Arria NLG PLC (LON:NLG) Chief Financial Officer Wayne Thornhill caught up with DirectorsTalk to discuss their half year results
Q1: So Arria’s half-year numbers out today, can you talk us through the highlights?
A1: Yes, sure. So from a financial perspective we’re delighted to see a continuing improvement in our non oil and gas revenues which are up 130% against prior year as are clients continuing to contribute to revenue in the period also are up by a healthy 20%. In addition to that, client reach also broadens, mostly recently we’ve secured engagement with a large US utilities business and as you know we announced the business processing partnership with Genpact recently and that’s going very well. As we begin to see clients exiting from our PoC stage into production it’s really pleasing to see that they’re opting to progress with multiple NLG applications rather than one at a time and that really bodes well for the second half of the year. So despite the reduction in headline revenue, which is a result of the loss of the Shell contract, elsewhere the revenue story is very strong.
You look at the cost side of the business, you can see the clear increase in operating costs of losses, that’s primarily the function of the significant investment that we’re making in delivering the new product strategy. The benefit of that action you’ll begin to see in the second half of the year as our Recount and SDK Developer Cloud products are launched to the market.
So for me, they are the major financial highlights, a major product launch innovative which is the SDK Developer Cloud and Recount, significant partnership with Genpact in a business process outsourcing space and of course the continued success of our patent programme which in the period increased from 5 to 7 patents approved and since then we’ve added another 2 so up to 9 so they’re the key things for me.
Q2: Now you did mention this a minute ago, you’ve had a change in product customer strategy since the Shell deal cancelled, how is this going to support your revenue streams in the future?
A2: So in essence what we’ve done is we’ve transitioned from focussed almost entirely on the oil and gas sector, selling a single product which is our NLG platform product, targeting a small number of clients, predominantly oil and gas and over-reliant on one of them which was Shell. So we’ve transitioned from that to a business selling multiple products across a range of industrial and service sectors with a growing client list and a product launch programme that we believe will be transformational for the business. So you already know about our NLG platform offering and selling enterprise-level applications to global corporates, what that business continues to grow and make steady progress and you’ll start to see that falling through into revenue line as it is doing already compared to prior year. Our first SaaS product as I mentioned is Recount and that’s going to launch later in the summer and Recount is basically a virtual financial adviser, it’s like an accountant for any SME business owner providing expert accounting advice in real time and on demand to either the business owner or a financial manager of the business owner and doing so at a fraction of the cost that’s available today. The SDK Developer Cloud is going to be providing best of breed tool kit functionality to allow the global developer community to create NLG applications of their own, again at a fraction of the cost that was previously possible. The way that’s going to drop into our revenue stream is that you’ll see more revenue from the NLG platform stream and then you’re going to start to see new revenues flowing through from both Recount and SDK Developer Cloud and that will be a combination of a per-seat per month revenue stream in respect of Recount and it will see a combination of per-seat per month and also micropayments for SDK Developer Cloud.
Q3: What are you seeing in the market at the moment?
A3: Across the 3 product offerings so we’re seeing our platform clients transition through from PoC into production and there what’s encouraging is we’re seeing them commissioning multiple applications at the same time rather than one by one. We’re seeing the developer community ask for better tools to help them develop and deliver rich language extension into their applications at sensible and affordable price point and we’re getting great feedback from SME business owners and accountants on the value of having high quality financial information available to them in real time and on demand and they’re effectively having a trusted financial adviser available in their pocket 24/7 and frankly, we’re responding to all of these things with our product offering; platform, Recount and the SDK Developer Cloud. So previously it was only the very largest corporates or wealthy individuals that could afford to get the best expert advice and even then it wasn’t available in real time on demand 24/7 so our view is that Arria’s NLG technologies are democratising the best available subject matter expertise and allowing everybody to be able to have access and to afford that expertise in real time and that’s going to have a profound impact on how people are interacting with technology in their everyday lives. We believe that Arria NLG is really well positioned to commercially benefit from that evolution with these products that we’re launching to the market.
Q4: Have Arria NLG had a positive start to the new financial year?
A4: Yes we have, so we’re half way in and as I say despite headline revenues down explainable due to the loss of Shell, non oil and gas revenues are up, new client engagements are up and we’re on track both on the revenue line and the EBITDA line for our full year numbers so yes, a very positive start.
