Aveva confident despite slide in first-half revenues

Pro forma revenues in the six months to 30 September fell 2.5% on a constant currency basis to £553.8m, while adjusted earnings before interest and tax slumped 57% to £72.9m. On a statutory basis, losses from operations widened to £77.6m from £74.3m.

The blue chip software firm is shifting its business model to focus on subscription-based revenues, however, and annualised recurring revenue (ARR) jumped 11.6% to £876.2m.

Peter Herweck, chief executive, said: "Aveva’s business model transition is accelerating, with a good ARR progression to 11.6% in the first half, driving recurring revenue up to over 70% of total revenue.

"The group’s first half operating margin was impacted by higher costs, particularly relating to planned investment, including research and development and selling and distribution, plus the return of certain costs post-Covid."

Looking to the rest of the year, Herweck acknowledged that some of the firm’s end markets faced "a more uncertain economic and geopolitical outlook".

But he added: "The board continues to expect further improvement in Aveva’s ARR growth rate in the second half, due to a greater weighting of contract wins and contract renewals, on which previously announced list price increases will take effect.

"On a constant currency basis, Aveva expects to achieve some revenue growth in the second half, notwithstanding a tough comparative in third quarter driven by a large contract win in the prior costs.

"Cost increases are expected to be significantly lower in the second half."

Aveva agreed in September to be taken over by French conglomerate Schneider Electric in a £9.5bn deal. Shareholders are due to vote on the recommended cash offer on 17 November. Schneider is Aveva’s largest shareholder, with a 59% stake.