Tribal Group warns of slowing growth as revenues dip
By Duncan Ferris
Date: Tuesday 20 Aug 2019
(Sharecast News) - Tribal Group's shares fell on Tuesday as it reported a drop in interim revenue and warned that short to medium term growth may slow amid a "structural shift" in the education software industry.
The AIM traded company reported revenue of £40.4m for the six months ended 30 June, for a 4.0% fall from the same period last year, as its education services division experienced a 9.0% reduction in sales to £11.7m.
However, revenue from the student information systems division remained constant at £28.7m and overall annual recurring revenue increased 5.0% to £19.9m so that it now represented 49.0% of total revenue as opposed to 45.0% at the same point last year.
Meanwhile, profit before tax increased by 4.0% to £4.3m, which was in line with management's expectations.
Tribal also warned that its outlook will be affected if large new licence opportunities in higher education remain depressed, stating that although its team continues to work on a number of bids the longer-term nature of the sales cycles may have a slight impact on the expected revenues and operating profit in 2020.
The company stated that this comes as the industry undergoes a structural shift, with a move away from costly and inefficient on-premise solutions and demand increasing for flexible, cloud-based student information platforms built on an open ecosystem.
Consequently, the educational software provider was optimistic that Tribal Edge, its next generation cloud platform, has the potential to transform its long-term growth prospects.
Mark Pickett, chief executive of Tribal, said: "Our outlook for the full year remains unchanged subject to successfully winning the Middle East inspections work in H2, we continue to work on a number of new revenue opportunities, and we remain very excited about the longer-term growth opportunities available to us through the transition to Tribal Edge."
Tribal Group's shares were down 8.19% at 66.10p at 0832 BST.
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