News alert from Aptitude Software Group plc

24 January 2023

Aptitude Software Group plc

("Aptitude" or the "Group")

Full Year Trading Update, Directorate Change and Notice of Results

Aptitude, the specialist provider of finance digitalization and subscription management software, today provides an update for the financial year ended 31 December 2022 and the current financial year together with details of a change to the Board.

Trading Update

Aptitude made strong progress in 2022, performing in line with market expectations. In addition to several new business successes the Group achieved a series of key milestones with Fynapse, Aptitude's next generation digital finance platform.

These key milestones for Fynapse include:

·   the launch of the platform in the first half of the year, followed by encouraging pipeline build;

·   the successful delivery of Fynapse to Aptitude's charter client in the American telco market and their subsequent entry into a multi-year subscription agreement; and

·   the signing of a multi-year global partnership agreement with Microsoft to deeply integrate Fynapse with Microsoft Dynamics 365 Finance (for further information see www.aptitudesoftware.com/news/)

The strategic global partnership with Microsoft, signed in December, has the potential to be a material contributor to the success of Fynapse globally in the medium and long term across all industry sectors. The combination of Microsoft Dynamics 365 Finance and Fynapse will provide Aptitude and Microsoft clients with the ability to unify financial data from various systems to increase scalability, gain the agility to rapidly adopt new regulations, automate manual processes whilst delivering better business insights and reducing the cost of the finance function.

Building on the new business successes announced earlier in the year, the Group has secured several new major clients in the second half of the year. These second half successes include:

·   Four new eSuite clients across multiple sectors demonstrating the strength and breadth of the capabilities of the subscription management platform brought into the Group in 2021;

·   A material new multi-year agreement for the Aptitude Accounting Hub with one of the largest Australian banks to replace their in-house finance data warehouse and underpin their finance transformation programme; and

·   A multi-year agreement for AREV, Aptitude's leading revenue management product, with a North American analytics software provider

Benefitting from these successes, the Group's Annual Recurring Revenue ('ARR') grew by 15% in the year to £51.6 million (31 December 2021: £45.0 million, 30 June 2022: £49.1 million). On a Constant Currency basis ARR grew by 9% in the year with a particularly strong performance from the Finance Digitalization product set, underlining the strength of the long-term opportunity for Fynapse.

The Group's balance sheet remains very strong. Following net corporate cash outflows (dividends and loan payments) of £3.8 million in the year, cash at 31 December 2022 was £29.2 million (31 December 2021: £29.1 million) and net funds of £15.9 million (31 December 2021: £16.1 million). Cash conversion was below the prior year's exceptional performance with the collection of some recurring revenue invoices extending into the new year.

Outlook

The Group has made good progress in 2022, achieving important strategic milestones and new business successes across all regions and across the existing product portfolio.

Notwithstanding this progress the Board is monitoring the wider economic situation and its potential impact on our clients' and prospects' procurement decisions. As ever, but particularly given the current economic environment, the Board will continue to carefully manage investment levels in the business, whilst maintaining momentum on Fynapse and the Group's other strategic priorities, to ensure profit expectations for 2023 are unchanged.

The Group is confident that Fynapse will accelerate Aptitude's growth in the medium and long term whilst also generating the expected higher gross margins due to the cloud native technologies on which the platform is built.

Board Change

The Board announces that Philip Wood, Deputy Chief Executive and Chief Financial Officer, will be retiring from the Board in July 2023. Philip joined the Board in 2007 and after 16 years with the Group is planning a career sabbatical to spend more time with his young family. The Board is very grateful for his key role in transforming the Group to focus on the Aptitude brand and the expansion of the product range, laying the foundations for Fynapse and the addition of revenue and subscription management.

As a result, the Board is pleased to announce that from today, Mike Johns, currently Finance Director of the Group's business outside of North America, will assume the role of Acting Chief Financial Officer whilst a formal selection process is conducted. Philip's financial responsibilities will now transfer to Mike with Philip providing on-going handover support. Philip will continue his responsibilities as Deputy Chief Executive Officer until his departure in July.

Mike will be available to meet shareholders at the time of Aptitude's preliminary results as part of the Group's results roadshow.

Notice of Results

The Group expects to issue its results for the year ended 31 December 2022 on Tuesday, 21 March 2023.

A presentation for analysts will take place at 10.00 a.m. on the day.  Analysts wishing to attend should contact [email protected] to register.

Aptitude Software Group plc

Ivan Martin, Chairman                                                                                   020-3687-3200

Jeremy Suddards, Chief Executive Officer

Philip Wood, Deputy Chief Executive Officer

Mike Johns, Acting Chief Financial Officer    

Alma PR

Caroline Forde / Hilary Buchanan                                                                020-3405-0205

About Aptitude Software

Aptitude helps complex organizations automate and transform their financial business models. Our core areas of focus are the accelerating digitalization of the finance function, and the cross-industry drive to deploy and manage subscription offerings. Aptitude also continues to support clients through complex regulations which often form the catalyst for broader finance transformation.

Finance digitalization enables finance leaders to automate manual processes, improve the speed of their function, enhance the quality of its outcomes, and do so at a lower cost. Aptitude's products draw data from complex, often siloed systems, automate its processing through complex accounting calculations, and create a unified view of finance. Businesses are left with a transparent view of their data, delivered at extreme performance and at a lower cost of ownership improving their finance functions' ability to support their business objectives.

Subscription management is a rapidly increasingly critical driver for new and traditional businesses alike, who need to launch new offerings frequently, in ways which appeal to their customers and allow them to outperform their peers. Aptitude's products power the acquisition, monetization, and retention of subscribers straight through to revenue reporting. With Aptitude, businesses can take new subscriptions to market quickly, retain their high-value recurring revenue, and stay one step ahead of the competition. Whilst business to consumer (B2C) subscription models are increasing all the time, Aptitude also specialises in business to business (B2B) subscriptions which are undergoing significant business model shifts post pandemic, increasing volume and complexity to manage.

Our global client base includes some of the world's largest companies, typically organisations with complex business models, large volumes of data, and numerous internal systems. Aptitude is headquartered in London, has a strong and growing North American presence, and is powered by Global Innovation Centres in Poland and the North West of England. Sales, support and implementation services are provided from offices in the United States, the United Kingdom, Canada, and Singapore.www.aptitudesoftware.com

Throughout this announcement:

¹Annual Recurring Revenue ('ARR') is the value of Aptitude's recurring revenue at a specific point in time, normalised to a one-year period. ARR includes recurring revenues contracted but yet to commence and excludes recurring revenues which are currently being received but are known to be terminating in the future. Included in ARR, for the first time, are recurring revenues from the Group's solution management services, comparatives have been adjusted to include such recurring revenue contracts.

2 Constant Currency is calculated by comparing the 2022 ARR at 31 December 2022 with 2021 position retranslated at the rates of exchange prevailing at 31 December 2022.

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