shopping experience, no matter the channel or location across a unified platform beginning with the supply base. This will enable:
| 1. | Customers to be able to shop online at a local store in addition to the central warehouse; |
| 2. | Customers to see exactly what is in stock at a local store to enable 30-minute click and collect and provide retailers with the opportunity to upsell whilst customers are in store; |
| 3. | Same day delivery through the growth of local courier networks; and |
| 4. | The ability to leverage customer relationships through the store network and to focus on ‘VIP’ customers. |
| 5. | Curated Orders and subscription revenue streams. As retailers build a database of customers’ individual information, and begin to understand customer preferences, they have no need to wait for an order. They send what they believe the consumer needs, whether it is a curated basket from the local store or from their warehouse in exchange for a monthly subscription fee. |
Whilst this sounds relatively simple at a high level, only a minority of retailers have achieved a true omni-channel solution to date. However, we believe this has now become an imperative for retailers to achieve in a post Covid-19 world.
The advent of omni-channel retailing – on-trend and given a boost
In the last six months, following our IPO, we have been pleased to see those retailers who have been taking omni-channel strategies seriously report strong market performances. Businesses such as M&S, JD Sport and Next, have invested significantly in their digital capabilities and positive results have followed. Although these are the large publicly visible retailers, they are reflective of a trend across the whole retailing industry.
We understand most retailers are now looking to follow suit.
However, we believe Covid 19, supply chain problems, and inflation have placed huge pressures on many retailers’ balance sheets, reducing the capital available to make the kind of investments traditionally required to transform at this pace and scale.
itim’s game-changing omni-channel platform enables its customers to reposition their businesses for today’s consumer but without the need for significant upfront investment or vast internal digital capabilities. We consider itim’s unique solutions to be at the vanguard of efforts to transition retailers to these new models and with it re-establish store-based organisations at the cutting-edge of the sector.
Product development and uniqueness
There are 5 areas where we demonstrate competitive advantage which is critical to the transition to omni-channel excellence.
Unified commerce platform
Unlike other vendors, we provide a single sales platform, across online, stores and wholesale with a single view of customers, single view of product and stock and unified marketing engine. This is crucial to our customers as they transform from product-centric to customer-centric businesses. This evolution is critical in a digital-first world. Importantly, it allows us to turn stores into assets in the fight for customer loyalty and spend by allowing multiple, complex customer journeys, including seamlessly integrating services such as 30-minute click and collect and 1-hour despatch from store.
Price Optimisation
Competing on price is now a basic requirement for a successful retailer as price transparency becomes so easy for consumers. Yet it is our view that genuine price optimisation capabilities remain challenging and elusive in the sector. Powering retailers’ price competitiveness, whilst leveraging gains from a world class approach to optimisation of promotions and markdowns is becoming ever more critical to retaining profitability in a digital world and a key component of the itim armoury.
Stock and Range Optimisation
Omni-channel retailing is opening up huge opportunities for businesses to gain critical steps towards greater profitability through stock optimisation. Itim underpins its customers’ ability to route an order to where stock is. Digitally-led retailers do not need to hold all their stock in stores, but can distribute it intelligently up the supply chain, all the way back to suppliers. Optimising stock this way means you can have bigger ranges with smaller stock investments.
Integrated Order Management
At the heart of omni-channel retailing is the concept of sophisticated order management. This is about being able to route customer orders to stock/service locations which are convenient to customers and profitable for retailers. We have pioneered ideas such as shop local, which allows consumers to shop the stock in their local store in addition to shopping the stock in the web warehouse.
Supplier Collaboration
To be a profitable omni-channel retailer in the modern world, we believe you need the help/collaboration of your suppliers. That means you need suppliers to be tightly digitally-integrated with your business, and you need them to do more of the work for you. Launching new business models like ‘marketplaces’ will only be possible if you can collaborate digitally with your suppliers. Consignment stock and drop-ship models are becoming more important tools in a retailers’ offering. Ensuring accurate product information and fast product introductions is now critical to achieving a competitive advantage.
These are the 5 areas in which we continue to make major investments in R&D.
Outlook
The business has continued to thrive over the last year as evidenced by our financial and operational performance, proving that our strategy continues to deliver. Looking ahead, costs will inevitably rise as we face rising levels of inflation and pressure on recruitment and wages. However, our high-levels of customer retention, excellent customer references and increasingly positive mix of recurring revenues positions the Group well.
We also are expanding internationally with international markets now accounting for 36% of our revenues from territories such as Southern Europe, South America and North America.
Ali Athar
Chief Executive officer
11th May 2022
