Tribal Group Plc · LSE:TRB
Tribal — H1 2019 Earnings Presentation
31 slides from Tribal's earnings presentation, Aug 20, 2019
Slide 1: 2019 Half Year Results
Empowering the world of education 2019 Half Year Results 20th August 2019
Slide 2: 2019 Half Year
2019 Half Year Good SIS performance in EMEA; Australia challenging; Education Services positive but Middle East inspections curtailed in H1 Annual recurring revenues almost £20m for half-year, up 7%. Operating margin up to 15.5% Acquisition of Crimson Consultants (Tribal Dynamics) expanded SIS offer
Slide 3: 2019 Half Year Highlights
2019 Half Year Highlights Tribal profit growth £m 7 Student Information Services 15% HE: Global ARR sales ahead, EMEA license and implementation ahead 6 despite no new SITS wins, however APAC significantly behind. 5 FE: Significant growth on prior year, won largest colleges 10% group in London. 4 WB
Slide 4: Financial KPIs
Financial KPIs Revenue Adjusted operating profit Adjusted operating margin £40.4m £6.3m 15.5% 2018 £42.0m down 3.8% 2018 £6.3m In line 2018 15.0% up 0.5 pp Annual recurring revenue* Committed income Revenue / Average FTE £19.9m £123.5m £96k 2018 £18.9m up 5.5% 2018 £121.6m** up 1.6% 2018 £92k** up 4
Slide 5: 2019 Challenges
2019 Challenges Universities are delaying going to market for new SIS system, particularly Australia, due to market uncertainties Challenges across all business in Australia are being addressed and improvement plans in place, but will continue in 2020 Dispute with software platform provider on royal
Slide 6: Acquisition of Crimson Consultants (Tribal Dynamics)
Acquisition of Crimson Consultants (Tribal Dynamics) What Why • Pure play Microsoft Dynamics vendor, developing IP- • Broadens Tribal’s portfolio of products to take to market: based solutions for the UK Higher and Further • increase share of wallet in existing customers Education market • penetrate
Slide 7: Financial Report
Financial Report August 2019 Tribal Results Half Year 2019 7
Slide 8: Summary six months ended June 2019
Summary 6 months ended 30 June 2019 Revenue Adjusted Operating Profit* Net Cash £40.4m £6.3m £6.0m 2019 £40.4m 2019 £6.3m 2019 £6.0m 2018 £42.0m 2018 £6.3m 2018 £9.2m down 3.8% in line down 35% § Core revenue, on a constant currency basis, is down 3%, SIS unchanged, Education Services down 9% § Adju
Slide 9: Segment Results
Segment Results Segment Revenue Segment Profit Revenue (£m) 2019 H1 2018 H1 2018 H1 Growth % (Constant Currency) (Constant Currency) (Constant Currency) (Constant Currency) 6 months to 30 June 45 14 28.7 29.1 28.8 - 40 Student Information Systems 12 35 30 10 Education Services 11.7 12.8 12.9 (9%) 25
Slide 10: Segment Results - SIS
Segment Results - SIS 2018 H1 Growth % 2018 H1 Growth % Student Information Systems 2019 H1 2018 H1 (Constant (Constant 2019 H1 2018 H1 (Constant (Constant (£m) Currency) Currency) EMEA (£m) Currency) Currency) License & Development Fees 3.4 4.8 4.8 (30%) License & Development Fees 3.2 3.0 3.0 8% Su
Slide 11: Committed Revenue
Committed Revenue Committed as at 30 June 2019 Total Committed Revenue* split by year of expected recognition £123.5m (FY18 £121.6m) 140 • Increase of £1.9m on 2018 £123.5m 8.9 120 34.7 Key Student Information System contracts closed • Sopra Steria (Shared Services Connected 100 Limited) Other • TAF
Slide 12: Cashflow
Cashflow 2019 2018 Operating Cashflows 7.4 8.0 Net cash before acquisition Working Capital movements (10.2) (6.2) £12.0m (£6.0m after acquisition) 2018 £9.2m up 30% Tax received/(paid) 0.1 (1.2) Operating cashflow (before tax) Net Operating Cash (2.7) 0.6 Acquisition of Crimson (5.9) - £(2.8)m 2018
Slide 13: Tribal: strategy update
Tribal: strategy update EMPOWERING THE § Evolution of Tribal strategy WORLD OF EDUCATION § Pricing the transition to We provide the expertise, Edge software and services required by education and business organisations worldwide to underpin student success. August 2019 Tribal Results Half Year 2019
Slide 14: Higher Education: a market ripe for change
Higher Education: a market ripe for change Lack of industry standards è systems patched together over time • Inefficient • Inflexible • Closed • Costly on-premise August 2019 Tribal Results Half Year 2019 14
Slide 15: Higher Education: a market ripe for change
Higher Education: a market ripe for change need a pathway • Inefficient • Efficient • Inflexible • Flexible • Closed • Open (for innovation) • Costly on-premise • In the cloud August 2019 Tribal Results Half Year 2019 15
Slide 16: Tribal Edge – a transformational journey
Tribal Edge – a transformational journey Process Transformation pathway • Best practice processes Tribal Edge user built into User Interface experience Business process complexity Technical Tribal Edge SIS complexity • Develop open standards • Cloud infrastructure System Transformation pathway Augus
Slide 17: Tribal Edge: a complete enterprise solution built on open standards
Tribal Edge: a complete enterprise solution built on open standards Student experience Learning & Employment Enquiries Applicants Admissions Enrolment Assessments Awarding Studying & Alumni Business experience CRM ERP Tribal Edge Student Information System HR … Ecosystem of standards-based integrate
Slide 18: Incremental Revenue opportunities
Incremental Revenue opportunities Focus on driving Annual Recurring Revenue: § Moving current on premise applications to the Public Cloud § Incremental sales of modules of Tribal Dynamics § Edge platform adoption driving additional hosting revenues § Additional value-add modules built on the Edge pl
Slide 19: Pricing: the transition to Edge
Pricing: the transition to Edge August 2019 Tribal Results Half Year 2019 19
Slide 20: Example 1 of 2: upfront pricing to Cloud / SaaS pricing
Example 1 of 2: upfront pricing to Cloud / SaaS pricing § Historic pricing model (blue line) Revenue model has upfront License fee + annual recurring Support & Maintenance payments at 20% § IFRS 15 (green line) spreads the license revenue over implementation period, typically 2-3 years § Cloud / Saa
Slide 21: Example 2 of 2: upfront pricing to Cloud / SaaS pricing
Example 2 of 2: upfront pricing to Cloud / SaaS pricing Profit model § Profit contribution margin for historic pricing models is around 80% (license and S&M) § Blended margin of Cloud / SaaS pricing lower due to cloud costs, but continues at same rate year-on-year § Breakeven point on cumulative pro
Slide 22: Tribal: model comparing revenue/profit with Edge
Tribal: model comparing revenue/profit with Edge § Chart depicts the model for existing Higher Education customers revenue / profit trajectory 1) without the introduction of Edge (light blue bars) and 2) the revenue / profit trajectory following the adoption of Edge (dark blue bars), highlighting th
Slide 23: Tribal – Looking Forward
Tribal – Looking Forward August 2019 Tribal Results Half Year 2019 23
Slide 24: 2019 – A Transition Year
2019 – A Transition Year Continue to develop our Edge strategy, and build out Edge modules, preparing company and customers for 2020 adoption Developed strategies for customers to migrate into public cloud, and developed SITS Accelerate to drive standardised process Grown ebs to be the Further Educa
Slide 25: Outlook
Outlook Company well positioned for first Edge delivery, sales growth in Tribal Dynamics, and driving partner ecosystem and M&A opportunities Opportunities for additional offshoring drive cost efficiencies and continuing margin improvement Forecast remains unchanged for 2019; market uncertainties re
Slide 26: Appendix
Appendix August 2019 Tribal Results Half Year 2019 26
Slide 27: Consolidated Income Statement
Consolidated Income Statement 2019 2018 £m £m Revenue 40.4 42.0 Gross profit margin 50% 50% Adjusted operating profit 6.3 6.3 Adjusted operating profit margin 15.5% 15.0% Other Items (1.8) (2.0) Statutory operating profit 4.4 4.2 Finance (income)/costs (0.1) (0.1) Statutory profit before tax 4.3 4.1
Slide 28: Other Items
Other Items HY HY 2019 2018 £m £m Acquisition related costs 0.1 - § To assist understanding of the Share based payment charges 0.5 1.0 underlying performance of the Legal 0.3 - business, certain items are included Restructuring 0.3 0.1 in Other Items. IFRS3 amortisation 0.6 0.9 Other Items (excluded
Slide 29: Product Development costs in 2019
Product Development costs in 2019 £m 2019 H1 2018 H1 Change Product Development 5.8 5.2 9% of which capitalised 2.8 1.7 38% Tribal Edge 2.8 1.5 47% School Edge 0.0 0.3 (1419%) § Investment in the Tribal Edge of which expensed 2.9 3.5 (19%) platform increased to £2.8m SITS (inc. SID) 1.0 1.2 (26%) ca
Slide 30: Tribal Edge – Student Information System
Tribal Edge – Student Information System User Interfaces (student and staff) Engage Marketing & Alumni Recruitment Management Student Enrolment/ Learning Student CRM Admissions Assessments Awarding Support Registration & Studying Event Apprenticeship Management Management … Finance Statutory Returns
Slide 31: Contact
Contact: Email § [email protected] § [email protected] WWW.TRIBALGROUP.COM @TRIBALGROUP August 2019 Tribal Results Half Year 2019 31