Aveva ARR rises 11%, Q1 group revenues flat

Information technology consulting company Aveva said on Thursday that annualised recurring revenues had risen 11% in the twelve months ended 30 June, principally due to growth in the annualised value of subscription and cloud contracts.

In its first-quarter trading update, Aveva said it expects annualised recurring revenues to accelerate throughout the rest of the trading year, with a list price increase implemented by the group in April 2022 set to take effect on more contracts in its second half weighted contract renewal cycle.

The FTSE 100-listed group also expects its focus on subscription and cloud to drive increasing ARR in subsequent quarters, which it noted also have a typically greater weighting than Q1 in terms of new order wins and revenue.

Overall revenues, on the other hand, declined by "a mid-single-digit rate" in Q1 on a constant currency basis, due to a decline in perpetual licences, which have upfront revenue recognition. Revenue was flat on a reported currency basis, supported by the strengthening of the US dollar throughout the period.

"Aveva's end markets are strong, particularly energy, and the sales pipeline is solid for the remainder of the financial year. This supports management plans for full-year growth in ARR of around 15%," said the group.

"As previously communicated, constant currency costs will increase in FY 2023, due to incremental investments and inflation. The majority of the increases are expected in the first half of the financial year," it added.

Reporting by Iain Gilbert at Sharecast.com