IFS has published its H1 2020 results. Despite an impact from the pandemic, it has still managed to maintain substantial growth. Total net revenue was 3,482 million SEK (US $360 million), an increase of 16% against H1 2019. That increase was slightly lower than the 22% growth it achieved in Q1 but still significant.
Software revenue grew by 26%, a slower increase than the 365 it delivered in Q1. Importantly, cloud revenue grew by 56% against H1 2019. As IFS continues to invest in building its cloud solutions across its chosen verticals, to deliver these figures after a full quarter of the pandemic is impressive. IFS Chief Financial Officer, Constance Minc added, “Our net revenue growth of 16% and combined with our ongoing margin expansion really highlights the quality of the business. We see recurring revenue is now at 80% of the total software revenues.”
Also, this quarter it was announced that EQT had moved the majority ownership of IFS between its funds and sold a substantial minority stake to TA Associates.
IFS Chief Executive Officer Darren Roos commented “Our focus remains on delivering value to our customers and never before has this mission been more critical to their survival. Our close collaboration with our partners has ensured we remain relevant, which is reflected in our results.”
IFS has continued to win new deals and deploy its solutions during the lockdown. How they continued to achieve this was discussed in a recent podcast with Matt Smith, Global Chief Architect at IFS. Smith explained how the company evolved its business value engineering service to overcome the constraints of lockdown
Enterprise Times: What does this mean
What is impressive about IFS is that it is growing across all fronts: net new customers (such as Carlsberg, Dolphin Drilling and Panasonic), new partnerships (Boomi) and more recognition by analysts such as Gartner and IDC. It has also considered ways in which it can increase the number of consultants with expertise in IFS by offering free training to consultants.
Wins like the one at Carlsberg would indicate that IFS is capable of winning business from the largest incumbents. In that case, it was SAP. It will not win every time against its larger competitors such as Oracle, SAP and Infor. It is providing competition in several key industries and winning consistently. With many countries emerging from lockdown, can IFS capitalise on companies prioritising investments in cloud-based ERP solutions?
What was missing from the announcement was an outlook for the rest of the year. However, as a private company, it does not need to do so. What is the outlook for IFS? Based on the existing growth, Roos is likely confident about the numbers increasing again. If the deals done are more substantial, then it might even outdo its Q1 growth with recurring revenues at 80% of total software
