15 Aug 2023 07:00
15 August 2023
Instem plc
("Instem", or the "Company")
Half Year Trading Update
Instem plc (AIM: INS), a leading provider of IT solutions to the global life sciences market, announces a trading update for the six months to 30 June 2023 ("H1 2023").
Financial Highlights
Revenue for H1 2023 is expected to be in the region of £29.7m (H1 2022: £27.0m), an increase of approximately 10.2%, with recurring software revenue growing by 27%. This excludes Samarind Limited, which was sold on 1 April 2023 and will be classified as a discontinued operation in the H1 2023 results statement. Annual Recurring Revenue ("ARR") at 1 July 2023 was c.£41m (1 July 2022: £32m). Overall performance was broadly in line with management expectations.
Closing cash at 30 June 2023 was £8.4m (30 June 2022: £10.3m), after £5.8m of deferred consideration paid in H1 2023 in relation to certain of the Company's previous acquisitions. The Group's balance sheet remains strong, retaining the flexibility to execute on acquisition opportunities as they arise. The Board is currently appraising a healthy pipeline of opportunities progressed to various stages.
Operational Highlights
The Company commenced the next phase of its development, positioning itself at the forefront of the growing Artificial Intelligence ("AI") opportunity with an increased focus on in silico solutions as part of a blended growth strategy, building on the relationships and fundamentals of the established business.
The transfer of the ToxHub Platform (the "Platform") and launch of Centrus® announced in May 2023 enables existing and new clients to utilise a single repository from which to unlock new knowledge through the application and deployment of cutting-edge algorithms.
The Company also renewed its long-standing agreement with the National Toxicology Program ("NTP"), run by the US National Institute of Environmental Health Sciences ("NIEHS") during the period - providing further potential for Instem to broaden its in silico presence. The size and scale of this extension underpins increased revenue visibility.
Post period end, the Company grew its Provantis footprint further, with Altasciences signing a three-year subscription order worth $3.1m. This follows the acquisitions of Calvert Labs and Sinclair Research by Altasciences and the subsequent decision to standardise on Provantis and to transition from on-premises deployment to Instem's cloud-based solutions, increasing its Provantis user licences from 250 to more than 600.
Outlook
The Company remains optimistic about the growth potential having positioned itself to provide solutions across the entire drug discovery and development life cycle. The in silico growth opportunity, in particular, is expected to increase as the Company addresses the pressing market need to reduce the cost and time of life sciences research and development, leveraging the integration of "Toxhub" data and technology into its existing Centrus suite.
As in 2022, it is expected that revenue growth will be second half weighted benefitting from increased software recurring revenue, predominantly from new business already secured and the reliable renewal of contracts with current clients.
With an increasing number of customer touch points and cross selling opportunities management is confident that Instem's performance will be broadly in line with the Board's expectations for the full year.
Phil Reason, Instem CEO, commented: "We are delighted with the continued momentum we are seeing, advocating our acquisition strategy and highlighting our standing across the drug research and development lifecycle. We believe there is significant potential to continue driving value and look forward to building on the Company's growing market reach."
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About Instem
Instem is a leading IT solutions & services provider to the life sciences market, radically reducing the cost and time taken for drugs to come to market across the discovery and development lifecycle. Its workflow software and data science solutions are targeted at increasing life science R&D efficiency, and are currently used by over 700 customers worldwide, including the largest 25 pharmaceutical companies.
Instem provides a compelling set of solutions - with more than 50% of global preclinical drug safety data collected over the past 20 years using its software. The Company is focused on increasing touchpoints across the drug development lifecycle - from discovery and non-clinical testing through clinical trials and up product launch. It is positioning itself at the forefront of broader market trends - with the aim of monetising growing demand for data insight that leverages artificial intelligence ("AI") and in silico-based solutions.
Its AI solutions include predictive data analytics, simulation and modelling, with a current total addressable market of over £600m, a serviceable addressable market of c.£150m and multiple opportunities to grow. The Group's broader portfolio helps clients collect, analyse, report and submit data to regulatory agencies with confidence and to reveal new insights from public and proprietary data with a total addressable market worth close to £2.0bn.
It has an established client base and is well positioned to grow revenues from existing and new clients. Its blended growth strategy will build on strong relationships and fundamentals with growing levels of high margin SaaS revenues underpinning continued profitable growth.
To learn more about Instem solutions and its mission, please visit www.instem.com