Tern “opportunities for IoT company investments continues to be remarkably robust”

Tern Plc (LON:TERN), the AIM quoted investment company specialising in the Internet of Things market, has announced its unaudited interim results for the six months to 30 June 2021.

Highlights

·    Significant progress from all of the Company’s principal portfolio companies1 in the period

o The period-on-period increase in turnover of the principal portfolio companies1 in the six months to 30 June 2021 was an encouraging 75% (six months to 30 June 2020: 62%).

o The period-on-period increase in the number of employees within the principal portfolio companies1, a key growth measurement, was 14% in the six month period to 30 June 2021 (six months ended 30 June 2020: 7%).  This was supported by an increase in revenue per employee of 53%, highlighting that employee growth was matched by a higher growth in revenue.

·    £0.7 million was invested in existing portfolio companies during the period, supporting their growth and development. As at 30 June 2021, Tern had £0.4 million in cash which was increased by a post period end fundraise of £4 million (gross) in July 2021.

·    IPO of Wyld Networks on NASDAQ First North completed just after the period end on 2 July 2021, following a syndicated funding in January 2021.

·    Device Authority continued to accelerate its annual recurring revenue growth through its subscription base and its modularised licence platform, KeyScaler, which launched for Azure Sphere in the Microsoft Azure Marketplace during the period, aided by the increasing focus on IoT security, the launch of product enhancements, the securing of further distribution partnerships and the recruitment of a number of key senior staff.

·   Talking Medicines launched its artificial intelligence and natural language processing powered patient intelligence platform, PatientMetRx, to provide a systematic way of measuring the patient experience of medicines for the pharmaceutical industry.

·    Significant further contract wins for FundamentalVR and a further investment in FundamentalVR from Tern post period end.

·    InVMA continued to enjoy growing sales and a strong sales pipeline, with a focus on the global deployment of AssetMinder®.

Al Sisto, CEO of Tern Plc, said:

“I am delighted by the progress and pace of development that our portfolio companies achieved in these continuing unprecedented times, increasing their relevance in the markets they serve, accelerating their customers’ digital transformation goals and creating new opportunities. The increase in aggregate turnover and portfolio headcount growth reflects our portfolio companies customers’ belief in and adoption of their products and services. I am also pleased how the team at Tern has been able to help guide our investee companies through this period of market expansion and growth. The ‘New Normal’ presents many unique challenges, but with the traction achieved by our portfolio’s emphasis on customer driven Product-Led Growth (“PLG”), which gained real traction in the second half of 2020 and has continued into 2021, our companies are now experiencing significant repeat business from existing customers through internal referrals. This approach has also helped to lower our aggregate portfolio sales cycles and development costs, improving revenue per employee, for example. All of which adds to the underlying prospects and value of the portfolio.

“We were pleased to see one example of the execution of our funding model with the syndication of the Wyld Networks funding early in the year followed by its IPO on Nasdaq First North post period end in July, with Tern retaining a majority interest in the business.

“The opportunities for IoT company investments continues to be remarkably robust as a result of the pandemic requiring companies and governments to adopt digital solutions. We also believe that the increasing ESG focus, particularly around sustainability, will rely on the importance of technology in many aspects of our future.

“Our portfolio companies made significant strides towards cementing their targeted market leadership positions during the first six months of the year, and we believe our objectives for Tern are being met as our portfolio expands in size and value. With our focus on the high growth IoT market, our years of operating expertise, the synergistic benefits of our portfolio composition and our sustainable investment model I believe Tern is very well positioned for the future. In addition, we will continue to aggressively seek the very best IoT technology companies which can provide disruptive solutions to the healthcare and industrial sectors and that add to the synergies between our existing holdings, providing additional value growth for the long term.”

Note 1: Principal portfolio company growth excludes Push Technology, in which Tern has a <1% holding and minimal influence.

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