(Alliance News) - Instem PLC on Friday said it swung to a pretax loss in the six months ended June 30 on higher employee costs, but reported topline growth despite the "market weakness" during the period.
The Staffordshire, England-based life science software company said it swung to a pretax loss of GBP66,000 in the first half of 2023 from a GBP2.0 million profit a year prior as employee benefits expenses rose by 26% to GBP18.2 million.
Revenue grew 10% to GBP29.7 million from GBP27.0 million the year before, while recurring revenue grew 27% to GBP19.6 million from GBP15.4 million.
Adjusted earnings before interest, tax, depreciation and amortisation fell by 11% to GBP4.0 million from GBP4.5 million.
Looking ahead, Instem said it continues to perform well, but expects the rate of revenue growth and underlying operating performance to be hurt by "a wider softening market in the near term."
Full year adjusted Ebitda is expected to be around GBP11.1 million, compared to GBP10.9 million in 2022.
Chief Executive Officer Phil Reason said: "We have achieved further progress during the period, reinforcing our position within the sector, growing our touchpoints and deepening relationships with existing and new clients. However, revenue growth has not been as robust as during previous periods due to a softening in market conditions in the consulting as well as [Standard for Exchange of Nonclinical Data] and Target Safety Assessment outsourced services segments of the business.
"While this market weakness has impacted the company's performance for the period, and is expected to be reflected further in the full-year performance, management believes that the long-term prospects remain strong - with the company's high levels of recurring revenues underpinning confidence as well as the relatively untapped upside from the growing [artificial intelligence] opportunities yet to be factored in."
Shares in Instem were up marginally at 825.09 pence each in London on Friday morning.
By Sabrina Penty, Alliance News reporter
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