DeepVerge rises despite just missing revenue forecasts

DeepVerge said in an update on Monday that its unaudited revenues for 2022 totalled about £17.2m - “slightly below” market expectations.

The AIM-traded firm said it would have achieved £18m, but for a “significant element” of recently-signed contracts now falling for delivery in the current year.

It said the result still represented a “significant increase” year-on-year, with 2021 audited revenue of £9.3m and 2020’s result at £4.4m, despite some delays into 2023 due to supply chain issues.

Licence revenues featured strongly, the board said, as the group progressively moved from small and medium ticket equipment sales to larger £1m-plus data and artificial intelligence (AI)-focussed sales through partners.

For the last 24 months, the firm said its business unit Modern Water had been focussed on building high-value solutions for monitoring water and wastewater using advanced software and data automation, underpinned by its established equipment range.

In addition, the company said it was moving its Labskin business “deeper into data and AI” with the creation of ‘Skin Trust Club’, with a focus on a personalised skincare platform for partners, and building a large skin microbiome database for its corporate customers.

The directors said the moves were in parallel with a refocusing of the business on tier-one partnerships that sell and support DeepVerge solutions in their core markets where they are dominant or major participants.

That, the company said, had led to “significant” contracts and order books with a range of government organisations across multiple territories.

That included US government agencies IARPA, NOAA and the Georgia Port Authority, where DeepVerge was focusing Labskin, Skin Trust Club and environmental microbiome sequencing efforts.

The Modern Water business, meanwhile, was increasingly focused on the developing world with business and multiple orders across the Middle East, China, south and central Asia and North Africa, providing solutions in markets that were under pressure from pollution and water scarcity.

DeepVerge said its accelerated restructuring, announced on 22 November, had created separate businesses with a “clear domain focus”, with the personnel and resources necessary to support the growth being experienced and anticipated.

The restructuring also brought certain key logistical processes in-house, which the board said would better serve customers and partners and protect against worldwide supply chain shocks.

As well as focus, the restructuring was also expected to deliver “considerable” cost savings in 2023 of up to £2m.

“The group's major achievements of 2022 were Intensifying the focus on bigger ticket, higher value, technology and data-based sales; gaining the confidence of partners and their customers to use our solutions; putting in place the personnel and resource structures needed to support and develop this type of expanding business; and bedding in reference sites across the globe which showcase the solutions we can deliver to customers,” said interim chief executive officer Dr Nigel Burton.

“These achievements, and the successful fundraiser in November, provide solid foundations for 2023.

“I'd like to thank our shareholders, customers, partners and employees for their support in 2022.”

At 1256 GMT, shares in DeepVerge were up 4.54% at 1.96p.

Reporting by Josh White for Sharecast.com.