INS.L Regulatory News (INS)

7 March 2018

Instem plc

("Instem" or the "Company")

SaaS Business Update

Growing demand for Instem's Software-as-a-Service ("SaaS") delivery model

Instem plc (AIM: INS), a leading provider of IT solutions to the global life sciences market, announces that one of the world's largest chemical products companies is the latest customer to adopt the Company's market leading SaaS delivery model for accessing its solutions via the Instem Cloud. Annual recurring revenue from this client will immediately increase by over 40%.

The growing shift towards the SaaS based revenue model will see a continued improvement of earnings visibility for Instem and will ultimately deliver an expansion in operating margins in-line with similar cloud-based delivery models.

Originally developed to attract new clients, this latest client to adopt the Company's SaaS approach has been using Instem's Provantis® software for more than 12 years and represents the growing trend to move from on-site installations to the Company's highly secure, cloud-based SaaS offering.

Instem's SaaS Platform

Instem's SaaS clients enjoy a reduced IT burden, flexibility and scalability to meet their changing needs, giving them faster access to new product releases and high quality shared services that in turn deliver an enhanced customer experience in terms of lower total cost of ownership, rapid implementation and high reliability.

Instem's professionally managed online platforms are run from centralised state-of-the-art third-party data centres, which can be accessed from any location that offers connectivity to the Internet, 24 hours a day, seven days a week, and are currently being used every day by drug developers, contract research organisations, universities, research institutes and government agencies around the world.

SaaS Impact on Quality of Earnings

The 40% increase in recurring revenue from one client is typical of Instem clients converting from on premise to SaaS deployment. With £3.4m of existing SaaS revenue and £9.6m of non-SaaS based recurring revenue, procured on an annual basis, reported for the 12 months to 30 June 2017, there remains a significant opportunity to achieve material increases in SaaS based revenue recognition over the next few years as clients make the transition.

ISO 27001

With an ever-increasing volume of high-value client data under its control, Instem has been independently certified to the international standard for information security management systems, ISO 27001. This is another unique differentiator for Instem in a market environment that has become highly focused on information security. The newly awarded certification to ISO 27001 is also a significant component in ensuring both internal and client compliance with EU General Data Protection Regulation ('GDPR') which becomes law on 25 May 2018, which we believe is another reason why customers are switching to Instem's SaaS cloud delivery platform.

Phil Reason, CEO of Instem plc, commented: "The strategic process of migrating clients from on-site installations to our market leading SaaS model continues apace. This latest agreement with a leading chemical client sees Instem deploy its Provantis® product from its own secure cloud services environment, as opposed to the client's own data centre, thereby reducing their cost of ownership while improving Instem's software deployment and management efficiencies."

"The transition to SaaS across the regulatory life sciences industry has been quickening in recent months after initial concerns over data security and the generally conservative nature of the participants. However, both existing clients and new prospects are now fully recognising Instem's leadership in this area and with GDPR coming into effect in May of this year we anticipate strong growth in SaaS revenue."

For further information, please contact:

About Instem

Instem is a leading provider of IT solutions & services to the life sciences market delivering compelling solutions for Study Management and Data Collection; Regulatory Solutions for Submissions and Compliance; and Informatics-based Insight Generation.

Instem solutions are in use by customers worldwide and enable our clients to bring life enhancing products to market faster.

Instem's portfolio of software solutions increases client productivity by automating study-related processes while offering the unique ability to generate new knowledge through the extraction and harmonisation of actionable scientific information.

Instem supports over 500 clients through offices in the United States, United Kingdom, France, Japan, China and India.

To learn more about Instem solutions and its mission, please visit instem.com.

About Provantis®

Provantis® is a modern, fully integrated Windows-based system for organisations engaged in non-clinical evaluation studies.