Nottingham, 15 May 2023 – This press release provides a trading update for Impala Bidco following a busy start to the year, and the execution of various business transformation projects. The update also details information regarding the potential misstatement of 2022 revenue figures reported under IFRS. Work is underway with a ‘big 4’ accounting firm, to conduct a full review of the figures, and any adjustments will be announced accordingly.
Q1 FY23 Trading Update
In the first part of 2023, through to the end of April, Impero saw total bookings of £4.5M ACV and £6.2M TCV. Overall, this was 4.2% down compared to the same period in the previous year, but a strong March saw an increase of 4.3% (ACV) over March 2022, and April was up 18.4% in ACV (30.1% in TCV), with the growth trend extending into May. The slower January and February months were mainly due to the timing of some large multi-year renewals in 2022 and a drop in the corporate business, due to a number of binary deals being pushed back into Q2. The business expects bookings to exceed previous year through Q2 as the busy selling season hits its peak.
In Impero’s core Education segment, bookings for the quarter were up by 11% in the first four months of the year YoY, with 11.4% growth in EMEA (ACV), 378% growth in APAC, and a slight drop of 2% in the Americas.
In the first part of the year, the business underwent a full review of cost and business efficiency, leading to the implementation of a headcount rationalisation plan, with annualized savings of £751k. As part of this process, several departments were streamlined. These changes brought together all aspects of technology under the CTO, with a view to accelerate initiatives around deployment automation and environment testing, as well as streamline the prioritization of support issues. Customer Success and Training moved into the Sales domain, under the CRO, to help unify the customer journey and support revenue goals for 2023. This restructure forms part of the planned integration of teams, following the ContentKeeper acquisition at the start of 2022.
As well as integrating departments, there was a focus on technological alignment. Q1 saw the rationalisation of a number of internal systems, including the migration of all staff into the full Microsoft ecosystem, rendering cost savings, as well as operational improvements. Leveraging the ContentKeeper Private Cloud infrastructure, Impero was also able to kick off its data centre migration project. This involved the building of two new data centres in the UK, and the initiation of a 12-month migration programme to move a number of Impero products and systems over from public to private cloud infrastructure. This project is set to deliver annualised savings of £1.5M by the end of FY23, and at this point in time annualized savings of £0.5M have been achieved.
Looking to product development, in Q1 there were a number of critical enhancements to Backdrop (the platform behind Classroom, Wellbeing and Safeguard). An investment was made in Machine Learning for Wellbeing’s online safety capture technology, as well as a full review of keywords, to reduce false positives and enable faster triaging for customers. For Classroom, work has been completed to improve the ‘Single Device View’ as well as the product’s thumbnail technology, for a better user experience. Classroom also released a version in German and has made significant progress towards a Dutch version. These two markets are showing increased demand for classroom management solutions, through existing reseller relationships.
The Web Filter development team released four meta-releases of the ContentKeeper Cloud product in Q1. Changes were focused on regional support required for the launch of ContentKeeper’s Web Filter in the UK, deployment automation work to increase operational efficiency and general enhancements and security upgrades. The Web Filter team also released version 194.19 to market enabling multiple Google domain support, providing new Microsoft Tenant controls and supporting DNS v3, which is particularly important for the UK market entry.
Towards the end of Q1, ContentKeeper’s Web Filter product was launched in the UK market. This was marked by attendance at the Bett Show in March, the largest education technology show in the world. The show generated around 400 leads for the business, currently with a pipeline value of £475,114, solely from the exhibition. Four of these leads have already converted into bookings.
Demand for ContentKeeper in the UK has continued to build with £2.7M (TCV) currently in the EMEA sales pipeline. Recent updates to Ofsted requirements and KCSiE guidance have increased the requirement for schools to provide clear, actionable data regarding student online safety. Feedback from Multi-Academy Trusts is that the product is unrivalled in its granular reporting and ability to filter content on all appropriate Operating Systems including iPads. As governance around internet content in the schools grows, and Multi-Academy Trusts look to consolidate technology across all their schools, the ContentKeeper Web Filter solution offers a critical solution to a growing problem.
The Bett show also marked the end of a busy tradeshow season for Impero, with 2,801 qualified leads generated in the period. This represents an 18% increase on Q1, 2022 and £3.9M in pipeline value. Testament to the success of the business over the last year, at the end of Q1 Impero was shortlisted for an Education Investor Award, for ‘Ed Tech Provider of the Year’.
Finance and Revenue FY22 Update
With the recent appointment of a permanent CFO, Impero is pleased to announce the appointment of a permanent Head of FPA who joined the business at the end of April. In addition, the business expects to confirm the appointment of a permanent Financial Controller in the near future. There have also been several interim hires replacing existing contractors to considerably upskill the finance function. The appointment of the top finance management team has been a key business objective over the past few months.
The Finance team has made significant progress internally with enhanced management reporting, addressing working capital challenges, improving the collections profile, and improving the financial control environment.
As a result of the focus on improving the financial control process, and in particular the order to cash process and focus on KPIs, it has become apparent that there has been a potential misstatement of FY22 revenue figures reported under IFRS. This was captured as part of internal reviews with the introduction of new KPIs. As a result, a ‘big 4’ accounting firm has been engaged to firm up FY22 revenue figures.
While there are several contracts (primarily relating to our recent acquisitions) where multi-year deals have been recognized in one year, there are also potential positive offsets.
Where multi-year deals have been recognized in one year, this is not lost revenue but revenue recognized too early; this correction is expected to lead to higher than anticipated revenue growth for FY23.
Any revenue adjustments arising from this exercise will also lead to an adjustment of revenue and adjusted EBITDA figures reported in the Q1/Q2/Q3 and Q4 bond reports for FY22.
It is important to understand that these revenue adjustments are not a real loss of revenue but a restatement of timing. These deals are still live and whilst the revenue has been recognized in FY22 incorrectly, it will be recognized appropriately in FY23 and FY24.
Once a definitive view of FY22 results is achieved and agreed with the appointed auditors, an update will be provided.
Information:
This information is information that Impala Bondco plc is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 18:30 CEST on 15 May 2023.