SPE.L Regulatory News (SPE)

SOPHEON PLC

("Sopheon," the "Company" or the "Group")

Acquisition and Trading Update

Initiation of M&A strategy coupled with solid execution of revenue objectives for the year

Sopheon, the international provider of software and services for Enterprise Innovation Management solutions, is pleased to announce the acquisition of the business and assets of ROI Blueprints LLC ("ROIB"), a cloud-based solution focused on detailed enterprise planning and execution. The Group is also providing a trading update for the current year ending 31 December 2021.

ROI Blueprints

ROIB is a cloud-based project and portfolio SaaS solution designed to help organizations drive operational execution management of corporate initiatives. Integrating the ROIB solution with Sopheon's Accolade product will extend the value of Sopheon's offering and expand market reach. It will also further accelerate Sopheon's migration towards cloud and SaaS. In addition to the cross-selling opportunities, these attributes will further underpin the Group's solid retention metrics. ROIB was founded in 2014 by industry domain experts Ketan Jahagirdar and Russ Fuja following years of expertise working with enterprise leaders such as Motorola, Accenture, and Diamond Management Consultants.

Greg Coticchia, CEO of Sopheon commented: "We are excited to add ROIB to the Sopheon family, further enhancing our ability to link and connect corporate innovation planning and operational execution for improved risk mitigation and decision making. ROIB not only brings new capability to our offering but also represents a wealth of knowledge which will contribute to our future roadmap. We see this as a technology acquisition that will improve our time to market for a key product capability. I believe it would have taken us at least two years of material investment to develop equivalent capability in house."

The transaction is structured as an asset purchase. Initial consideration of US$1.5m is payable in cash, funded from the Group's existing resources of over $24m at 30 November 2021. An additional, contingent deferred earn-out of up to $1.5m is payable over the next three years, linked to product deliverable and revenue targets. Up to one-third of the earn-out is payable in Sopheon shares valued at £9.35 per share, the mid-market closing price on 16 December 2021. The business is expected to record pro-forma revenues of approximately $0.1m in 2021. Sopheon will also take on an annual cost base of approximately $0.5m and net financial assets of approximately nil, before valuation of intangibles and goodwill. As noted above, Sopheon revenues are expected to respond positively to the added market reach afforded by the ROIB capability, which adds upsell opportunity and the potential for a higher acquisition of new customers.

Ketan Jahagirdar, ROIB co-founder and CEO commented: "Sopheon represents a unique market fit for us. We have built what we believe is the most compelling platform for project and portfolio execution. We are very excited that we can now accelerate further development and commercialization as part of the overall Sopheon product offering, leveraging Sopheon's proven sales and marketing resources."

Trading update

In our half-year report issued on 25 August 2021, we reported rising commercial traction across our core performance metrics as we migrated the business to a more recurring model. We are pleased to report that we expect revenues and EBITDA for the year ended 31 December 2021 to be comfortably in line with market expectations, coupled with solid progress on building annual recurring revenue. The closing weeks of the year remain busy with commercial activity. The Board will update shareholders further on the full year outturn at the end of January.

Andy Michuda, chairman of Sopheon, commented: "I am delighted to be embarking on the M&A strategy that we have previously signposted, with the acquisition of ROI Blueprints. It adds depth to our product offering, and brings important intellectual property and capability to support our cloud transition. Coupled with our strong organic execution, this is a great way to finish the year".

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This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (596/2014/EU) as it forms part of UK domestic law by virtue of the European Union (withdrawal) act 2018 ("MAR").

About Sopheon. Sopheon (LSE: SPE) partners with customers to provide complete Enterprise Innovation Management solutions, including software, expertise, and best practices, that enable them to achieve exceptional long-term revenue growth and profitability. Sopheon's Accolade solution provides unique, fully-integrated coverage for the entire innovation management and new product development lifecycle, including strategic innovation planning, roadmapping, idea and concept development, process and project management, portfolio management, and resource planning. Sopheon's solutions have been implemented by over 250 customers with over 60,000 users in over 50 countries. Sopheon is listed on AIM, operated by the London Stock Exchange. For more information, please visit www.sopheon.com.