Unit4 today announced stronger than expected growth in its first quarter. Considering the pandemic crisis is gripping the globe this was a superb result. It perhaps indicates that the people first strategy and the target industries that Unit4 focuses on are more likely to continue their ERP projects. Unit4 focuses on Higher Education, Public Sector, Professional Services and Non-Profit. Of these Non-profit has been hit hardest but the first two are unlikely to slow down deployments.
Cloud bookings grew 87% year on year and according to Mike Ettling, CEO exceeded targets. He commented to Enterprise Times: “We had an extraordinary Q1”. The annual growth in total bookings was also 55%. Unit4 also completed more than 100 customer deployments in the quarter and this would have helped in the increase in Cloud subscription revenue of 14%. Net revenue retention stood at 101%.
There were some changes in what was forecast. Ettling explained that while some deals were pushed back, others were brought forward. While he admitted that he had also been concerned by the figures for April during which most of the world was in at least partial lockdown he noted “April’s been good as well”
Gordon Stuart, Unit4 CFO said: “We are well-positioned to navigate smoothly through this period of uncertainty thanks to our focus on driving customer success, our resilient technology platform, business infrastructure and strong cash position. Our finance team members are playing an integral role in helping their business partners explore offensive and defensive options so we can remain flexible and drive the best results in the short, medium and long term.”
The prospects for a solid 2020 already look good. In the first quarter, Unit4 won several significant deals across Europe and APAC. Significant wins in Europe included Norwegian Post and Titania. In the US, Logan University, MO selected its higher education solution.
The future also looks solid, with Unit4 also announcing a formal partnership with Arribatec, a global SI. What is clear, is that despite the majority of staff working from home Unit4 has continued to deliver implementations. The company stated that “Projects are initiating, continuing and going live with no impact on timelines and quality delivered”.
This is a common refrain from across the tech industry with most organisations coping with the change in the working environment and in some cases thriving in it. One customer, Lara Doris, Director of Finance, Mary Immaculate College noted: “We recently undertook a successful project with Unit4 to move to the latest version of its ERP, our finance operational backbone. The project team was very professional, and everything ran very smoothly and on-budget. At this difficult time for the education sector, institutional continuity is essential so we can continue to support staff and students effectively.”
A year of change
The quarter also saw Ettling celebrate a year in his role as CEO. He commented: “Last year was a milestone for us. We renewed our leadership, invested in our people, refreshed our brand, and focused on how we could accelerate our transition to the cloud. The current crisis has proven our ability to adapt and remain resilient. We are committed to sustaining this momentum by maintaining the strong support and guidance we’re able to give our customers and doing this remotely, delivering planned go-lives, and supporting those looking to carry out new change projects.
“I’m incredibly proud of the work our customers are doing from public sector organizations supporting essential workers; Universities creating essential PPE; nonprofits like CGIAR who are raising awareness around the impacts of COVID-19 on the most vulnerable communities around the world; and charities supporting children and caregivers in isolation.”
Enterprise Times: What does this mean
Ettling has accomplished much in the last year. What is even more impressive is that Unit4 has continued to evolve through the crisis. As Stuart highlighted, it is not just about continued growth. There is also a note of caution in case things change during the second half of the year. That may still happen, though Unit4 seems better protected than others as it provides solutions to industries that are mainly unaffected. The exception may be its Non-Profits division where revenues are significantly down.
While some organisations may continue with existing cost-saving projects, others are likely to reduce employee numbers and therefore license fees. The net revenue retention figure may, therefore, drop below 100%. This may not indicate a drop in customer numbers though. Regardless, other sectors could also turn to cloud-based ERP solutions such as Unit4 as they look to survive and thrive in the new normal of working conditions.