A change in strategy means that the revenues of smartFOCUS should be more predictable in future.
Instead of selling perpetual software licences smartFOCUS is using a Software as a Service model where payments are generally monthly. Recurring revenues account for 50% of group revenues and this will increase.
A 2007 profit of £1.7m was turned into a £1.2m loss of £1.2m after revenues declined from £11.5m to £10.4m. The decline was partly down to the change in income model although trading was tough in the fourth quarter. The email business continues to grow.
Marketing and consumer relationship software provider smartFOCUS has reduced its annual overheads by £1.5m at a cost of £500,000. That will help to improve this year’s performance.
There is net cash of £1.5m.
First quarter trading is strong. The fourth quarter will no longer be crucial so it should be easier to achieve the analyst’s forecast than it has been in previous years.
At 5.125p a share, smartFOCUS is valued at £4.81m. House broker Arbuthnot forecasts 2009 profits of £200,000. The shares are trading on 13 times prospective earnings.
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