Instem trades in line with expectations in first half

Life sciences information technology provider Instem updated the market on its first half on Monday, reporting that it performed “well” across all of its business, despite the ongoing backdrop of Covid-19.

The AIM-traded firm said it continued to execute its acquisition strategy in the six months ended 30 June, growing the “strength and depth” of its solution suite and team, with the additions of the Edge Software Consultancy and d-Wise Technologies.

Trading for the period was in line with its expectations, with first revenues increasing by about 45%, including a four-month contribution from the Edge and a three-month contribution from d-wise.

Like-for-like revenue growth, excluding the acquisitions, was around 8%, which translated to 15% growth on a constant currency basis.

Operational cash generation, including on a like-for-like basis, remained “strong”, with a closing cash balance on 30 June of £17.9m.

On the operational front, Instem said the acquisitions of the Edge and d-wise had “transformed” the scale of the business, and “further broadened” its offering across the drug discovery and development lifecycle, increasing recurring revenues and strengthening relationships with clients.

Integration of both businesses was progressing “well”.

The group said it generated “strong” organic growth across all divisions, adding that the continued transition to the software-as-a-service (SaaS) model, which combined with favourable market conditions, generated “increased visibility”.

That, the board said, left the company well-placed to convert opportunities within new and existing client bases.

Looking ahead, Instem said its trading was still in line with the board's expectations, adding that given the “step change” in the scale of operations and its strong pipeline, it was confident that the company was well-positioned to achieve further growth, while also taking advantage of any further acquisition opportunities that could arise.

“The Instem team has once again performed exceptionally well, almost entirely working from home offices and continuing to successfully deal with the ongoing challenges of Covid-19 while making a positive contribution to vaccine and therapy development,” said chief executive officer Phil Reason.

“We are pleased with the progress made on the initial integration of d-wise and the Edge, and believe the enlarged group continues to be well placed to grow recurring revenue and focus on further enhancements to margins and cash generation.

“We have a proven model, increased scale and buoyant market conditions, and look to the future with confidence.”

At 1253 BST, shares in Instem were down 2.43% at 722p.