SPE.L Regulatory News (SPE)

SOPHEON PLC

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

TRADING UPDATE

Sopheon plc, the international provider of software and services for Enterprise Innovation Management and Strategy Execution Management, provides an update on the Group's performance for the year ended 31 December 2019.

In our interim results statement issued on 22 August 2019, we noted that we expected a more pronounced second half weighting to our annual performance, alongside a significantly expanded sales pipeline with a much higher than expected proportion of SaaS (Software as a Service) opportunities. That expectation has not changed. We entered the traditionally busy final quarter with over $30m1 in opportunities with 2019 target close dates, of which almost half related to SaaS deals and the balance in perpetual licenses along with associated consulting services. Today, overall revenue visibility2 for the year stands at $28m with $9.9m in remaining opportunities with 2019 target close dates. Of this, up to $2.7m represents perpetual license fees which, if signed, would contribute to recognized revenue in the current financial year. An additional $4.8m represents potential orders for multi-year SaaS or other recurring commitments, and the balance associated consulting services. December is traditionally a very busy month where we would expect to close a material number of deals and this would deliver a strong quarter in historic terms; however we would caution that our ability to execute on this is dependent on customers signing orders consistent with their plans as communicated to us, without unexpected internal delays.

In this regard, a number of the opportunities previously expected to sign in the fourth quarter have shifted to 2020. In some of these cases, Sopheon has already been selected as preferred vendor. The reasons for the extended buying cycles vary; some relate to extra scoping effort to expand the use of Accolade into a strategic purchase for the customer; others are due to customer specific factors such as M&A, personnel changes or budget consideration impacting decision making. Specific examples include a very substantial new SaaS deal with a top tier global customer, where Sopheon is the selected vendor but has since been held up due to customer resource availability due to another system implementation delay. At the other end of the scale, a mid-size perpetual license extension order from an existing customer has experienced delays due to an organizational restructure. The Company now expects both of these examples to sign in the first half of next year.

We have not seen a reduction in the overall size of our pipeline, rather a shift in the timing of conversion. The total forward pipeline for the balance of 2019 and 2020 has continued to grow and is now around 60% higher than at the end of 2018; we estimate that a third of this pipeline is SaaS related.

The Group's balance sheet also remains robust, with net cash as at the end of November 2019 at $19.2m.

Sopheon's Chairman, Barry Mence said: "The Board continues to believe that Sopheon is uniquely well placed to secure a leading position in the new and rapidly emerging enterprise solutions space of strategy execution management. This belief is undimmed by recent operating performance and conversion delays. Nevertheless, as a disciplined business, we have continued to tune costs in line with revenue wherever possible, while mindful of maintaining drive behind our strategic priorities. With a solid market position underpinned by a strong balance sheet and a strong pipeline, we continue to face the future with confidence and we fully intend to press on with our own strategic initiatives for long term growth and expansion."

As in previous years, a further update will be provided in January 2020.

1 Total deal value including software and service elements.

2 Revenue visibility is defined on page 7 of Sopheon's 2018 annual report which is available from the investor section of www.sopheon.com.

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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 200 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.

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.