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Sdl plc – preliminary results for the year ended 31 December 2017

A year of root and branch transformation

SDL plc (“SDL”, “the Group” or the “Company”), a leader in global content management and language translation software and services, announces its preliminary results for the twelve months ended 31 December 2017. 

Results image

Financial highlights 

  • Revenue from Continuing Operations up 7.9% to £285.7m (2016: £264.7m), +3.2% at constant currency 
  • Language Services revenue up 11.6% to £184.5m, +7.1% at constant currency 
  • Language Technologies revenue up 7.0% to £48.6m,+1.6% at constant currency 
  • Global Content Technologies revenue contracted 2.6% to £52.6m (down 7.4% at constant currency), with strong prior period perpetual licence deal 
  • Adjusted profit before tax of £22.0m (2016: £27.0m) excludes £2.5m of research and development expenditure which has been capitalised in the year (2016: £nil) 
  • The disposal of the Fredhopper and Social Intelligence business realised a profit on disposal of £20.6m and net cash proceeds of £22.2m 
- Adjusted profit before tax is calculated before amortisation of intangibles and exceptional items.
- Adjusted earnings in the earning per share calculation is based on profit after tax and before amortisation of intangibles and exceptional items (net of tax) and before tax exceptional items. A reconciliation of the adjusted earnings per share calculation is set out in Note 7 to the preliminary financial information.
- Constant currency movements are calculated by applying 2017 monthly exchange rates to the corresponding 2016 monthly results. Average rates for the year for the Group’s two principal foreign currencies are set out in the Interim Chief Financial Officer’s Review

Strategic transformation 

  • Helix automation programme is on track 
  • Strong traction in premium verticals, particularly Life Sciences and Marketing Solutions 
  • Increased number of Connectors to over 100, enabling more customers to have automated and integrated access to content and services 
  • Undertook restructuring activity in the second half of the year to reduce headcount and costs in specific areas of the business and to structure the business with clearer lines of accountability 
  • Key product launches, including Neural Machine Translation and SDL Trados Studio, with the latter being the most successful release to date 
  • Machine Translation (“MT”) available in Amazon Marketplace 

Operational highlights and KPIs 

  • Good progress across our operational KPIs 
  • 259 cross-sell and up-sell deals (2016: 228) 
  • Premium Services revenue up by 78% to £40.1m (2016: £22.5m) 
  • Language Services RRR (Repeat Revenue Rate ) of 93% (2016: 93%) 
  • Technology ARR (Annual Recurring Revenue ) up 4.8% to £63.4m at 31 December 2017 (2016: £60.5m); 

Commenting on the results, Adolfo Hernandez, CEO said: 

“2017 was a period of operational heavy-lifting and it is frustrating that, as we drove our transformation, we were not able to perform consistently in financial terms in all areas of the business. Our financial results were impacted by weak gross margins in Language Services in the first half and by software deal slippage towards the end of the period. In each case, we initiated detailed recovery plans. Furthermore we continue to modernise our business systems, processes and structure to create a more robust and forecastable business. More positively, SDL took a number of significant strategic steps forward in 2017, most notably the major investment in our automation programme (“Helix”), the divestment of non-core businesses, the launch of neural Machine Translation and the strong growth of our premium verticals.” 

Commenting on the outlook for 2018, Adolfo Hernandez, CEO said: “As expected, we enter 2018 with another packed agenda. We will be rolling out Helix to our Language Services business and we expect to see the benefits of productivity and margin gains in the second half of the year. We will continue to focus on sustainable sales growth, through account management and by extending our premium solutions strategy. In our technology businesses, we have a number of key launches and we will continue to make the investment required to modernise our platforms and products. Operationally, we are focused on improving our infrastructure and Business Intelligence and we will monitor the cost base and drive efficiencies where we can. We have a sound strategy to take SDL forward and a significant market opportunity to pursue. We are highly cognisant of the need to balance growth, investment and profitability through this period of transformation.” 

For further information please contact: 

SDL plc - 01628 410100
Adolfo Hernandez, CEO
Xenia Walters, Interim CFO 

FTI Consulting LLP - 0203 727 1000
Edward Bridges
Emma Hall

- Current year revenue earned from prior year customers as a percentage of current year revenue; the difference between RRR and total revenue is revenue from new customers
- Annualised revenue from existing contracts which includes term licence fees, SaaS licence fees, support and maintenance and hosting.
 

Cautionary statement Certain statements in this announcement constitute, or may be deemed to constitute, forward looking statements (including beliefs or opinions). Any statement in this announcement that is not a statement of historical fact including, without limitation those regarding the Company’s future expectations, operations, financial performance, financial condition and business is a forward looking statement. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement. As a result, you are cautioned not to place reliance on such forward looking statements. Except as is required by the Listing Rules, Disclosure and Transparency Rules and applicable laws, no undertaking is given to update the forward looking statements contained in this announcement, whether as a result of new information, future events or otherwise. 

Nothing in this announcement should be construed as a profit forecast. This announcement has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to SDL plc and its subsidiary undertakings when viewed as a whole.

About SDL

SDL (LSE: SDL) is the global leader in content creation, translation and delivery. For over 25 years we’ve helped companies communicate with confidence and deliver transformative business results by enabling powerful experiences that engage customers across multiple touchpoints worldwide. Are you in the know? Find out why 85 of the top 100 global companies work with and trust us on SDL.com. Follow us on Twitter, LinkedIn and Facebook.